Conscious Capitalism has proven to be a great framework for companies who wish to improve their corporate performance while creating a positive impact for their stakeholders. In this article, I provide you with the conceptual framework for a metric driven approach to Conscious Capitalism. I highlight the need for metrics to measure each of the Conscious Capitalism tenets and show you how to identify relevant KPIs to measure your company’s impact for the various stakeholders. I also explore the importance and value of dashboarding which enables you to see the connection between your desired outputs, strategies employed, and results obtained, all in one place.
How to measure your impact
You will know from working with me, watching my videos, or reading my blog that I am a firm believer in combining intuition or gut feel with data and metrics to optimize decision making. Metrics help you to be in reality with your business, to adjust behavior, take action, and make better decisions. Are you currently making gut decisions without metrics and data? Or do you have a healthy diet of metrics and data to give you the clarity you need?
The only way to know that Conscious Capitalism is actually making an impact for you is if you are effectively measuring the four tenets, and your progress towards the outputs you wish to achieve. This is key to getting the most from the Conscious Capitalism philosophy.
In structuring and/or restructuring your business towards Conscious Capitalism, there will be certain objectives in mind, and attached to these objectives are outputs or specific results you will want to achieve such as higher revenue, higher profits, lower turnover rates, fewer levels of management, customer and employee satisfaction, less legal costs, fewer product returns, etc. These will need to be measured so that you actually know the impact Conscious Capitalism is having on your business.
Measuring the four tenets
Leadership is integral to the creation of sustainable businesses, and conscious leadership is paramount when developing a conscious business. Not only do conscious leaders inspire and model the behavior that constitutes a conscious culture, they are also at the center of holding the organization’s purpose. You will, therefore, want to make sure that you are measuring the changes and improvements in leadership and culture.
The Leadership Circle created by Bob Anderson and Bill Adams is an excellent tool for measuring conscious leadership.
One advantage of building your leadership assessments into your master dashboard is that you will be able to see the relationships between improvements in leadership and changes in other areas of the organization.
Here is an example of a holistic leadership assessment that can be used to gauge your overall leadership performance. The Leadership Circle can be built into your dashboarding solution.
The Leadership Circle
According to SHRM “One in five Americans have left a job in the past five years due to bad company culture. The cost of that turnover is an estimated $223 billion”.
Culture plays an important role in uniting individuals in an enterprize and ensuring cohesion and teamwork. Having common values and principles unifies the team while practices and rituals determine how things get done. Having a conscious culture sets the tone for developing a conscious business.
As a leader, not only will it be important for you to assess where you are on your conscious leader’s journey, but you will also have to examine how conscious your company’s culture is and how much progress you have made in evolving the culture of your organization.
“Culture is a tricky thing to measure, but that doesn’t mean it’s impossible to quantify. Culture is directly connected to hiring and retention, so metrics related to employee turnover, time-to-hire and employee engagement can shed light on your cultural strengths and weaknesses. Annual engagement studies and pulse surveys are valuable tools to begin with.’ says Joe Galvin, Inc. columnist and Chief research officer at Vistage.
If you want to get granular, and I recommend that you do, there are a handful of survey-based assessments that can be used to get a more accurate read on your organization’s culture and values.
- The Competing Values Framework (CVF) developed by Robert Quinn and Kim Cameron
- The Denison Organizational Culture Model
- Barrett’s Cultural Values Assessment
As a conscious company, you want to ensure that your dashboard includes a summary graph representing the evolution of your culture, which can look something like this…
Barrett Values Center, Cultural Values Assessment
When you measure leadership and culture, you can see how improvements in these areas are affecting more tangible business objectives.
When you introduce purpose, it’s about giving stakeholders a why. What higher purpose does the organization exist to serve? The Conscious Company glossary does a great job of defining mission within the context of Conscious Capitalism. They describe mission as follows:
“A statement that sets out a business’s purpose and what it means to achieve it both now and in the future. The term is sometimes used interchangeably with “purpose,” especially in the context of describing a business that prioritizes achieving self-transcendent goals.”
Simply put, conscious companies have a mission statement that encompasses a higher purpose!
Below are examples of mission statements which reflect a higher purpose:
Patagonia: Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.
JetBlue: To inspire humanity – both in the air and on the ground.
Tesla: To accelerate the world’s transition to sustainable energy.
Sweetgreen: To inspire healthier communities by connecting people to real food.
TED: Spread ideas.
When your purpose is well defined and specific, as in the above examples, it enables you to create a single unifying metric that lets you know whether or not you’re on track to fulfilling your purpose. This single unifying metric is also known as the mission metric. Your mission metric is one of the most powerful and aligning metrics a company can create. When you build your mission metric into your dashboard, you will want to:
- Ensure that everyone in your organization has access to it and understands its importance
- Ensure that they can see how you are trending on the fulfillment of your purpose
- Enable each person to understand how their role directly impacts this metric
This is one of the most aligning and powerful things you can do in your company.
In measuring your mission it is also vital that you look at stakeholder impact, and not just the stakeholders mentioned in your mission or purpose statement. Is your purpose effectively inspiring employees? Are customers choosing your products above others? Are your suppliers aligned with your purpose etc.? In the next section, we look at various strategies and specific metrics applying to each stakeholder group.
Depending on the strategy that your company is employing to fulfill its responsibility to each of the stakeholders, there will be specific metrics that will need to be developed. These metrics should tie back to the strategy employed and the desired result in order for them to be meaningful and useful.
Here are some ways to measure your impact on customers, team members, investors, suppliers, your community, and the environment.
|Deeply engaged, inspired, healthy employees||Corporate mindfulness programDevelop identity, belonging and tribe Creating an environment for productivity, open communication, career development, meeting company goals.Communicate the company mission and report on it monthly Learning and talent development Access to tools and information||ProductivityeNPS – Pulse surveys and single click pollsEmployee Retention Rate# of sick days takenCompany Values|
|Highly loyal, trusting customers||Build a brand with a purpose Add a CSR componentCreate an amazing customer experienceMake customers’ lives easier and remove obstacles Loyalty and reward programsCustomer feedback implementationBe a transparent and responsible business||Repeat CustomersReferralsReviewsNet promoter score (NPS)Customer Satisfaction (CSAT)Churn RateRetention RateCustomer Lifetime Value (CLV)Customer Effort Score (CES)Engagement Rate|
|Committed, innovative, profitable suppliers||Assess risks and be proactive Relationship based suppliers who buy into the missionHave a supplier feedback channel Initiate a supplier compliance guideDevelop strong ties with ethical suppliers by asking how employees are treated and where raw materials are sourcedRegular reviewsEstablish an SLA||Quantity ordered vs quantity receivedDelivery On Time Lead time variance Return rates Ordered price vs invoice price|
|Thriving welcoming communities||Reframe the company’s mission to benefit the communityIncorporate community improvement in the company’s strategy Business/employee driven community outreach program Community communication ||Qualitative feedback and case studiesExternal quantitative data related to project goals for community focus (e.g., no. of vegetable gardens planted, no. of low-cost houses built, no. of parks restored, student test scores, lower Body Mass Index, decreased criminal activity of participants, etc.)|
Environment consists of:(Materials, Energy,Water, Biodiversity, Emissions, Effluents and waste, Products and Services, Compliance, Transport)
E.g. Reducing packaging materials, minimizing transportation costs and installing energy-efficient lighting
Online data collection methods, TRIRIGA and Energy Star
|Adapt business strategies to align with UN’s 17 Sustainable Development GoalsAdoption of clean and renewable energy sourceImprove supply chain sustainabilityReduce carbon footprintRecycle waste Switch to energy efficient productsFinancial contributions to aid environmental restoration and/or research Company driven volunteer activities Implement sustainability checklist for new developments (i.e. warehousing, plants, operations, new branches etc.)||Common Carbon Metric Greenhouse Gas EmissionsEnergy-Generation MixWater UseWater PollutionWaste GenerationTons of waste recycled Sustainability score|
|Shareholders – Superior long-term financial performance||Sales strategiesMarketing strategiesOpen up new marketsFocus efforts on a single marketCreate a new product lineFinancial StrategiesIncrease fixed cost utilizationDecrease unit cost||RevenueOperating MarginCash Tax RateIncremental Capital ExpenditureInvestment in Working CapitalCost of CapitalNet ProfitMulticapital scorecard|
Consolidating all the data on how you are performing on the four tenets in a single view is the next step. This is an example of what a conscious company’s dashboard might look like.
Sample Dashboard Tracking on the Four Tenets
I discuss dashboarding in further detail later… But first, let’s talk about the importance of integrating stakeholder interests.
Integrating Stakeholder Interests
Once you have taken into account the interests of all stakeholders, developed strategies, identified goals and objectives, specified relevant metrics and created a dashboard for the above; how will you ensure that the information obtained from your metrics is being employed to move your company’s mission forward?
Breena E. Coates, Chairman and Professor of the Department of Management at California State University recommends that performance in stakeholder goals and metrics be “embedded into the firm’s DNA”. Dr Coats suggests that this be accomplished by linking performance on specific metrics to “leadership job descriptions, evaluations and reward systems”. This introduces an aspect of accountability.
In a paper titled Leadership-driven “Conscious Capitalism” and the Triple Bottom Line, Dr. Coats asserts that “The embedding process will be more useful if the principles of Kyosei—interconnectedness and harmony with the business environment, and Kaizan—continuous improvement are a major part of audit and evaluation of the strategy.”
This means that you have acknowledged your business’ interconnectedness to its stakeholders, that your business practices are in harmony with the natural and business environment and that you are continuously improving your business’ performance by applying lessons learnt. This is a dynamic approach which takes the changing nature of a business and the internal and external factors which have an impact on the business into account.
The figure below shows how this can be achieved.
Embed CSR Strategy into the Firm’s DNA
Here, we can clearly see the feedback loop from vision through metrics and back. By employing the tools mentioned here (codes of conduct, communication, training, governance, stakeholder involvement, assessments, evaluations, and audits) you can effectively shift your organization towards becoming a conscious business by measuring your impact throughout the journey and continuously improving performance.
How measuring your impact with Conscious Capitalism leads to improved performance and actualization of the framework’s benefits
In my previous article I mentioned the importance of viewing data visually i.e. in tables, charts and maps. Once you have identified the best metrics for your organization, it’s important to conduct some data management and invest in a system that provides you with a dashboard of your KPI’s.
The primary advantage of a graphical user interface or dashboard is that you can take your company’s pulse in an instant. One glance tells you all you need to know. It also tells you where you need to place your focus and attention.
More and more significance is being placed on dashboarding. This Medium article breaks down the different types of dashboards available and uses Walmart as a case study to demonstrate how dashboarding can be used to gain a competitive advantage “Walmart… revolutionized retailing by launching its own geostationary satellite and then tracking inventory and supply chain transfers in real time; which allowed them to track inventory at any store, instantly… Walmart could make important decisions quickly and crushed the competition by consistently outperforming other chains by 15 percent — a staggering competitive margin in retail.”
Dashboarding is not rocket science. With the variety of dashboarding tools and integration platforms available, you could be a few clicks away from accessing vital business information in a format that is both digestible and meaningful.
While you don’t need to launch a satellite to create a dashboard containing all the information you need to make important decisions about your business, hiring a consultant with knowledge and experience in identifying metrics and creating powerful dashboards could be one of the most impactful actions you take for your business.
Dashboards are not only advantageous to a company’s leadership, they’re great for employees too. Jenna Ryberg, Human Resources Director at iDashboards, discusses the advantages of dashboarding in her blog post Strengthening Company Values Through Data Sharing. She asserts that dashboarding can be used to create transparency, solicit feedback, drive employee engagement, and establish psychological ownership.
“Dashboards can help establish the feeling of ownership by allowing you to share relevant metrics with employees in a way that they understand and care about. Whether you’re sharing information about budget goals or marketing outcomes, keeping your employees in the loop helps individuals understand their contribution to the company goals and empowers them to make informed decisions and invest more effort in their job.” says Ryberg.
Ryberg also references Gallup poll data, which tells us that “engaged business units lead to measurable improvements”
- 41% reduction in absenteeism
- 17% increase in productivity
- 21% greater profitability
Additionally, “Sales teams that regularly address their employees’ engagement outperform by an average of 20% those that disregard it.”
If you embrace the principles of Conscious Capitalism, the tools and strategies mentioned in this article will aid you in your efforts towards operating with clarity in your higher purpose. They will also help to ensure that you have considered the needs of all parties involved in the process of making a profit, that your leadership is setting a good example, and that you are creating a conscious culture. Metrics and dashboards can be used to track your progress under each of the Conscious Capitalism tenets with each of the various stakeholder groups in mind.
Unless you are using metrics to track your progress, you will not know if the Conscious Capitalism framework is working for you. Your metrics tell you how well you are doing, they help you identify gaps and make corrections, both strategic and operational.
It’s one thing to be motivated by purpose and impact, and it’s another thing to actually be able to measure and see the impact you are making. When you combine purpose and impact with metrics and dashboarding it enables you and your organization to unleash its full potential and actually make the difference you intend to make.