measuring and reporting non-financial benefits using the social return on investment (sroi)...
TRANSCRIPT
Measuring and
reporting non-financial
benefits using the
Social Return on
Investment (SROI)
framework
Hugo Minney (RPP, FAPM)
Benefits Management
Summit, June 2016
Contents
50 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 Management
A 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
process
Used for identifying your
stakeholders
Six stages of SROI
1. 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 Reminder
Six stages of SROI
1. 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
This presentation was delivered
at an APM event
To find out more about
upcoming events please visit our
website www.apm.org.uk/events