Books: Rethink your Organization’s PerformanceBy
How many planets the size of Earth will it take to support humanity long-term? In The MultiCapital Scorecard: Rethinking Organizational Performance, Martin P. Thomas and Mark W. McElroy argue that not just scientists but also finance and accounting professionals need to consider such big-picture issues as part of their organization’s corporate social responsibility.
Accountants are responsible for measuring, monitoring, and reporting organizational performance, with the ultimate goal of achieving sustainability and value creation. With an abundance of data and no clear framework to organize our reporting, however, performance evaluation is easier said than done.
The authors present a scorecard that considers all sources of capital and stakeholders relevant to an organization in an effort to achieve effective “triple bottom line” management focusing as much on social and environmental concerns as profits. Thomas and McElroy don’t take the balanced scorecard we’ve seen for decades and simply tack on sustainability. Instead, they’ve developed a new multifaceted scorecard that generates a summary measure of sustainability that can be monitored and evaluated over time.
To facilitate understanding of the multicapital system, the authors provide detailed examples that guide readers through the steps of creating a scorecard. These cases demonstrate how to quantify short- and long-term goals, assess progress toward those goals, consolidate units into an overall measure, and report the organization’s progress to its constituents. I particularly like the seven-point scoring system to track progression toward or regression from goals over time. This scheme prevents an all-or-none mind-set when it comes to meeting or falling short of a goal.
As the saying goes, “you get what you measure.” If your goal is to achieve organizational sustainability and value creation over the long term but you need some guidance on putting together a set of meaningful metrics, this book will get you started on the right track.
And to answer the question above, according to the Global Footprint Network, as of 2019 we would need 1.75 planets the size of Earth to meet the resource demands of all the world’s citizens. That increases both the urgency for organizations to achieve sustainability and the relevance of this book.