Jessica Runicles and Stephanie Poppendoerfer of BITC's Advisory Team explain why companies are now measuring the impact of CR in the same way as other business activities - and give their tips on how to measure effectively.
Running the CR Index gives us on the BITC Advisory Team a good idea of what the important trends in business are. One we’ve seen over the past year is a big increase in the proportion of companies measuring the financial value of CR.
Our research suggests that CR success indicators are converging with standard business success indicators – indicators such as share price and market value, cost savings, reputation and risk mitigation.
It’s evidence that businesses have accepted the ROI of CR practice as proven, and moved onto working out how to guarantee the greatest financial and societal impact from CR activity. A recent report from Project ROI1 underlines this, finding that well designed CR programmes increase revenue by up to 20%, customer commitment by 60%, and decrease employee turnover by up to 50%.
The key phrase here is “well-designed”. Strategically focused CR programmes which have been planned and measured in the same way as any other business decision are notably more effective. And measuring the right performance indicators is an essential part of this.
Companies often begin measurement by assessing the impact of individual CR programmes on an ad-hoc basis. The more successful companies in the Index take a holistic approach and measure the collective impact of their activities on the business as a whole.
Both approaches have value. Quantifying the impact of CR activity using traditional business metrics allows CR professionals to report on its value alongside other business operations, and helps embed and integrate CR activity with business strategy. Additionally, demonstrating the value of CR to a company strengthens the business case and helps get senior managers to buy-into it.
But how do you do it?
Here's our seven tips on measuring the business value of CR.
Be clear about your objectives - why are you measuring business value?
Objectives can range from simply trying to understand the business impact better to getting senior buy-in to increase resources for specific things. Your objectives will help determine which activities you should look at and which impact(s)/benefit(s) you should capture.
Start small for success
Your ultimate aim should be to apply a holistic approach to capture the full picture of business benefits generated by your CR activities. But this is highly resource and time intensive, so begin by focusing on a limited number of flagship programmes. Once you’ve developed a robust measurement framework and tools, you can roll them out to other programmes and areas.
Map the perceived benefits to boost buy-in
If you’re able to clearly explain the expected business benefits of your CR programmes or activities, it will make it much easier to get the backing necessary to get started.
Decide what you should and what you can capture
Your objectives will set which business benefits you should measure. But some impacts are easier to capture than others. Work out what data you would need to collect to measure each business benefit you’ve already identified, and look at how difficult it would be to capture, or if you’re perhaps already capturing it. That will help you to decide which impacts you will be able to measure.
Develop a measurement framework
Your framework should outline which business benefits will be captured, and the scope of measurement. It should also explain the methodology and metrics used to measure each business benefit. Metrics can be qualitative and quantitative and sometimes be converted to financial value.
Make it clear who should be collecting data
Data will usually need to be collected from various different internal departments or come from external sources. Sometimes a partner organisation will need to capture impacts for you. Make sure everyone responsible for collecting data knows it!
Make the most of your results
Once you have results available, use them. Data can be used to strengthen business cases, drive improvements and scale up programmes, and identify activities to be dropped.
Image: Number and finance by Ken Teegardin, from www.SeniorLiving.org