Measuring performance in new ways

Does your company still assess its performance merely in terms of financial factors? Increasingly, companies are including ethical…

Does your company still assess its performance merely in terms of financial factors? Increasingly, companies are including ethical, environmental, health and social impact in assessing their performance. A recent report from the Industrial Society shows that, while traditional financial issues remain the most commonly-used measures of company performance, some 24 per cent of businesses and organisations in Britain now use measures of performance that account for their impact on workers, society and the environment.

For instance, according to Mr Peter MacDonald, managing director of The Body Shop in Ireland, the company has supported issues like the Greenpeace campaign against Sellafield, highlighted the "tragic judicial murder of Ken Saro-Wiwa in Nigeria", and raised the issue of refugees with the motto: "no room in the inn".

The company tries to get an image that will make people stop and look. "Last year, we did it around homelessness. We got a wonderful photo of a homeless man called Martin. And we simply used the black and white photo in all of our shops from the week before Christmas up to about January 4th. We said: `Make a call. Make a difference', and we put up the logoed names of four national organisations in the North or in the South - people like Focus Ireland, the Salvation Army and St Vincent de Paul."

The Body Shop has been involved in "ethical auditing" since 1994, following earlier audit programmes for health and safety at work and environmental protection. Its Values Report, posted on its website, examines the subject areas of social, environmental and animal protection.

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The Industrial Society, which has some 10,000 member organisations, campaigns to improve life at work and is a major workplace training and advisory organisation. Mr Will Hutton, chief executive of the Society, said, following the publication of the society's recent report: "A growing number of companies are declaring independence from using only financial measures of performance. Such a narrow approach has often proved counterproductive beyond the very short run."

Managing Best Practice (no 71) on Performance Measurement contains a survey of 380 British businesses and organisations. It found that:

frequently used measures to assess performance are customer satisfaction (77 per cent), quality (69 per cent), profitability (67 per cent) and employee attitudes/ satisfaction (66 per cent);

complaints/returns (75 per cent) and customer surveys (71 per cent) are the most popular ways of measuring the satisfaction of customers;

while customer satisfaction is recognised as an important measure of performance, many employers may not have grasped the key to achieving it.

employee turnover and absence rates are the most popular ways of measuring employee satisfaction;

91 per cent of respondents use performance standards set and agreed by line managers to measure the performance of individual employees;

nearly two-fifths do not measure the performance of teams in any way;

35 per cent of organisations see performance measurement as the responsibility of the human resources director/manager, and 25 per cent employ a dedicated manager;

25 per cent do not measure the performance of their human resources function in any way;

just over one in five (21 per cent) do not use any framework to guide their performance measurement;

2 per cent do not measure performance at all.

The report contains case studies of best practice in performance measurement from five employers: Britain's Inland Revenue, Forte, Loughborough College, Orange, and Wakefield Metropolitan District Council.

Copies of Managing Best Practice no 71, Performance Measurement, are available from The Industrial Society, 48, Bryanston Square, London W1H. Telephone: 0044 207 479 2126. Price: £60 sterling plus p&p. An annual subscription to the Managing Best Practice series costs £450 sterling, covering 12 issues. Each issue contains case studies of best practice, with the forms and materials that the companies have developed for their own use. For further information, contact: customercentre@indsoc.co.uk, www.the-body-shop.com