What does Triple Bottom Line mean? I have been in meetings when someone mentions it but no one explains it.
Yes, I know what you mean. Traditionally companies have measured their success through how much money they have made. However, this is purely financial measure and only covers one aspect of an organisation.
More recently the concept of wider range of measures has become popular with the publication of Kaplan and Norton’s book The Balanced Scorecard. This recommends an organisation should still measure its financials, but also measure key outcomes to do with its people, its customers, and its operations. This results in being able to see more holistic picture of what is happening with the organisation and how well it is doing. It also enables managers to involve people more in the organisation as they can relate more easily to this broader set of measures and see how they can impact the results more readily.
However, all of these measures tend to see the organisation as an entity on its own seeking success in competitive world. The Triple Bottom Line (TBL) concept takes the measurement of results step further and aims to measure the organisation’s success within broader context of society and the world in general.
The term was first raised by John Elkington in his book Cannibals with Forks: the Triple Bottom Line of 21st Century Business. It raises the concept of an organisation being responsible to its stakeholders rather than just its shareholders. That is, to anybody who is directly or indirectly affected by the organisation’s business.
The TBL concept covers three rather than one bottom line. It still covers “profit”, but this is broadened to include the economic benefit gained by everyone impacted by the organisation and not just the shareholders. The additional bottom lines measured are “people” and “planet”.
“People” measures the business practices of the organisation related to labour and the community in general. This covers the more traditional measures of providing safe working environment, reasonable working hours, and paying fairly. However, it also extends to issues such as not using child labour, provision of health care and education, and contributing in wider sense to the strength and growth of the community surrounding the organisation.
The third bottom line “planet” is to do with sustainable environmental practices. That is caring for the environment. This involves reducing the ecological footprint made by the organisation in the course of its business. This would cover reducing energy consumption, using reusable materials, and making non-destructive products.
In hindsight it might be that our fixation on the one financial bottom line might have contributed strongly to the current world economic situation and in the future more organisations may embrace the TBL concept. However, TBL doesn’t naturally fit with average human behaviour and can also be challenge to measure effectively.
Is there way to improve the information flow in the organisation. We get feedback from our staff that they never know what is going on.
Every time I have carried out consulting assignment I have noticed that 100 percent of the time lack of communication has played major role in contributing to the issue needing to be resolved. People definitely do want information but the trick in effective communication in an organisation is to hit the right balance between what people want and what you need them to know.
People really want to know about things that are likely to affect them personally. In research on this issue I once asked some employees what types of information they wanted expecting them to say profit, turnover, sales volumes etc. However, the surprise was that they all wanted to know why fence was being moved on the premises and would it affect the car park. So clearly people want to know stuff that will impact them.
However, for good business reasons, most senior managers want people to be aware of the organisation’s strategy and business plan and where the organisation is going. useful way of meeting everyone’s needs is to use monthly “team brief”.
It can start with the CEO and senior managers producing short document from their monthly meeting outlining the key issues and happenings in the overall organisation and the key measures and outcomes for the month. This will generally have strategic focus. Each executive team member then adds information of relevance to their part of the business and this becomes more focused on the business plan and is circulated and discussed at department level.
Finally it can move to each team in the organisation and have more localised information included. For example, why the fence is being moved. Overall this may seem very simple but its strength is in its simplicity. It creates framework for communication that meets everyone’s needs effectively and is useful management tool in building strong link between strategy and execution in the organisation. M
Kevin Gaunt, FNZIM, FAIM, is CEO of NZIM Auckland and has been senior executive with, and consultant to, some of New Zealand’s largest companies.
