Social Impact As A Business Key Performance Indicator
Traditionally, Elite Entrepreneurs have always used profit as a primary indicator of business success. Recently, the 2018 BNP Paribas Global Entrepreneur Report uncovered a noticeable change in the metrics Elite Entrepreneurs use to define the achievement of success in business.
Today’s successful entrepreneurs are not easily satisfied with monetary returns, viewing economic contributions and profit as necessary to a business rather than what defines their success. Instead, they seek to examine the significance of their business activities in terms of impact on the environment and society.
This article examines the emergence of social impact as a business Key Performance Indicator, and details the trends found between the different categories of Elite Entrepreneurs.
A Shift in Definition of Success
In our 2016 Global Entrepreneur Report, only 10% of Elite Entrepreneurs established social impact as a component of their personal success definition. This year this percentage rose to a respectable 39%.
Although a majority still upholds profit as the number one indicator of business success, social impact has now become the second priority, rising above other goals such as transferring a business to the next generation or breaking even on your initial investment.
Making an impact is now a Key Performance Indicator (KPI) for global entrepreneurs and making improvements in this area has also become a personal goal for many.
Entrepreneurs today define themselves as great business leaders only when they are able to change people’s lives for the better, by creating jobs and empowering others’ careers, rather than purely financial metrics.
Millennipreneurs & Developing Markets on the Forefront
Among Millennipreneurs (entrepreneurs aged 35 and under), the percentage of those who consider social impact a metric of business success is even higher – 46%. This is much higher than the 39% average across all Elite Entrepreneurs surveyed for our report.
Millennipreneurs seem especially socially responsible when compared to Boomerpreneurs (entrepreneurs aged 55 and over). Only 28% of Boomerpreneurs view social impact as a sign of success. Among entrepreneurs aged 36 to 54, the percentage of those who consider social impact a KPI is 38%, resembling the average.
Source: 2018 BNP Paribas Global Entrepreneur Report
As for geographical differences, social impact as a KPI is more widespread in developing economies. Nearly 65% of entrepreneurs based in China define success using social achievements.
This trend continues in other Asian countries, such as Taiwan, India and Indonesia. In mature market economies, on the other hand, entrepreneurs do not often consider social achievements when examining their business success.
We can see that not all Elite Entrepreneurs have equal views towards social responsibility, and their opinion towards social impact as a performance indicator is influenced by demographic and geographical factors. Age has also been found to influence the importance entrepreneurs place on social impact.
Entrepreneurs from younger generations see themselves as citizens of the world with a broader range of responsibilities, growing up in an era where they are faced with global pressing issues, such as climate change and high unemployment rates.
The Rise of Social Impact as a Business KPI
Evaluating Success in Achieving the KPI
Although Millennipreneurs use social impact as a performance metric, they are not satisfied with their current achievements in this regard. Less than half (48%) of Millennipreneurs believe that they have generated a satisfactory impact on the environment and society, more likely expressing satisfaction around the profits made on their initial investment.
Making a social impact is prioritized as an area for improvement in the future.
While fewer Boomerpreneurs use social impact as a success metric, they are more optimistic about their performance. 66% of Boomerpreneurs feel they have achieved success in making a social impact. Boomerpreneurs are generally more positive about their ability to succeed in business and across their personal performance metrics.
However, when reflecting on their general entrepreneurial achievements to date, this pattern is reversed. Millennipreneurs rate themselves with an average score 8.3 out of 10. For Boomerpreneurs this number averages at a 7.8, similar to the 7.7 average among Generation-X Entrepreneurs.
We can see that although Millennipreneurs are more satisfied than older generations about their overall success in entrepreneurship, they are more critical about their progress when compared to individual performance metrics, such as social impact.
Source: 2018 BNP Paribas Global Entrepreneur Report
The 2018 Global Entrepreneur Report highlighted a significant increase in the value Elite Entrepreneurs place on social responsibility in all aspects, resulting in a change in the way business success is evaluated. The use of social impact as a Key Performance Indicator for business performance is on the rise, making it the second most important metric after profits for the first time in history.
We have seen this trend emerge across our earlier Global Entrepreneur Reports and we expect to see it continue in the future. With Millenipreneurs believing they have a long way to go to achieve their social impact goals, it is likely that we will see more initiatives from Millenipreneurs in the social and environmental realm in the coming years.
BNP Paribas will continue to keep up with the shift and share findings periodically. In the meantime, for more insights, refer to the full 2018 BNP Paribas Global Entrepreneur Report or download it by clicking on the link below.
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