apm benefits summit 2016 - hugo minney sroi

Measuring and reporting non-financial benefits using the Social Return on Investment (SROI) framework

Hugo Minney (RPP, FAPM)

Benefits Management Summit, June 2016

Contents50 minutes practical session to cover:

What does success look like?

Measuring Success

Why are “soft” measures important?

Putting a financial value on non-financial measures

Return on Investment – in a new light

10 mins introduction and explanation

15 mins understanding

15mins applying

5 mins sum up

Basics of Benefits ManagementA Benefit is a result that a stakeholder

perceives to be of value.

Benefits Management is the identification, definition, planning, tracking and realisation of

business benefits

What does success look like? Financial Cash Releasing KPIs

– The ‘easy’ things to measure

– Traditional Return on Investment

Financial long-term, and not-directly-financial KPIs: issues arising

– How to show Logic Chain/ Chain of Causality?

– How to assign a value?

Some examples KPIs Easily quantifiable

– Sales

– Costs

– Profit

Less easily quantifiable but possibly more important

– Customer satisfaction – an indicator of future business

– Staff satisfaction – R&R and productivity

– IP portfolio

Not-for-profit and possibly non-financial – the real future of the organisation

– Savings on other possible costs

– A value assigned to Quality of Life, or Happiness

– Future impact on the economy

Exercise – example measures

What would success look like for each of these Programmes (based on FTSE100 Bakery/ high street eatery)?

ICT investment – a new CRM system

Fleet cars for management

Ventilation system for a bakery

Replacing bakeries in built up areas with a single bakery out of town

The SROI six stage processUsed for identifying your stakeholders

Six stages of SROI1. Establishing scope and identifying key

stakeholders

2. Mapping outcomes – relationship between inputs, outputs and outcomes

3. Evidencing outcomes and giving them a value

4. Establishing impact (what would have happened anyway?)

5. Calculating the SROI – and sensitivity analysis

6. Reporting, using and embedding

Change happens because people make it happen Who stands to gain?

Who stands to lose?

What do they care about?

What do they want to see change?

How can you measure that?

How can you minimise the effort of measurement?

What can you report?

How much do parents love their children? How much is a parent willing to pay to

have a child?

How do we know?

Is this a reasonable (conservative) cash figure for how much love is worth?

Customer Satisfaction – what does it mean? How much does a customer cost to acquire?

How much is the lifetime worth of a customer?

How many customers will you acquire with your new capability?

Will you change their lifetime worth, on average?

How much difference do you think this will make, in financial terms?

What is the Return on Investment?

Staff satisfaction – what does it mean? How long does the average member of staff

stay?

What are the recruitment, onboarding and induction costs?

How much does sickness/ absence cost?

How much difference will you make to each of the above by your new programme?

What is the Return on Investment?

Chain of Causality/ logic chain

How much of the benefits we are measuring can be attributed to the programme we’re managing?

– What else is going on? (changes in the environment, other projects)

– Is there a logical connection?

– What’s attributed to the sum total of “everything else”?

SROI and Sensitivity Analysis

RoI

– Total return / total cost

Worst case

Most likely case

Best case

LM3 – Local Multiplier 3 A simple example of how money makes money

My company pays me £5000. I pay tax.

I spend what remains on cars/ insurance/ buying food and stuff/ entertainment and eating out. Each business pays tax.

They pay their employees. They pay tax

Each employee spends what remains on cars … eating out. Each business pays tax

Does the money run out?

If we’ve created £15000 from the £5000 that I spent (it touched 7 pairs of hands before it left the North East), where did it come from?

Some things to be aware of

Deadweight

Attribution

Causality

Believability

Standard approaches

Exercise – example measures

What would success look like for each of these Programmes (based on FTSE100 Bakery/ high street eatery)?

ICT investment – a new CRM system

Fleet cars for management

Ventilation system for a bakery

Replacing bakeries in built up areas with a single bakery out of town

Exercise ReminderSix stages of SROI1. Establishing scope and identifying key

stakeholders

2. Mapping outcomes – relationship between inputs, outputs and outcomes

3. Evidencing outcomes and giving them a value

4. Establishing impact (what would have happened anyway?)

5. Calculating the SROI – and sensitivity analysis

6. Reporting, using and embedding

Exercise CRM System

1. Stakeholders (5min)

2. Inputs, outputs and outcomes (Chain of Causality) (3min)

3. Evidence and value (how will you measure?) (3min)

4. Impact (what would have happened anyway?) (2min)

5. Calculating the SROI – What is sensitivity analysis? (2min)

6. Reporting, using and embedding

Some useful tools

The ‘Guide to Social Return on Investment’ (Cabinet Office)

SROI Thought Leadership Guide

HACT measures library

Hugo Minney

PhD, RPP

FAPM,

07786 961837

Hugo.Minney@TheSocialReturnCo.org