Businesses are powered by capital and the “capital” includes all resources that contribute to the success of the business. The emerging field of corporate sustainability, which translates the goal of long-term business growth that is simultaneously respectful of stakeholders inside and outside of the business venture into pragmatic action items and encourages business owners and leaders to recognize and quantify forms of capital, in addition to financial capital, on its own terms.
Mark W. McElroy, PhD, consultant, author and educator in the field of corporate sustainability and founder of the not-for-profit Center for Sustainable Organizations in Vermont and Martin Thomas, former head of global strategic planning at Unilever, recently developed the MultiCapital Scorecard, the first and only context- and capital-based integrated measurement, management and reporting system. Using the Scorecard, business leaders and owners of any size organization can assess company performance in terms of impact on all types of capital used. Which resources is your organization maxing out, which are under-utilized and how do these practices impact prospects for sustainable growth?
1. Economic capital
All financial resources, including access to investment capital, credit and loans and also the value of the brand the business possesses.
2. Human capital
The combined expertise, experience, knowledge, motivation, focus and discipline that you and your employees and consulting specialists possess and your shared intellectual capital.
3. Relationship capital
The extended team you work with, including any networks, strategic partners, your informal business advisory board, referral sources and in addition, your reputation as a professional.
4. Constructed capital
The infrastructure that we depend upon, including transportation, electricity, heating and air conditioning, the internet, effective and appropriate laws and regulations, public safety and available places where business commerce might take place.
McElroy and Thomas advocate for the MultiCapital Scorecard to be used to create a sustainable vision, mission, goals, management and business practices for organizations. They recommend that the organization first identify its internal and external stakeholders and the duties and obligations owed to them. Next, define the ideal standards of performance and apply context-based metrics to measure your organization against those standards.
Small businesses and self-employed Freelancers can make use of the Scorecard to account for the various types of capital that is available, measure the use of each form of capital and better understand how to manage and nurture resources. Goal-setting will become more obvious as priorities surface and opportunities and weaknesses emerge. The stage will then be set making plans that usher in sustainable growth and profits.
Thanks for reading,