Some have said that sustainability is "doing well by doing good." Perhaps this is a good start. But sustainability is much more than doing well or well enough. It's all about performing!
Sustainability reporting initiatives such as the Global Reporting Initiative (GRI) focus on "results." They provide their followers with a very long list of lagging indicators. The focus is always on "doing less of a bad thing." So this approach does not seem to measure "doing well" directly! It is not about performing.
Fortunately we have business excellence frameworks that focus on leading indicators to measure performance. These indicators help drive performance. Performance is the key to the future success of your sustainability effort. Results only describe what has already happened. There really is no such thing as "performance results." Unfortunately, this term is an oxymoron just like the term "environmental sustainability" (see my previous blog).
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There are a myriad of business excellence frameworks embodied in national organizational excellence award programs around the world.
In the United States, the national business excellence framework is embodied in the Baldrige Performance Excellence Program. Unfortunately, most organizations mistakenly believe that they have to apply for the award in order to use the framework. This is not true.
Many companies use this business excellence framework to operate their business. These companies include: Baxter Healthcare, Eaton Corporation, Johnson & Johnson and Intel. The Baldrige Program has developed independent evidence to demonstrate that organizations that use the business excellence framework outperform financially the organizations that do not use the framework by a margin of 2 to 1. That certainly helps the "profits" part of the slogan "People, Planet and Profits!"
The Global Reporting Initiative and other organizations involved in sustainability and other nonfinancial reporting schemes have ignored these business excellence frameworks. That's too bad! It turns out that an organization need not choose. Leading indicators in the performance programs complement the lagging GRI indicators by helping a program track its progress and perform into the future. You need to have both.
The leading indicators most commonly used in business excellence frameworks include:
1. Effective and visible systems and processes of leadership in place at all levels
2. Develop cultures and support behaviors that are consistent with core values
3. Foster equal opportunity, the environment, education and health and encourage well being among community stakeholders
4. Use systems and processes to plan for sustainable success and to align the program to its core purpose
5. Build resources and assets and apply them to achieving goals and increasing future value
6. Measure what is necessary to increase understanding of the environment in which you operate and continually review to ensure it remains current, meaningful and effective
7. Use knowledge to support decision-making, stimulate innovative thinking and ensure organizational success and sustainability
8. Create a work environment that is engaging, positive and open, foster creativity and unify the efforts of your people
9. Align your needs with people's expectations to build sustainable organizational capability
10. Determine what stakeholders and markets want now and what they will want in the future
11. Design processes for building and managing customer relationships to suit sustainable markets
12. Determine the stakeholders' perception of value, benchmark this information, and use it to deliver sustainable value
13. Manage and optimize processes as a system and regularly review processes for relevance and suitability in assisting the organization to achieve its sustainability objectives
14. Use structured methods to improve your processes and achieve efficiency and effectiveness for all stakeholders
15. Continuously improve products and services based on determinations of how they perform against stakeholder expectations.
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Doesn't this seem like a better way to get to a more sustainable state? Maybe these business excellence frameworks are worth a second look. I will be providing more information about them in future blogs.
Remember that there are differences between the different business excellence programs. Besides looking at the Baldrige Program, you may want to check out the PEP Program (Canada), the EFQM Program (Europe), and the Australian Business Excellence Program. There is a lot of information available on the Internet and there are a large number of books available on the topics.
Business excellence frameworks treat results separately from these leading indicators. The way that the leading indicators and the results are "scored" will be covered in future blogs. It will be much easier for stakeholders, inside and outside the organization, to track scores rather than hundreds of results.
Please respond to this blog if you have had any experience with the use of leading indicators like these in your sustainability program. I look forward to hearing from you.
Robert B. Pojasek, Ph.D., is the Practice Leader for Business Sustainability at First Environment Inc. and an internationally recognized authority on the topic of business sustainability and process improvement.