CMG Measurement and CSR selected slides for SXSW Eco May 2013

1. Corporate Social Responsibility: Components, ROI and Measurement Selected Slides for SXSW Eco Panel Picker May 2013

2. 2 © 2010-2013 Community Matters Group Strategic Corporate Social Responsibility is the art of making responsibility profitable and making profitability responsible. 1 CSR 101 2 Why Measure 3 Nuts & Bolts 4 Key Challenges 5 Building Excellence Agenda

3. 3 © 2010-2013 Community Matters Group Corporate Social Responsibility Strategy Environmental Sustainability Money, Resources & Time Ethics & Transparency People (internal) Leveraging Relationships Business Practices 1 Corporate Social Responsibility Components

4. 4 © 2010-2013 Community Matters Group Corporate Social Responsibility Strategy Business Practices Environmental Sustainability Money, Resources & Time Ethics & Transparency People (internal) Leveraging Relationships 1 CSR Component: Environmental Sustainability Carbon Footprint GHG Emissions Waste Water Pollution Energy Customers’ Impact Supply/Value- chain’s Impact

5. 5 © 2010-2013 Community Matters Group Corporate Social Responsibility Strategy Leveraging Relationships Business Practices Environmental Sustainability Money, Resources & Time Ethics & Transparency People (internal) 1 CSR Component: Business Practices Loan Portfolio Deposit Portfolio CRA Values-based Products This is about the impact of core operations, products and services and as such, varies greatly by business. For a bank this could include to whom and how they lend, where they locate branches, whether they help unbanked populations or are predatory, if they support green building, etc.

6. 6 © 2010-2013 Community Matters Group Corporate Social Responsibility Strategy People (internal) Leverages Relationships Business Practices Environmental Responsibility Money, Resources & Time Ethics & Transparency 1 CSR Component: Leverages Relationships B2C Customers B2B Customers Suppliers Vendors Sphere of Influence Competitors Leading Collaborations Inspiring Others

7. 7 © 2010-2013 Community Matters Group Corporate Social Responsibility Strategy Ethics & Transparency People (internal) Leverages Relationships Business Practices Environmental Responsibility Money, Resources & Time 1 CSR Component: People (internal) Fair Pay & Benefits Work-Life Balance Development & Advancement Diversity & Inclusion Employee Health & Safety Supporting Volunteerism Employee Assistance Training

8. 8 © 2010-2013 Community Matters Group Corporate Social Responsibility Strategy Money, Resources & Time Ethics & Transparency People (internal) Leverages Relationships Business Practices Environmental Responsibility 1 CSR Component: Ethics & Transparency Business Ethics Governance Reporting Social & Environmental Impact Human Rights Responsible Investing Advocacy

9. 9 © 2010-2013 Community Matters Group Corporate Social Responsibility Strategy Environmental Sustainability Money, Resources & Time Ethics & Transparency People (internal) Leveraging Relationships Business Practices 1 CSR Component: Money, Resources & Time Strategic Philanthropy Non-$ Resources Grassroots Volunteering Skills-based Volunteering Cause Marketing Strategic Spend Sponsorships In-kind Giving

10. 10 © 2010-2013 Community Matters Group Measurement is the first step that leads to control and eventually to improvement. If you can't measure something, you can't understand it. If you can't understand it, you can't control it. If you can't control it, you can't improve it. —H. James Harrington, performance improvement thought leader 1 CSR 101 2 Why Measure 3 Nuts & Bolts 4 Key Challenges 5 Building Excellence

11. 11 © 2010-2013 Community Matters Group Measurement underlies two key processes: Prove  To stakeholders  To the market  To customers  To influencers  To employees  Sharpen discussion  Enable experimentation  Support tools  Link to continuous improvement Im 2 Why Measure? Prove & Improve

12. 12 © 2010-2013 Community Matters Group 2 Why Measure? More Details • Measuring inputs and outputs to confirm that you and your partners are doing what has been agreed upon Confirmation • To assess the impact of your investments and learn lessons critical to improving your effectiveness, you need measures of what has actually changed in addition to inputs/outputs Improvement • Internally and externally, people believe that you measure what you value and you value what you measure―especially in a performance-based culture Credibility • The act of measurement can be worthy of note, as can the stories that emerge from the evaluative process Publicity

13. 13 © 2010-2013 Community Matters Group 2 Why Measure? Generating External ROI • Based on existing research, current best practices and fresh creative thinking, identify a “Theory of Change” How Can We Move the Needle? • Test the “Theory of Change.” Did the strategic actions achieve the desired results? Is This ―Theory of Change‖ Correct? • How much was achieved? Is there a way to improve effectiveness? How Much Did We Move the Needle? • This process will help prove and improve the change generated External ROI

14. 14 © 2010-2013 Community Matters Group 2 Why Measure? Generating Internal ROI • Dupont has saved nearly $5B since 1990 through efficiency improvements. Over a recent two year period, average annual internal rate of return was 75%. Efficiencies & Cost Reductions • Clorox Greenworks cleaning supplies: Sales of $60M+ in 2010 (while that is a drop from 2008‟s peak, attributed to the recession, it is still significant). New Products & Services • By developing ways to add shared value with „bottom of the pyramid‟ consumers, Unilever projects 50% of its revenue ($20B+/yr) in developing countries. New Markets • There is growing research that customers are more likely to patronize companies and brands that they see as being responsible. Increased Sales • The CISCO Networking Academies initiative has solved a key restrictor to CISCO‟s growth―lack of qualified workers to administer their networks. Overcoming Challenges

15. 15 © 2010-2013 Community Matters Group 2 Why Measure? Generating Other Internal ROI • A key „intangible asset,‟ brand can be heavily influenced by CSR excellence, or lack thereof (eg, BCCCC State of Corporate Citizenship Report). Brand/Image/ Reputation • CSR can help measurably improve morale, recruitment, retention, productivity, and leadership (eg, Hill & Knowlton Study). Talent • CSR can create great value by improving relationships with key influencers (eg, Northeast Utilities reduced approval times by engaging local politicians in CSR). Key Influencers • CSR can help improve exposure to regulation, lawsuits, competition, materials access, supply chain disruption, customer retention (eg, Panasonic lead-free TV). Risk Reduction • Failure at just one aspect of CSR can impact a company‟s license to operate (eg, Enron; WaMu). License to Operate

16. 16 © 2010-2013 Community Matters Group Indicators (or benchmarks) are measures which help quantify the achievement of a result. They answer the question "How would we recognize these results in measurable terms if we fell over them?" So, for example, the rate of low-birthweight babies helps quantify whether we're getting healthy births or not. Third grade reading scores help quantify whether children are succeeding in school today, and whether they were ready for school three years ago. The crime rate helps quantify whether we are living in safe communities, etc. —Karen Finn, Partner, Results Leadership Group 1 CSR 101 2 Why Measure 3 Nuts & Bolts 4 Key Challenges 5 Building Excellence

18. 18 © 2010-2013 Community Matters Group 3 Measurement Drives Strategy 3 Design strategies to achieve desired results 6 Adjust and continuously improve 2 Develop ―Theory of Change‖ 5 Measure and evaluate the impact 1 Identify desired results 4 Invest and test ―Theory of Change‖ Some measure what they already do and try to capture their activities and impacts. But to really drive change, you need to:

19. 19 © 2010-2013 Community Matters Group 3 Types of Measures: Broadly Speaking • Eg, $50K donated to an afterschool college/career preparedness program • Eg, 100 employees volunteered 1 hour a week for 9 months as academic coaches Inputs (things you do) • Eg, $50K enabled afterschool program to engage 100 additional students in a college/career preparedness program for 2 hours/day, 3 days/week for 9 months • Eg, 900 hours of academic coaching Outputs (what is done with the resources) • Eg, participants showed a 30% improvement in overall grades (vs a 2% improvement for nonparticipants) • Eg, 30% increase in morale indicators and 20% increase in retention rates for employee volunteers Outcomes (what has changed, impacts)

20. 20 © 2010-2013 Community Matters Group 3 Types of Measures: Yet Another Way To Look At It • “What are we doing?”Activity • “How well are we doing it?”Quality • “What has changed as a result?”Change

21. 21 © 2010-2013 Community Matters Group 3 Types of Measures: More Specifically • Eg, inputs, outputs, direct outcomes like number of participants getting into college, dollars saved, etc. Direct Measures • Eg, there is no “employee morale thermometer” to measure morale, but there are causally related measures like timeliness, attrition and sick days Proxy Measures • Proxy measures alone can be imperfect. Individually, timeliness, attrition and sick days don‟t measure morale, but they have different “noise patterns” and triangulating them can create a good indicator of morale Triangulated Measures • There can be deep persuasive power in anecdotes. Individual stories of the impact on people, communities, departments, etc. can be incredibly potent Anecdotal Measures

22. 22 © 2010-2013 Community Matters Group 3 Techniques for Gathering & Analyzing Data • Sampling: Identify representative sub groups and use data gathering techniques (eg, observation or surveys) to glean data that can be applied to the whole group • Census: Collect data from an entire population Sampling & Census • Identify an existing “longitudinal divergence” in the population that you can use as a natural experiment ―or―design an intentional experiment, comparing a well-matched control group and experimental group Experiments • Often, relevant data is already being collected (eg, annual employee surveys, a nonprofit‟s own research on their impact, data collected by government agencies and advocacy groups, etc.) Found Data • Regression • Bayesian Statistics • Difference in Differences Analysis, etc. Statistical Analysis

23. 23 © 2010-2013 Community Matters Group ―That’s the beautiful thing about data – it can either back up your instincts or prove them totally wrong.‖ —Susan Wojcicki, Senior Vice President Marketing, Google 1 CSR 101 2 Why Measure 3 Nuts & Bolts 4 Key Challenges 5 Building Excellence

24. 24 © 2010-2013 Community Matters Group 4 Key Measurement Challenges & How to Overcome • Many nonprofits lack the expertise and capacity to measure impact, and often face demands for varying metrics from multiple funders • Many companies have limited budget for measurement Capacity/ Resources • It appears difficult to measure the value of less tangible variables (eg, morale), but it is possible • Not measuring gives them the only value that we absolutely know they can„t have: zero Intangibility • Eg, decisions on having more efficient data centers that only look at the power cost reductions miss most of the benefit (75% of the ROI is from rent/space savings) • Unknown relationships (eg, tree coverage reduces crime) Hidden Value • Standardization • Systems Integration • Establishing & Refining New Metrics Overcoming These Measurement Challenges • Triangulation • Data Excavation • Uncovering Hidden Value • Investment & Training

25. 25 © 2010-2013 Community Matters Group 4 Key Measurement Challenges & How to Overcome • It can be challenging to attribute specific impact • It can be difficult to demonstrate direct causality Attributing Impact & Causality • Many larger challenges (eg, persistent poverty) are complex and are influenced by a wide set of factors (eg, education, transportation, job availability, etc.) and actors (government, foundations, nonprofits, etc.) Complexity of Challenges • Too often, those asked to measure are not involved in designing the measurement and evaluation plan Lack of Buy In • Make larger investments • Utilize proxy measures • Acknowledge uncertainty Overcoming These Measurement Challenges • Find discrete indicators • Engage all stakeholders • Fund measurement

26. 26 © 2010-2013 Community Matters Group Have we done what we set out to do? If we’re working with a nonprofit, and they say ―we’ll train 20,000 individuals and take 5,000 into jobs‖, then we want to know whether you’ve hit that metric... (Beyond that) what is happening that you did not imagine would happen, both positive and negative, so that you can then mitigate that or enhance it in the next round of funding or support? —Akhtar Badshah, Senior Director for Global Community Affairs, Microsoft Corporation 1 CSR 101 2 Why Measure 3 Nuts & Bolts 4 Key Challenges 5 Building Excellence

27. 27 © 2010-2013 Community Matters Group 5 Building Excellence: Key Scoping Questions • Why do you want to measure and evaluate your efforts? Confirmation? Improvement? Credibility? Publicity? What do you want to see in return? Why • What do you want to measure and evaluate? Outputs and inputs? External impact? Internal ROI? Overall impact and/or impact of specific initiatives?. What • What depth of measurement do you want to engage in for each of these? Depth • How much money/time do you want to invest in measurement/evaluation? Investment

28. 28 © 2010-2013 Community Matters Group 5 Building Excellence: Key Scoping Questions • What are other similar companies doing vis-à-vis measurement? Do you want to lead or follow? Competitive Benchmarking • What is the capacity of your partners to help you measure your activity and impact? Partner Capacity • What are you already measuring? Where can you find existing measures (found data)? What is your current baseline? Existing Measures • For all your existing data (and any new measures you decide to create), how good are the ABCDEs? Availability; Believability; Coverage (broad enough?); Depth (can you drill down far enough?); Execution ABCDEs

29. 29 © 2010-2013 Community Matters Group 5 Building Excellence: Key Steps for Success • Based on the answers to the previous scoping questions, build into the next strategic plan comprehensive measures and evaluation aligned with the plan‟s specific goals and targets Building a Plan • Start by measuring inputs and outputs • If desired, measure external impact and internal ROI • Evaluate the success of your efforts against goals Measuring & Evaluating • Use measurement and evaluation to inform strategy adjustments and continuous improvements • Report and communicate your results transparently Continuous Improvement & Reporting • Robust measurement and evaluation that drives ROI (internal & external), supports continuous improvement and helps capture compelling stories End Game

31. 31 © 2010-2013 Community Matters Group CMG Core Competencies CSR Strategy & Implementation Strategic Planning to Drive External Impact & Internal ROI Rigorous Measurement of External Impact & Internal ROI Internal & External Stakeholder Engagement Communication with External Stakeholders, Employees, & Executives Implementation (eg, Flagship Partnership Management) Creative Solutions to CSR Challenges Measurement Strategy Engaging Stakeholders Measuring Outputs & Outcomes Developing Measures External ROI Measurement Internal ROI Measurement Direct, Proxy, & Anecdotal Measures Sampling, Census, & Experiments Data Excavation & Triangulation Statistical Analysis

CMG Measurement and CSR selected slides for SXSW Eco May 2013

CMG Measurement and CSR selected slides for SXSW Eco May 2013

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