Measuring Social Impact

Tom wrote the following for the CBI Good Business web site, published 1 November 2016. The article was inspired by a day conference organised by the British Standards Institute on whether there should be a British Standard on impact measurement:

A debate rages about the measurement of social impact. Charities need to demonstrate impact to funders, commissioners, donors, media and government, whilst businesses who value their social and environmental responsibility are being asked: ‘just how responsible are you?’

All organisations impact upon others. It’s rational to expect that social and environmental claims should reflect an organisation as a whole. Although big corporates will rush to demonstrate their positive impact through corporate social responsibility (CSR) activity, community engagement and philanthropy, just one oil spill, prosecution or product recall can change perceptions.

The heat of the current debate is not whether but how impact measurement is made. How do you compare reducing carbon footprints with creating apprenticeships? Or time spent listening to children read with pro bono legal advice? Can a common system of impact measurement cope with all of these activities?

People are striving to say ‘yes’. One way is to monetise impacts – what are they actually worth?  When a company donates an employee’s time to a charity should we count the hours at the actual salary rate, the cost to the company or a commercial rate? Or an independently calculated agreed sum? This is a common question within CSR circles, but is an hour really an impact measure? No, it’s an input.

What’s an apprenticeship worth? A company creates two identical apprenticeships with a net investment of £10,000 each; one goes to a long term unemployed ex-offender, one to a bright school leaver. The true social impacts, including lifetime savings to the state as a result of that individual gaining skills and employment, are vastly different.

Here’s a parallel: GDP is a recognised, long established and monetised assessment of a country’s worth that tells you nothing about the values, culture and degree of liberty that its people enjoy.

Clearly, simple impact measurements are less meaningful than complex ones; and calculations which become tiresome, long-winded and costly are both unattractive to organisations and open to challenge. Even more to the point: smaller organisations, charities or businesses, are less likely to have the skills necessary to make the objective and detailed comparisons that universally comparable impact measurement demands.

To achieve its goals an organisation must know what changes its activities make happen. Change and impact can be both quantitative and qualitative, sometimes impossible to monetise meaningfully. However, enhanced employee engagement, generated by a company with a purpose beyond the purely commercial, can be measured over time and is a prize worth having.

There’s a danger that standardised impact assessments will strike many as ‘not for us’; smaller players might use a low cost, ‘rough and ready’ assessment like Measuring the Good whilst others complain that a growing impact measurement industry offers unproven value for money.

So internal impact measurement is vital to achieving social and environmental goals. External impact assessment can be standardised but only to a degree, not least because different stakeholders make contrasting demands. Truly objective, universal standards that retain utility are problematic; and measures which accentuate the positive and eliminate the negative miss the point.