What is the best way to measure social value?
Firstly, what is ‘social value’? People might believe it is about the social benefits of a project. Social Value is how people articulate social change. This is probably one of the main reasons why no one has managed to understand or create a definitive method to measure social value.
Social Value is about what matters the most, not necessarily yours or an organisation’s objective. We have witnessed how technology, mainly digital, has resulted in social change – a powerful tool for communication and capturing social value. If your organisation has a variety of projects taking place at the same time, you need to understand the shared social value of each project and what it offers.
The Social Value Act came to prominence in 2012; an act to require public authorities to have regard to economic, social and environmental well-being in connection with public services contracts, and for connected purposes – Legislation Gov UK. The Government proposed a 10% weighting towards social value on all future tenders and it has never been more important to be able to effectively measure and report on the social value added to your business.
Consumers nowadays are increasingly making buying decisions based on how to positively impact their communities and the wider environment. Measuring your social value contribution and effectively reporting on this will allow an organisation to gain a competitive edge, as well as help to drive smarter, well-informed and ethically driven strategic decisions. Therefore, it is of great importance that an organisation focuses on social and environmental concerns, whilst simultaneously driving value and profits.
How? According to The Guardian, there are a few ways:
- Translating stories into a bigger picture
- Defining the shared value
- Align or equate outcomes with each other across stakeholder groups
- New opportunities to use digital technology to understand whether the impact of a project can be identified by other organisations when measuring their work
An example of social value can be the value we each experience from increasing confidence, living next to a community park but differentiates to financial value – Social Value UK. Can Social Value improve the way we understand the world, build relationships (and partnerships) and decision-making; including investments?
Social return on investment (SROI) is used to measure extra-financial value, evaluate impact on stakeholders, identify ways to improve performance and enhance the performance of the investments. Between 2009 and 2010, the Social Value UK proposed to establish a linkage between SROI analysis and IRIS (social accounting and auditing) to create a common ground in definitions to describe an organisation’s social and environmental performance. SROI can also be used as a learning tool for each organisation.
What is the difference between SROI and ROI? Simple, ROI refers to a single ratio whilst SROI analysis reports value from the experience of stakeholders and uses indicators to tell a story; measuring and communicating non-financial value.
By understanding the principles of social value will help you develop a greater depth of awareness, knowledge and practical skills to help you embed social value within your organisation and display to your customers that you champion a culture of social responsibility and positive impact.
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