Ongoing Study May Lead to Better Measurement of Social Impact
By Simon Robinson, Director, LBG Australia & New Zealand
Investing in the community is now business as usual for companies. Stakeholders expect it, and it is an integral part of good corporate citizenship. However, the majority of companies in Australia and New Zealand do not measure the impact of those community investments. But a longitudinal study between LBG Australia & New Zealand and The Centre for Corporate Public Affairs (CCPA) could help to change that, and in doing so drive up the amount companies invest in their communities.
How much do corporate Australia and New Zealand actually invest? That number can be roughly extrapolated: LBG Australia & New Zealand’s 50 member companies reported total community contributions of AU$237 million (~$219 million) in 2013 (for more detail, see http://2013review.lbg-australia.com/#inputs). Meanwhile, the Australian Bureau of Statistics tells us that there are more than 3,500 businesses with 200-plus employees, which is where the vast majority of the LBG membership would sit.
So even if non-LBG members contribute only 25 percent of what LBG members report, corporate Australia contributes billions of dollars annually in money, time, goods, and services to the community. I’d hazard a guess that the real impacts of that are being measured by less than 1 percent of the businesses making the contributions.
I make these calculations to illustrate a point: performance measurement in this field is desperately poor. What other company department would be allowed to do this?
Can you imagine if a company initiated a recruitment campaign and had no idea how many people had responded, were recruited or, more importantly, retained? Or if a company invested in a major advertising campaign but had no idea how many sales were generated? I am being flippant but I hope you’ll take my point that business, as a rule, doesn’t make significant investments without due consideration of the return they will bring. So why is community investment exempt?
Impact measurement can be time consuming and costly and is often deemed too difficult. But if we can crack “the impact nut” and enable companies and their community partners to better assess impacts, then we will see an increase in the quality and quantity of what business invests in the community.
Developing a management process
Eventually, if LBG and the CCPA and other efforts are successful, the impacts of corporate community investment (CCI) will be measured as a normal part of doing business. We are creating a management process which, within a few years, we hope will simply be the way things are done, like Total Quality Management.
As part of this effort, we are conducting a longitudinal study that will run from 2013 to 2016 (and potentially longer). The study has already assessed how eight large companies in Australia and New Zealand analyze and manage their CCIs.
The first report, released in January 2014, recommends that companies seeking better understanding of the impact of their CCIs clarify the strategy of each CCI while strengthening the intent and nature of what they measure.
The CCI measurement process consists of four steps (Figure 1). Steps 1 and 2 are the focus of this first phase of the study. The discipline of applying these steps will help companies clarify the impact they aim to deliver as well as the strategic and measurement intent of their CCIs.
Thresholds for measurement
The missing link in CCI progress is the absence of robust and rigorous measurement mechanisms. We found that measuring CCIs of more than AU$150,000 per annum over two years or more and anchored in independent third-party assessment, analysis and findings, would represent significant progress in more accurately and meaningfully understanding CCI outcomes and social impact.
We do not recommend measuring CCIs of less than AU$10,000. For CCIs AU$10,000 to AU$150,000 per annum, Steps 1 and 2 of the Social Impact Measurement Path should be applied, including qualitative case study assessment and reporting.
Measurement leads to better outcomes
When measurement practices become widespread, companies will better understand the impacts they have on the community and the benefits those impacts generate for the individual businesses making them. Companies can then make more informed decisions and even increase their community investments, thanks to their deeper understanding of those investments’ impacts.
No well-managed business spends money on initiatives when they don’t understand the return—except when it comes to community investment. If we can encourage businesses to make impact measurement a standard process, then I believe we will see a new era of corporate community investment.
About the author:
Simon Robinson
Director
LBG Australia & New Zealand
Simon Robinson, Director at LGB Australia & New Zealand, is a specialist in measurement and benchmarking of corporate community investments and impact assessment via the LBG methodology. As a corporate social responsibility professional since the early 1990s, and with more than 25 years’ experience, Simon has held a range of positions including Deputy Regional Director for Business in the Community (UK), GM for Corporate Responsibility at Sensis and inaugural CEO of Melbourne/Australia Cares.
