An analysis of the extent of integrated thinking reflected in key performance indicators disclosed by the Top 40 South African listed entities over time

Abstract

This research explores the extent to which integrated thinking is reflected in key performance indicator (KPI) disclosures. A KPI Integrated Thinking Index (KPI-ITI) is developed to gauge the alignment of KPIs with integrated thinking principles. Indicators of integrated thinking from the academic and professional literature are used to develop a schematic for evaluating the alignment of KPIs with integrated thinking. The application of the resulting KPI-ITI is illustrated using a sample of South African organisations’ primary reports in 2013, 2017 and 2021. Reports are analysed using a content analysis to identify disclosures dealing with KPIs which are evaluated using the schematic. Results are calibrated using well-established integrated thinking proxies. Ten indicators are identified to develop integrated KPIs. The application of the KPI-ITI reveals that, from 2013 to 2021, KPI disclosures evidenced greater integrated thinking application, primarily driven by the increased use of post-implementation reviews, a shift away from financially-focused KPIs and incorporation of the Sustainable Development Goals (SDGs) and multi-capitals in KPI structures. The index developed is calibrated with other integrated thinking proxies supporting its robustness for assessing integrated thinking in performance evaluation structures. The study is among the first to outline formally the dimensions of integrated thinking specifically in the context of KPIs and detail an index which can be applied to evaluate KPIs to evidence integrated thinking, including insights in an emerging economy context. The study is based on KPI disclosure practices by a sample of companies in a single jurisdiction and findings should be generalised with caution. The index offers practitioners, standard-setters and academics an easy-to-apply technique for examining the extent of integrated thinking which can be expanded further into other publicly available information and jurisdictions. The index can inform stakeholders on the aspects to be investigated when assessing whether management is implementing long-term value creation and sustainability initiatives.