Peter Drucker’s oft-quoted “What gets measured gets managed” is the mantra for a whole generation’s endeavour to ensure that corporate reporting involves more than just narrow measures of monetary profitability.
An organisation’s selfish need may lead it to adopt tools such as the balanced scorecard to measure the non-financial drivers of profitability, including areas like customer service and employee wellbeing. But furthermore, society’s need for Corporate Social Responsibility (CSR) has led to a broadening of the Companies Act annual reporting requirements and a great deal of intellectual effort to develop broader measurement frameworks such as “Triple Bottom Line” and “Integrated Reporting”.
But do these frameworks deliver truly deliver better ethical behaviour?
I believe that this is not necessarily the case since these frameworks are often applied solely to annual, public disclosure.
Many organisations set bold, ambitious ethical goals in their strategic plans and follow up by including CSR prominence once a year in their ‘PR-friendly’ annual reports.
However, true adherence to ethics and values does not happen once a year in the spotlight of glossy publication. It happens every day, in every transaction.
There are plenty of corporate ethical failure stories that were not predictable from an organisation’s CSR spin. Arguably the only way of guaranteeing ethical behaviour is to embed that behaviour in the culture (a.k.a. “how we do things around here”).
If it just feels wrong to do it the wrong way, then doing it the right way is the easiest rational and emotional response.
But culture is not foolproof and we still need signs to remind us. Organisations must find an everyday way of signalling the importance of ethics and highlighting non-compliance before it has negative consequences.
Maybe the answer is not difficult?
I don’t need to measure compliance with my teeth-cleaning ethics – I have a daily habit because it feels wrong if I go to bed without having cleaned my teeth. But when my children were young I had to build their teeth-cleaning habits by using ‘star-charts’ and rewarding and reinforcing good behaviour.
Equally, perhaps we need to learn from some of the principles embedded into the ‘Toyota Way’ philosophy that has transformed motor-manufacturing. The principle of ‘Andon’ says that when you come across a process problem, you raise a red flag (sometimes literally) and stop to fix the issue.
Therefore how do we ensure that we have consistent ethical behaviour at the root of our organisations?
We need measures and flags that indicate at a weekly, monthly or quarterly basis that make it obvious we are either in compliance with our ethical standards or we have issues. We cannot afford to wait for the annual statutory accounts/CSR reports to gather data, as some organisations do.
These measures must be unavoidable by being suitably prominent within the core of our management reporting systems
Or rather “what gets measured [on an ongoing basis] gets managed [on an ongoing basis]”
That’s all good in theory, but what about in practice? Sounds like you’ll have to wait for my follow-up blog…