Aim for more than financial success

In addition to financial performance, companies also have a social responsibility. Companies should decide what non-financial performance parameters to be judged by, and then measure these so achievements can be tracked and improved.

The chief executive of the worlds biggest mining company, BHP Billiton, said in October 2011 that companies should include in their performance measures the level of community acceptance of the way the company conducts itself. He said “We need affirmation from our communities that what we are doing is the right thing”.

An interesting idea for a company like BHP is that where they source their materials and labor can have a profound effect on the country itself. For example, going to a country that is relatively poor could bring benefits to the people of that country. Hence the company can contribute to the greater good.

More direct social responsibility measures include employee turnover rate – this can be used a measure of whether employees are proud to be associated with the company.

While most investment decisions will be based on financial performance, today companies are expected by their employees and communities to also be good citizens. A company will be wise to monitor their social responsibility achievements and to regard their community acceptance as an important asset – often as important as the assets shown on the balance sheet.




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