Why Manage Better?

Monday, February 28, 2011

Use ROI to determine ‘What’ and ‘How Much’ of social investment not ‘If you should’.

Quality has many dimensions.  While process and system quality often takes our attention, there are many companies focused on management and organization quality.  If Quality of Life, (borrowed from brand promise of the TATA group from India), is what we seek and work for then SR and Quality cannot remain far away. 

In my MBNQA training sessions and workshops I have often stressed that there are two aspects of the MBNQA core values which separate it from the similar models.  One is Agility and the other is Social Responsibility.

I have observed over 50 companies from close quarters during Performance Excellence assessments (based 
on the MBNQA) and found an interesting co-existence of superior business performance and social responsibility.  I am not suggesting a cause and effect relationship between social responsibility and performance excellence – but a co-existence is surely assured.

Perhaps, companies which do well find it their duty to serve the society OR since they serve the society well their conscience is clear and they take better business decisions! I don’t know and frankly I don’t care.  I am not a keen supporter of the ROI angle in social responsibility.  ROI won’t let me decide weather to do SR but it surely can help in decide ‘how much’ and ‘what’.

Jim Collins in his works Good to Great and Built to Last also alludes to the link between social responsibility and performance excellence.  Again, we don’t know which one leads to the other.  And we don’t have to know.

During the assessments I have carried out I came across some brilliant applications of social responsibility. Most interesting ones include:

TATA Steel manages a whole city – Jamshedpur in India.  This is perhaps the only privately managed city in India.  What is the ROI? Tremendous brand appeal for TATA group, respect, excellent education infrastructure leading to students who serve other companies as well, and much more.

Several TATA group companies manage their social responsibility programs just as they manager their business.  I have seen a balanced scorecard and monthly review being conducted on the same for Social Responsibility.  Titan (India’s leading watch and jewellery maker) employees differently-abled staff (who would typically be rejected by other companies because of their disability) in same roles as with able staff.

TATA group funds several leading institutions of eduction including the Indian Institute of Science, Institute of Fundamental Research, Institute of Social Sciences, a Cancer Hospital etc.

Read more: http://www.tata.com/company/Articles/inside.aspx?artid=HCy+RNqd0vk=

Birla Group in India supports rare performing art forms where there is negligible government interest.  What is the ROI – some art forms may survive and our next generations will see our rich heritage. 
A Birla Group company, Indo Gulf Fertilisers, established a vocational training centre for villagers to be trained in skills that could fetch them jobs.  ROI – Indo Gulf had les pressure from society to offer jobs at their own plant (something they could not do any more).  Indo Gulf also ran a fantastic program to bring government agencies and needy village societies together to allow government aid to reach villagers directly.

In my career as a Performance Excellence I have advised companies to consider offering their skills to society rather than just money.  For example – a leading IT Services company worked with local universities to improve curriculum and study material.  In my view this is a more far-reaching service than donating money. 

All these and many more companies follow the basic premise:

Social Responsibility is just that – a responsibility.  It is not charity.  It is our way of saying thank you to the society that allowed us to do business.

What can we do to interweave SR and Performance Excellence?  Well we just have to adopt the MBNQA in letter and spirit.  Item 1.2 is all about societal wellbeing and community support.  One of my favourite questions in this is about what are the communities you support and why?  A client of mine interestingly interpreted this by selecting people with vision-impairment as a community and offered the option of sending their electric utility bills in Braille! Brilliant.


Andy-India said...

I guess sometimes sum of all subjectivity becomes objectivity. Subjectivity I mean here is SR and objectivity is performance excellence.

We call it 'Social Responsibility' so I feel there should be no ROI calculation as it's a responsibility. We don't calculate ROI when it's a responsibility back home.

I remember in one of my previous company where I worked out of Kolkatta managed to employee around 30 people from below poverty line background who couldn't afford to study. They were trained on basic etiquettes to handle work and were employed. This is still ongoing is heartening to hear!

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