The metrics of ethics

You know the adage: “If you can’t measure it, how do you know it works?” Well ethics is no exception. But the metrics are as diverse as the definitions.

CSR is one of the antecedents of economic performance (McGee 1998) and can be used to strengthen corporate image and “ultimately economic/financial performance” (with the reverse also holding true). But ethics goes further than CSR. Much further:

An organisation’s ethics should be enshrined in every aspect of its activity from product to customer to supplier to staff. They should be embedded in every business function (especially marketing) within the organisation, so that everyone involved is aware of your position from an ethical and values perspective.

By articulating and communicating your organisation’s ethics, it should be possible to review and to manage how they affect each area of the business.

For example, ethical companies tend to be more customer oriented, and therefore measuring consumer behaviour is one option. Evaluating marketing performance is another. And as companies with communicated ethics and values have greater staff commitment, then measuring staff performance and loyalty are other metrics to consider.

Then there’s Anmbler, Kokkinaki & Puntoni’s (2004) model that covers off three significant bases, all of which present tangible aspects of the business that can be measured:
• Relationships: with consumers, stakeholders, shareholders, employees and suppliers
• Economics: profit, sales, company/brand value, market share
• Social opportunities: cost benefit analysis and social RoI
The FTSE4Good Index also offers in its criteria a list of elements that can be measured with regard to ethical behaviour.

And the lists go on.

The key point in all of this is that ethics should not be viewed as intangible, a ‘nice but not need to have’, or a CSR tick box. Ethics are a real and measurable part of doing business today.

So if you are an advocate of making the effort to clarify, define and enshrine ethics in your organisation, then you need to also ensure you include some metrics. Only then can you truly realise the value of ethics. And equally as important, only then can you really bring the board and management with you.