CEO’s Letter: What We Really Measure

What We Really Measure

Elliot H. Clark

CEO

We arrive at the 2014 CR Magazine 100 Best Corporate Citizens Rankings. This list captures the 100 Best Companies, according to our methodology, in the entire Russell 1000 index. This is not to say that there are not good corporate citizens in the other 900, but this measurement is as much about the individual companies as it is about society and business culture. We, in essence, measure the success of the Corporate Responsibility movement.

The market rating represented by the 100 Best Corporate Citizens illustrates the progress of the definition of corporate citizenship—from the old world view of corporate social involvement to the new one. It, frankly, shows the progress from bad to better.

In Act v, Sc 1 of Shakespeare’s Measure for Measure is the quote: ”They say, best men are moulded out of faults,
And, for the most, become much more the better
For being a little bad.”

In spite of the loud voices of the more radical activists, it cannot be about being perfect. I don’t even know what that means. This kind of measurement needs to be about progress. In fact, the overall scores of the 100 Best Corporate Citizens improved again this year.

The mean of the 100 Best Corporate Citizens moved up in 2014 (again, hooray) from 129.64 to 127.53 (lower is better). This is a 1.6 percent year-over-year improvement. More impressive for statistical geeks like me is that the standard deviation dropped from 35.38 to 33.93 for a year-over-year narrowing of the scores of 4.3 percent. This means that everyone on average got better and the rankings have become more competitive in a narrower band of scores. This is all good news.

The top 10 companies also showed a monstrous improvement in scores with a mean of 64.28, dropping to 48.40 for a 24.27 percent year-over-year improvement. From these data points you can clearly see the leadership of the top 10 companies. The top 10 Best Corporate Citizens were 4.8 standard deviations better than the mean of the top 100!
What does this tell us about business culture? Companies care about corporate citizenship and they are increasing proficient at metrics and reporting, which is leading to an era of increased transparency and responsibility. It also tells us that organizations such as the Corporate Responsibility Association and others committed to education and professional development of the CR functions are having a positive impact on the practices of corporate responsibility. It also reminds us of the enormous duty we have at CR Magazine in concert and cooperation with other media outlets to keep the marketplace informed of progress and innovation—and to develop these kind of numerical and data driven analyses of performance.

In an era where we have recent legacies of financial scandals, environmental accidents and safety recalls, we can view these isolated failures of some companies while also seeing the big picture. There is ongoing improvement and the will to do much better. Please enjoy the 2014 100 Best Corporate Citizen List and we look forward to your continuing efforts to advance the CR movement and your own company performance.

Posted April 28, 2014 in 100 Best