Social impact measurement looks promising. One of the most common measurements is Social Return on Investment which is the present value of the impacts divided by the inputs. It arrives at a ratio which if greater than 1 is a project or organization whose impacts exceed the cost of provision. There are some tough decisions to be made and rigour is important. However, it is possible to over-complicate the process of measurement. Here are some basic principles for keeping it simple.
Measures do matter
Creating measures does impact on stakeholder behaviour – especially the employees. To not measure is to lose focus. Some critics of impact measurement focus on the whole of organization measurement and the use of a single measure to satisfy funders. Funders are just one user of this measure – it is possible that in an attempt to prove that the funding is worthwhile an organization puts effort into maximizing the SROI. But that is to miss the benefits to other stakeholders of impact measurement. Measures matter to employees, to beneficiaries of services, and to the broader society.
Measures can motivate
The claim that measures such as Social Return on Investment will demotivate staff is unwarranted. Good measures, used well, can motivate. They can confirm the sense of purpose and direction that everyone in the organization and the beneficiaries or customers really want. Measures, rightly used, can balance the caring vision and the economic needs. Measures can focus staff on the specific improvements that they need to make to increase the value of the services they provide.
Never take measures too far
Sometimes measures are not that useful because we go too far. It is possible to measure the outcomes using key indicators. These are outcomes in the medium term. It may not make sense to try and measure impact, especially to find financial proxies for impacts. Organizations should stop at the point that the measurement process makes sense for all users.
Test the measures to make sure they are robust
Good practice is to use international benchmarks or to aggregate from data of individuals in the field. Using financial proxies can be fraught with difficulties if you just latch on to some best guess. The measurement system lacks rigour and robustness if any of the measures are dubious. If organizations are transparent about the measures they use or go through an assurance process then there will be opportunities to fine tune the measures.
Monitor the measurement approach
Organizations change. What created impact in the past may not do so today. The Theory of Change is a working model or set of hypotheses. But these will change as the organization changes and the environment changes – we don’t live in a static world.
Please share your comments. For further information contact us or visit UniSA’s website
Dr Bruce Gurd is an Associate Professor of Management at the University of South Australia and Deputy Director of the Australian Centre for Asian Business. He teaches the research project of UniSA’s 5 star MBA and researches the area of organizational performance measurement.