June 24, 2016
The Purpose Effect

The Purpose Effect Scorecard

PurposeEffect_3DMy latest book, THE PURPOSE EFFECT, has been out in the wild for about six weeks.

Toward the end of the book I introduce ‘The Purpose Effect Scorecard‘ a means in which an organization can publicly state and track how it is serving all of its stakeholders.

For me, stakeholders are the reason an organization is in business in the first place.

There is a fairly easy way to summarize all of the stakeholders the organization ought to be serving. If it is putting its customers first, it does so through its team members (who are ideally engaged, demonstrating personal and role-based purpose) who then aim to assist the community in which they live, and the society they are a part of. Additionally, the organization will provide a return to owners and/or shareholders where applicable. Of course, this is an outcome of a properly aligned strategy that addresses the needs of other stakeholder groups before shareholders. Thus, there are five key stakeholders an organization ought to be serving:

  • Customers
  • Team Members
  • Community
  • Society
  • Owners/Shareholders (if applicable)

For each of the five stakeholders an organization now aims to serve, I recommend setting targets and to then publicly publish the results to a new dashboard website. This is not a Corporate Social Responsibility (CSR) document or report. It is a thoroughly defined and proactive set of targets and measures that are established, which the organization holds themselves accountable to on a quarterly and annual basis. CSR documents tend to be reactive, and, too often, toothless. A cumulative score or target can be created from all targets measured against all stakeholders. This is applicable for public sector, not-for-profit and for-profit entities as well.

The targets that are set annually and then tracked quarterly (and publicly published) ought to include the following:

  • Customers: customer satisfaction scores through various factors including reliability, responsiveness and relationship. Other metrics could be devised by the organization.
  • Team Members: engagement scores and sub-drivers, diversity breakdown, acts of internal recognition, positional changes/promotions and learning & development expenditure.
  • Community: team member volunteer hours, organizational philanthropic investment, in-kind donations, number of community members impacted, etc.
  • Society: CO2 and greenhouse gas (GHG) reductions, water utilization/reuse, energy consumption/redesign, material consumption/lessening. Other examples from the Dow Jones Sustainability Indices-DJSI-could also be utilized.
  • Owners/Shareholders (applicable to for-profit firms): Profitability, revenue and shareholder return (if publicly traded), but all metrics set to levels at appropriately fair levels.

Each stakeholder holds a 20 percent share of the overall scorecard. (In the case of public sector or not-for-profit organizations, the first four stakeholder groups are utilized, each accounting for a 20 percent share but the final stakeholder might be renamed “budget” ensuring the organization does not overspend. Each of the measurement categories found within each stakeholder also can be broken down by a percentage weight.

For example, under Community, the organization determines how many hours it should be volunteering, its community investment level and amount of in-kind donations. These are raw values. But the three categories (and others if it chooses) are then broken down by a weighting. Perhaps volunteering holds a 50 percent weight, whereas community investment and in-kind donations hold 25 percent each. Whatever gets reported then feeds the 20 percent category of Community, which then feeds the overall score of The Purpose Effect.

When the organization achieves its overall target for the year, that is the point when other incentives kick in.

So far the only version of The Purpose Effect scorecard is found in the book.

I’m making it available today in this space as a graphic in hopes that others can utilize it in their efforts to transform the organization toward The Purpose Effect model.


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