July 10, 2018

The Ethical Balanced Scorecard: Competing Perspectives

Organizational Effectiveness

In 1996, Robert Kaplan and David Norton published their seminal work on strategy development and execution, "The Balanced Scorecard: Translating Strategy into Action." Since then, their methodology has been implemented across thousands of organizations. Kaplan and Norton's central hypothesis is that companies need to take a balanced look at how their organizations are performing to achieve their objectives. They advocate a multi-perspective ("balanced") view, including financial, customer, operational, and human capital metrics. 

The "balanced" perspective can be applied to any number of organizational sub-units or functions, but one area often overlooked that demands a balanced perspective is ethics. 

Most Fortune 500 companies today incorporate an ethical component into their strategic plans. A major challenge for management, though, is that different stakeholder groups may have vastly different perspectives on what constitutes ethical decision making. For a company to be "ethical," must it:

  • Pay a living wage to employees?
  • Only do business with vendors meeting eco-friendly standards?
  • Act in the best financial interests of shareholders?
  • Support market competition?

Starbucks, known for ethically sourced coffee beans, is dogged by accusations that it crushes smaller competitors. Amazon, which provides customers with top notch customer service, is known for its challenging corporate and fulfillment center cultures. Apple, which revolutionized multiple industries on the way to becoming the world's most valuable company, has come into question for the practices of its suppliers. Chevron, often recognized as America's best oil and gas company to work for, regularly faces complaints that it is environmentally unfriendly.

These successful, well-respected companies look different depending on one's perspective, which is why it is critical to look at your company's approach to ethics in a balanced and holistic manner. Much like a company needs to pursue excellence in operations, people, finances, and customer to be successful, it should consider multiple perspectives to be considered an ethical organization. 

When weighing the ethical implications of a business decision, consider the following perspectives:

Your customers, your potential employees, and the community all want to do business with ethical companies. Weighing multiple ethical perspectives in the strategic decision making process improves the decision itself, helps identify potential objections from different stakeholders, and positions your company as an ethical player.

Understand your culture 

Judy partners with executives and leadership teams to engage and inspire employees in a way that delivers sustainable strategic results. She brings deep expertise and creative ideas to solve organizational effectiveness issues and closely collaborates in a way that builds internal capabilities. Judy has spent over 25 years consulting in a variety of industries, bringing her expertise in behavior to a wide range of organizational issues including organizational behavior change, leadership, change management, culture and engagement.

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