You can’t manage what you don’t measure, or so the aphorism goes. This summer, the Boston College Center for Corporate Citizenship (BCCCC) will launch a framework to assess the business impact of community involvement (CI) programs. The framework will empower corporate citizenship practitioners to make a compelling internal case for their programs. After all, firms will not justify business expenditures as simply “the right thing to do,” and there’s no need when a range of metrics can demonstrate how CI enhances the bottom line.
CI initiatives refer to corporate citizenship that contributes to an external societal issue. It does not include internal corporate responsibility efforts to “do no harm” or to promote greening operations, product safety, transparency and sustainability reporting. The Center chose to limit the new CI framework to business impact because there are ample existing approaches to measuring social impact. Furthermore, there is a growing number of resources to help with process measures (e.g., community and volunteer satisfaction, number of employees involved), but relatively few mechanisms to assess the business impact of corporate community involvement initiatives and fewer still that capture return-on-investment (ROI).
During the BCCCC conference on corporate citizenship this month, Bea Boccalandro moderated a panel called Measuring What Matters: Finding the Business Value of Community Involvement Initiatives. There, she said CI professionals tend to trip over the same stumbling blocks: determining exactly what to measure, appropriately attributing the business impacts to the CI program, and calculating ROI. The session integrated the experiences of Aetna’s Chris Montross and Jane Coen of Underwriters Laboratories Inc. to show how these challenges have been met in practice and to highlight indicators for measuring business impact. Boccalandro proclaimed that it’s an iterative process – if you keep at it, you’ll keep getting better. She quipped, “Perfection in measurement is unproductive…we may have more to prove as corporate responsibility is a young field, but we must resist the tendency to set a ridiculously high bar and be willing to move forward without a double-blind experimental design.” In fact, most judgments on the impact of business initiatives in marketing or human resources are not based on experimental design.
The BCCCC framework aspires to be the acid test for CI. It assesses impacts and not outputs. The developers of the framework suggest piggy-backing on indicators that a company already uses. For instance, indicators to measure employee morale and those that offer a comparison group such as employees known to participate in volunteer programs and those known not to participate. If this data is not available, standard indicators that will be provided through the framework are a next best option to measure meaningful change in a business function. In 2009, Aetna added a question to its annual all-employee survey asking how many times in the last year the respondent had participated in Aetna-organized volunteer events. They cross-checked those answers to the level of agreement in response to “Aetna is a good place to work.”
When measuring ROI and monetizing the impacts, a company must first measure the change in the intermediary business function (e.g., retention, recruitment, customer loyalty, brand recognition) that can be attributed to the CI program and, second, convert that into revenue or cost savings. How? In a much cited study, Sears applied a conversion factor to calculate the ROI of community involvement. It found that a 5% increase in employee satisfaction drives a 1.3% increase in customer satisfaction, which led to a 0.5 percent increase in revenue growth. As such, a 10% increase in employee morale correlates to a 1% increase in productivity.
The BCCCC framework will immediately enable broader and better measurements of the business impact of community involvement. The workbook that accompanies the framework will provide step-by-step guidance, online worksheets, suggested indicators, and ROI conversion factors based on ample research. Still, the framework must evolve beyond its substantial emphasis on employee surveys and the HR benefits of CI. Investment in community programs create opportunities to cultivate new customers and develop new products. It will be exciting to track how the BCCCC framework adapts and measures what too many wrongly deem un-measurable.
The publication of the Framework for Measuring the Business Impact of Community Involvement, expected in the summer of 2010, will be announced via twitter.com/bcccc.
Glenn Gutterman is a CSR and institutional development consultant who lives in Bogotá, Colombia. Gutterman’s expertise spans employee volunteerism to sustainability reporting. He consults with businesses and organizations that value people, planet and profit, and seek competitive advantage through CSR.