3.1 What is social impact?
What does the term social impact really mean? The word impact means there are consequences to the actions you take. You therefore create change in something else.
What about the social element? This is the reason for being, the purpose of the organisation you work in. It addresses a social need identified in your community. If the impact you have consists of the consequences of your actions, then your social impact is simply the consequences of the actions you take to address the social needs you have identified. Put even more simply, social impact is the change you bring to the lives of the people and organisations you work with.
Rather than asking about the social impact your organisation achieves, you can think about it by giving an example of how your organisation has changed someone’s life. Your ‘social impact’ is how the lives of your clients are being changed. ‘Social impact measurement’ is just a new approach to doing something that has always been done.
Activity 8 Key Performance Indicators (KPIs)
Before going on to study what social impact to measure and what framework to use, it is important to first ask yourself: how do you know that the strategy of your sustainable enterprise is on track? In this activity, you will look at how organisations can use Key Performance Indicators (KPIs) to measure and manage key aspects of their operations. Watch this introduction to KPIs and make your own notes about what steps this organisation takes to incorporate KPIs into its business.
The video illustrates how Furniturecorp, a small business, goes about incorporating KPIs in its strategy in order to be sustainable. Once the business develops a strategic plan which requires a number of changes, it then has to work with its staff to ensure that everyone within the organisation understands and buys into the new strategy. The concept of KPIs is discussed in the video as one popular approach to tackling this issue. It requires the organisation to follow the steps below:
- Identify the organisation’s Critical Success Factors (CSF), that is, what the organisation must do successfully in order to achieve its goals (e.g. manufacturing and sales targets) while being aware that these may change over time.
- Work with staff to develop and agree measures to achieve CSFs and to discuss the constraints to be overcome. Some of the measures identified include non-financial aspects, frequency of measurements, and links to individual and team goals, all of which must be clearly understandable and serve as triggers for action.
- Identify the Key Results Indicators (KRIs), that is, summaries of past performance (e.g. sales turnover, net profits and market share) and how they differ from KPIs. KRIs can be used to measure day-to-day performance.
- Beware of the ‘bad side’ of KPIs. Make sure you consider their implementation and ensure that staff are not focusing only on KPIs. KPIs should be used as a guide to ensure the attainment of organisational and individual goals.
If you want to read more about these four steps, you can consult Parmenter, D. (2015) Key Performance Indicators: Developing, Implementing, and Using Winning KPIs, Hoboken NJ: John Wiley & Sons.