Study: ‘Spiritual’ performance metrics have charity merit
Using performance measurements with metaphysical dimensions like Buddhism’s five spiritual practices can lead to better economic outcomes in the non-profit and charity sectors, says Haley Beer, assistant professor of performance and responsibility at Warwick Business School.
Performance measurement may have originated in the for-profit sector but it has far-reaching implications for nonprofit organisations “because it serves to legitimise, attract resources and preserve expectations of stakeholders,” said Ms Beer.
In the past donors allocated money based on reputation and trust, but now they are beginning to demand evidence of the social impact of these organisations. As in traditional businesses, investors in the non-profit sector want evidence their money is being used optimally.
Performance measurement also has implications for how these organisations govern, manage donations and provide services. They also help handle unethical behaviour within the organisation.
In spite of their importance, little effort has been made in developing performance measures specific to this sector. Most approaches attempt to measure social impact, but do not provide a view into intraorganisational outcomes.
Non-profits operate under different constraints and have different priorities, which suggests that judging them by the same standards as their for-profit counterparts may result in an inaccurate measurement of their performance.
Most measurements designed for private sector work are based on an underlying assumption that they are there to assist the business in becoming more profitable. Non-profits, on the other hand, “must balance the interests of multiple/varying stakeholder groups, many of which are not interested in financial matters,” she said.
There is a fundamental disconnect between the way non-profits understand their value and the way they measure it. Stakeholders of non-profits associate performance with the following three traits: Social connectedness (a shared social message among stakeholders), entrepreneurial awareness (the active exploration and exploitation of opportunities to create social value) and financial meaning (securing and managing finances to enable social value creation).
Non-profits, however, typically use the same profit maximisation metrics used in the business world.
In their paper, “Spiritually Informed Non-Profit Performance Measurement,” Ms Beer and her co-author, Minnesota State University assistant professor Edward Gamble, seek to fill in this gap by using Buddhist philosophy-inspired performance measures.
The study, published in the Journal of Business Ethics, was derived from interviews with 63 executives, directors, senior employees and long-serving volunteers at non-profit organisations.
The research centred on five spiritual practices within Buddhism: a pro-scientific philosophy, personal responsibility, healthy detachment, higher collaboration and a wholesome view.
Recently scholars have looked to spiritual practices as a way to deepen our understanding of organisations within a society. For example, social and moral principles help outsiders make sense of the business model underlying Islamic banking, which insulated some institutions from the 2008 crisis, Ms Beer and Mr Gamble said.
According to Ms Beer’s research, adopting Buddhist practices may enable employees to appreciate the intricacies of non-profit organisations, which sometimes do not measure performance through traditional standards.
The evidence also suggests that embracing spirituality within organisations may lead to better decision-making, enhanced creativity, reduced absenteeism and greater emotional control, she said.
Several large for-profit organisations such as Google, General Mills and Target are already adopting spiritually-informed practices to reap some of these described benefits, said Ms Beer.
“Performance management should connect people with the processes of the organisation and promote behaviours that are in line with its objectives. Spiritually informed principles can help non-profits rediscover this,” she said.
The individualistic, bureaucratic and materialistic emphasis of profit-oriented philosophies in the non-profit sector has distracted these organisations from their expected role in society, said Ms Beer.
Socially motivated employees would be more willing to participate in traditional corporate practices like performance measurement when they understand these practices will allow them to identify opportunities to create social value and drive social connectedness.
“Some might think spirituality and business should not be mixed, but both play an important role in society and should be seen as interdependent,” she said.