01 Jun 2010  Sharpening Your Skills

Social Reporting

The most difficult task for socially responsible companies is how to report the value of their work to a diverse group of stakeholders. Here's a starting place.

 

Sharpening Your Skills dives into the HBS Working Knowledge archives to bring together articles on ways to improve your business skills.

Questions to be Answered:

  • What's the best way to report nonfinancial metrics?
  • How can nonprofit leaders balance demands from many stakeholders?
  • How do I sell CSR to investors and other stakeholders during a financial crisis?
  • How do I drive CSR through my organization?

What's the best way to report nonfinancial metrics?

One Report: Better Strategy through Integrated Reporting

Stakeholders expect it. And smart companies are doing it: integrating their reporting of financial and nonfinancial performance in order to improve sustainable strategy. HBS senior lecturer Robert G. Eccles and coauthor Michael P. Krzus explain the benefits and value of the One Report method. Plus: book excerpt. Key concepts include:

  • Integrating reporting in One Report means to describe, simply and clearly, management's view of the relationships between financial and nonfinancial metrics.
  • Companies like Philips, Novo Nordisk, Natura, and United Technologies are leaders in conducting and communicating integrated reporting.
  • The four key benefits of integrated reporting are: greater clarity about the relationship between financial and nonfinancial key performance indicators; better management decisions; deeper engagement with the broad stakeholder community; and lower reputational risk.

How can nonprofit leaders balance demands from many stakeholders?

The Many Faces of Nonprofit Accountability

Working Paper. Nonprofit leaders face multiple, and sometimes competing, accountability demands from numerous actors, for varying purposes, and requiring differing levels of organizational response. The challenge for leadership and management is to prioritize among competing accountability demands. HBS professor Alnoor Ebrahim examines the tradeoffs inherent in a range of accountability mechanisms. Key concepts include:

  • Accountability is not simply about compliance with laws or industry standards, but is more deeply connected to organizational purpose and public trust.
  • Nonprofits will continue to face multiple and competing accountability demands, so they must be deliberate in prioritizing among these demands. A critical challenge is to find a balance between upward accountability to their patrons and remaining true to their missions.
  • Few nonprofits have paid serious attention to how they might be more accountable to the communities they seek to serve.
  • Juggling the many expectations of accountability—for finances, governance, performance, and mission—requires integration and alignment throughout the organization.
  • Numerous mechanisms of accountability are available to nonprofits, such as greater transparency and disclosure, performance assessment, industry self-regulation, and adaptive learning. But leaders must adapt any such mechanisms to suit their organization.
  • The greatest payoffs rest with strategy-driven forms of accountability that can help nonprofits to achieve their missions.

How do I sell CSR to investors and other stakeholders during a financial crisis?

Corporate Social Responsibility in a Downturn

Financial turmoil is not a reason to scale back on CSR programs—quite the opposite, says HBS professor V. Kasturi "Kash" Rangan. As a marketing scholar Rangan is optimistic about strategic CSR efforts that provide value in communities and society. Key concepts include:

  • Corporate social responsibility (CSR) means "activities undertaken by businesses that enhance their value in the community and society and thus benefit their reputation and brand," says Rangan.
  • CSR should be treated as a business discipline and practiced with the same professionalism and rigor as other aspects of a firm's strategy. "For example, many of the programs that come under the umbrella of 'climate change' have the potential to benefit the environment as well as a company's bottom line," Rangan adds.
  • Good examples are the early childhood literacy initiative of PNC, a financial services organization based in Pittsburgh, and the 10,000 Women initiative of Goldman Sachs, which facilitates a business education for underserved women.
  • Companies should classify their CSR programs according to the ability to enhance and even transform the firm's business practices.

How do I drive CSR through my organization?

Achieving Excellence in Nonprofits

Nonprofit boards and executives are confronted by a confusing landscape of conflicting demands, rapidly evolving rules, and changing opportunities for finding resources. How can organizations stay focused? Harvard Business School professor Herman B. "Dutch" Leonard discusses today's challenges and his Executive Education program on Governing for Nonprofit Excellence. Key concepts include:

  • The biggest challenge facing nonprofit boards is staying focused on key goals; developing a strategy for accomplishing them; and generating a set of tactics, operations, and actions that are aligned with producing them.
  • In high-performing social-mission-driven organizations, the board and executive management team are in clear agreement on goals, strategy, and actions.
  • Always involved in rapidly changing environments, nonprofits need to maintain "situational awareness," rethink their approaches, and implement change constantly.