Creating environmental performance indicators to assess corporate sustainability and reward employees

Abstract

Assessing environmental performance, measuring the circular economy and quantifying decarbonization have become crucial in green management in recent years. Both scholars and practitioners have focused on different strategies to create performance indicators capable of tackling all these aspects. At the same time, companies have started connecting managers’ and employees’ incentives to the achievement of corporate goals. We analysed a case study of an Italian food company which uses environmental performance indicators to assess corporate sustainability and reward managers and employees. Through a series of interviews with members from all departments, we identified around 200 different key performance indicators, i.e., performance, commitment, control, reactivity, economic, consent, transversal and multifunctional. A final dashboard of around 70 indicators was then created and linked to employees’ rewards. A tailor-made methodology was, thus, used to define target for the company’s management by objectives, taking into account the trend of each indicator. This is the first attempt to investigate how a company can create an environmental performance indicator system to assess corporate sustainability and reward employees through management by objectives. Our study further extends not only the academic literature, but also provides a practical and operative contribution to all the companies that aim to create a new key performance indicator system. Lastly, we merged the management and strategies for promoting green practices amongst employees through a reward system with the environmental performance of each organisational department by creating a methodology to define management by objectives.