Learning a new language is a major project to take on. When you’re trying to master different alphabets, syntax and idioms, you almost have to retrain your brain at the same time to think in a slightly different way.
That’s essentially the challenge facing business leaders who want to make the leap from a traditional model where a company measures its philanthropic endeavours as something separate to its core activities to a model where it’s measuring the social value of those activities.
Proper assessment of social value requires a change in thinking from leaders, many of whom are used to traditional measures of financial value. Leaders take a degree of certainty from a balance sheet and that just isn’t always there in social value measurement. It’s a complex, evolving area and we shouldn’t pretend it isn’t – it’s a language that’s still working on its vocabulary and grammar.
There are many different tools and frameworks available to help companies measure social value, but there is no single, globally recognised standard for how to do so. So there’s work for companies to do to decide which system of measurement works best for them, and to explore the models that do exist before starting to design something bespoke.
Leaders are going to have become comfortable with the fact they aren’t going to see a single number that sums up the social value of a programme or the whole business. Multiple sources of information need to be considered – a company’s social impact might be made up of economic benefits, health benefits, skills improvements and more.
Context is also key – the numbers themselves don’t mean much without the story behind them. Is your impact good, bad or indifferent for the area it takes place in? Newcastle is a very different economic environment to London, for example; indeed, parts of a single city can differ widely from one another.
This means companies face big data collection challenges, particularly where less tangible impact is concerned. How do you get at what has changed in young people’s lives as a result of a programme, for example? People aren’t simple – someone’s assessment of their own situation is entirely subjective.
Leaders must acknowledge the difficulties involved in getting this right and, if they are serious about mapping and demonstrating their social value, ensure they have the right level of resource in place to do it properly.
And communication is another big consideration. Legislation and regulation set out standards for how financial value is communicated to external stakeholders; the media and others have the knowledge and experience to interpret and analyse a company’s financial story.
But given the challenges for companies to report on social value to their own satisfaction, they also need to seriously consider how that information is translated for an external audience, in a way that will resonate with people and add to their understanding of the business’ overall impact.
This will be vital to business’ efforts to regain lost ground in public trust over the next few years and to growing the responsible business movement as a whole.