valuing non-financial performance

8/3/2019 Valuing non-financial performance

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Valuing non-financialperformance

John Swannick

Executive Director

EABIS


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ar e va ue

Source: Accenture 2004


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Brand and asset value


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.....and increasing volatility?


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E l


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A three-year study across 40 global companiesA 12-month study across 50 global companies

Employee engagement

Source: ISR-Towers Perrin


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Top Ten Global Engagement Drivers

Top 10 Engagement Drivers (2007)1. Senior management interest in employee well-being

2. Opportunities to improve skills and capabilities

3. Organization's reputation for social responsibility

4. Input into decision-making

5. Organization quickly resolves customer concerns

6. Setting high personal standards

7. Career advancement opportunities

8. Challenging work assignments that broaden skills

9. Good relationship with supervisor

10. Organization encourages innovative thinking

Source: Towers Perrin 2007 Workforce Study Global


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Engagement key drivers by sector(ISR survey 2006)

EmployeeEngagement

SupportiveCulture

Social

Responsibility& Image

CompetitivePosition

Leadership

My Job

OrganisationalResponsibility

My Job

CorporateResponsibility

& Integrity

Leadership

Imageand CorporateSustainability

My Work

CustomerFocus

Chemicals FMCG Pharmaceuticals Logistics


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Th I tit t f B i Ethi D Ethi P h


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The Institute of Business Ethics Does Ethics Pay research

showed a relationship between NFP and p/e ratios. In thiscase, ethical performance and p/e ratio stability ( strongoutperformance).


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The blockages


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The blockages

V l i fi i l f


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Valuing non-financial performance:

the collaborative ventureCompany

performanceMeasurement

Management

Integration

Investorvalue

Core drivers

Materiality

Regulatory

InfluenceESG Disclosure

Investor salience

Th j t


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The company project

Strategy

What is the company strategy? How does NFP support the strategy? How should NFP support the strategy?

Management

Who manages NFP? How is it managed?

What are the performance improvement processes?

Results

What are the companys Key Performance Indicators?

How does NFP relate to the company Key Performance Indicators?

How can NFP drive performance improvement?


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MaturityCoherence in

measurement ANDmanagement ofnon-financialperformance

IntegrationDeliveringperformanceimprovement throughcore managementprocesses

StrategicResults linked to corebusiness strategy andKEY Performance

Indicators

The desired flightpath?


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Phase 1: initial conversations

16 companies

10 different sectors


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Employees Satisfaction Engagement

Customers Satisfaction Advocacy

Public OpinionReputation

tracking

Common core areas: perception indicators


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Emissions Waste

Resource useEnvironment

R&D investment as % of revenue New productsInnovation

Code of ethics/conduct

Code implementation & KPIs

Corporate

Governance

Common performance indicators


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Total shareholder returns

Earnings per share

Revenue

EBITDA Free Cash Flow

CAPEX

Net assets

KEYKPIs

The big challenge


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Convergence

Working group of asset managers Comparison of quantitative and qualitative analysis of non-financial drivers of

financial performance Identify long list of core non-financial drivers

Consensus

Test long list with wide group of asset managers Quantitative assessment of materiality

Identify short list of superfactors

Validation

Test superfactors with asset owners Promote results to mainstream investors

Investor Value

valuing non-financial performance

Documents