Editor's Choice, May 2013: helping business make smart choices on measuring socio-economic impact
This month's Editor's Choice is most definitely NOT yet another a tool for measuring business impact. It does contain a good review of ten tools that could be used. But it's greatest value lies in the way it introduces the task, the strategy and the choice of tools.
WBCSD's ►Measuring Socio-economic Impact: A Guide for Business seems to be based on a few implicit assumptions - which I happen to think are correct: that businesses face a medley of possible tools out there, with little guidance on which suits which purpose. That the basic issues around identifying why to measure results, and what kind of results, do not get enough attention. That development speak is spoken for development practitioners but businesses are increasingly expected to report results on social outcomes, without the useful jargon and shortcuts.
Section 1 of the guide reviews the case for assessing impact - familiar stuff, but well put. Section 2 is what I really like. It explains, in business and development speak, that the easy things to track are what you sell or buy (outputs), and the difficult things to track are the 'gold standard' known as 'impacts'.
Section 3 is a welcome development of analysis that several of us have built up over the years, which compares tools according to the data needs, the type of unit (single site, whole economy) to be assessed, the purpose and so on. It reviews each tool and provides a useful summary table, mapping tool by criteria.
I agree with most of the reports's analysis, particularly when Section 4 concludes that rarely can something be taken 'off the shelf' without adaptation. The conclusion focuses on the need to ensure results drive decisions and actions. For this reason, I would have liked the tools section to include good old fashioned Key Performance Indicators - a standard approach for companies in tracking financials and operations, with plenty of scope to extend to more social and Base of Pyramid metrics. Admittedly they track progress rather than measure results, but they have a good chance of driving to the heart of decision-making, which is precisely what the conclusion to the report calls for rather well:
"Today, stakeholder pressure and enthusiasm are common motivations for companies to measure their socio-economic impacts – but is almost as common for the same stakeholders to criticize companies’ measurement efforts for failing to drive action."
The report is correct that embedded social reporting into operations is core to the agenda ahead. And in its clarity of logic and presentation, this report is one step forward to making that happen.
The report and a video can be accessed from WBCSD here.
These themes are developed further in a new blog about a joint WBCSD BIF and BFP event on measuring impact, for impact, at which WBCSD presented their report and I shared BIF perspectives.
A summary by BIF of different tools that companies can use is in our Spotlight, here.
All previous Editor's Choice posts are available here.