Measuring the impact of corporate citizenship

Ask a corporate citizenship person if their company really understands what they're doing, and the answer may be no. They'll tell you that their CEO doesn't get it, and the business doesn't appreciate the value of what they contribute. Some will even tell you it makes them worry about the future of their function.

They think the problem is that the business doesn't understand the value of social responsibility and social impact, but they're wrong, says Jason Saul, President of Mission Measurement and a member of the Boston College Center's faculty.

"The business doesn't need to understand social impact; social impact needs to understand the business," said Saul. "In other words, social impact needs to prove its value to the business."

Companies want to know how corporate citizenship is making a difference - tangibly, practically and realistically. "At the end of the day we have to demonstrate value, and the way we demonstrate value to the business, and to society, is by speaking the language of the business - by speaking the language of measurement."

There are many reasons to measure, but if corporate citizenship is to be around for the long haul, measurement must help the company answer the "so what" question: How does the program contribute to the company's strategic objectives? How do these activities truly benefit the business, and what is the return on investment?

Measurement Needs to Change

In order to answer these questions, four shifts need to take place in corporate citizenship measurement:

  • Corporate citizenship departments need to function like other business units and demonstrate their value to the business.
  • Corporate citizenship needs to focus on outcomes rather than programs.
  • There needs to be a shift from evaluating corporate citizenship to truly measuring it.
  • Performance reporting needs to replace compliance reporting.

Operate like a business unit:

Aligning the company's corporate citizenship with its business is nothing new. A company in the food business gives out hunger grants; a professional service firm does pro bono work. But this is no longer enough. To provide real business benefit, there has to be a strategic link, a business case for everything, whether it's raising visibility, deepening key relationships with customers, engaging employees, gaining credibility with regulators, or getting a seat at the management table.

That doesn't mean that everything has to translate to a direct business goal. It means that corporate citizenship departments have to be able to show measureable results so the business can determine whether or not it values corporate citizenship. For example, a corporate citizenship program may not raise the sales of the company overall, but it might increase employee satisfaction, reduce turnover, deepen relationships with partners, increase visibility in the community, or enable the company to enter new markets.

Focus on outcomes rather than programs:

Companies value outcomes, not programs. Saul gave his work with the Ronald McDonald House Charity as an example: "We interviewed everyone about the value of this program, from the CEO of McDonald's to the head of McDonald's Europe, to owner operators all over the country. And what we found was everyone thought it was a nice thing to do, but they didn't understand the value to the business - until we uncovered a piece of data. We found that McDonald's customers who understood about Ronald McDonald House and knew about the charity were two to three times more likely to revisit the stores than those who didn't know. Based on that data alone, the company invested eight figures more money in this program. The picture of a kid in a hospital was a nice-to-do, but the return on investment made business sense."

How do you prove the value of an outcome? By measuring in a way that allows you to translate the social change into business value. Instead of measuring reach, measure effective reach: not just how many people are served, but how many people are effectively served, meaning they're served and they're reaching a positive outcome, like a change in behavior as a result of the reach. For example, explained Saul, OfficeMax used to count the total number of volunteer hours for its Associates; now it counts the percent of "highly-engaged" Associates who both donate and volunteer. Now they are showing business value, because research links high-engagement to greater productivity and retention.

Measure rather than evaluate:

Evaluating is a post-hoc inquiry, said Saul. It happens at the end of a strategic intervention to determine if a particular intervention worked. "I would argue that most companies probably don't need to evaluate everything they're doing because they're not always trying to prove a ground-breaking new intervention."

In contrast, measurement happens pre-hoc, or up front. The company sets the goals and the metrics for success, and then tries to determine what are the best, most effective practices for precipitating those outcomes, whether they are business outcomes or social outcomes.

It's the difference between proving and improving, explained Saul. "Evaluation is a post-hoc inquiry that says, 'At the end of this period of time for this population of people, I want to prove that this program was the only reason for this impact.' Performance measurement is a very different tool. It is used upfront by the organization to measure the progress or indicators of success along the way."

Focus on performance reporting rather than compliance reporting:

Compliance reporting focuses on someone else's agenda, said Saul. When asked to report against complex third-party standards such as the Global Reporting Initiative, companies often go through the motions, submitting data that many view as meaningless.

In order for social impact measurement and reporting to be done well, the process must be organic, he explained. An effective framework for social impact measurement must recognize that a company's social and environmental potential is intimately linked with the organization's core culture, objectives and competencies, and the desired outcomes should be articulated against this framework. Performance metrics need to be outlined up front against those outcomes to see whether or not they're taking place.

Defining Success

Defining corporate citizenship success is about defining outcomes. Up front before any program starts, before you hire an evaluator, before you design a program, launch it or put branding on it, you need to define the outcomes you want from the program. And in defining those outcomes, you need to engage your real stakeholders - the CEO, your head of marketing, your employee base, your customers, your community leaders, and your key business partners - to define what outcomes are most valuable.

Once you do this, you'll be armed to tell your story, both inside and outside the company, in a very different way, and you won't be complaining that no one understands or values what you do.

Jason teaches the Boston College Center's program, Measuring the Social and Business Impact of Community Involvement, which is next offered on March 11-13, 2009 in Savannah, GA.

He is also working in partnership with the Center to develop a practical framework, guidelines and tools to assist companies in measuring the business value of their community involvement (CI) initiatives. By convening a research network/learning forum of 10 or more companies, the project will examine the current state of impact measurement and examples of best practices, identify promising metrics and provide a platform for deeper customized research and analysis for participating companies. The Center is currently recruiting companies to participate in the learning forum. For more information, contact Vesela Veleva.