A Far Better Way for Companies to Keep Score

Nearly 1,000 companies have voluntarily been certified as a B corporation, and in the process have confronted head-on tough questions that most firms avoid. Why did they do it? Tim Masson, CEO of the Ian Martin Group, just went on the record to tell you why.

Last week, Tim wrote an open letter to business owners on the two-year anniversary of his firm's re-certification as a B Corp. In it, he argues that for decades companies have prioritized shareholders over customers and employees.

He says:

With only one rule to the game, keeping score is simple. Every one of the approximately 125 million businesses on the planet has a P&L statement. The number at the bottom tells you if you’re winning or losing. As business leaders, this system engages our full competitive force to drive that single score.

There's just wrong problem. This is a lame, overly-simplistic metric. Being obsessed with this quarter's financial results causes many firms to make bad long-term decisions that come back to haunt them.

For this and other reasons, a growing number of firms are taking the B Impact Assessment, which Tim describes as the world’s most comprehensive definition of the new rules of the game. He especially likes that,

Just as financial statements can be compared across industries, geographies and business sizes, the B Impact Score reduces hundreds of data points to a single number that measures a company’s positive contribution to society.

The assessment process forced the Ian Martin Group to confront a whole series of issues it had never before even considered. But they persisted.

They used the B Impact Assessment to figure out new ways to improve the company. One of the initiatives that I like best was that they created a set of "unpolicies" designed to give employees both more freedom and responsibility. Here are a few examples:

• Rather than offer set flexible work options, the firm lets co-workers know that they can make suggestions to their work team for alternative ways of working.
• Rather than a prescribed program of learning and development, they let co-workers know that they can propose all kinds of experiences to increase their mastery.
• Rather than tell people they must buy the cheapest thing, they offer ideas on how co-workers can look for better supplier performance – such as through B Corps, Fair Trade, or Energy Star.

Tim admits that the assessment questions are intense. One drove them to envision: a world with each and every person pursuing meaningful work. Here, according to Tim, is what happened next:

After articulating this vision, we started hiring anyone who showed up and made it clear that it was also their personal mission in life. One of these people has already started a new business for us called Hirefly and another founded a technology company we recently acquired called Fitzii.

I've only scratched at the surface of Tim's heartfelt letter; he offered an in-depth overview of both the process and the benefits his firm perceives.

Whether or not your firm chooses to pursue the B assessment process, I strongly endorse Tim's position that companies need better ways to keep score of their performance. For obvious reasons, people do what you pay them to do, and right now too many companies pay their employees to do things that drive customers crazy and slow their firm's ability to stay relevant in a rapidly-changing world.

Companies need a better way to keep score, no doubt.

Bruce Kasanoff ghostwrites for social innovators and executives who do well by doing good. Learn more at Kasanoff.com. He is the author of How to Self-Promote without Being a Jerk. (Twitter = @BruceKasanoff)