The challenge of measuring social value

Social value
Social value

How do you compare the social value of two organisations that both want to supply desks to a government department? It was a question posed by Lord Young of Graffham at Social Enterprise UK and Interserve's Social Value Summit in February, before the publication later that month of his review of the Public Services (Social Value) Act 2012.

Young argued that, without more standardisation, commissioners of public services faced the uphill task of comparing one organisation's social value with that of another. In his review of the social value act, he said more organisations should quantify the difference they make in monetary terms and that further steps should be taken to establish which measurement technique should be used, and when.

Sarah Crawley, chief executive of iSE, a social enterprise development organisation based in Birmingham, describes the lack of comparable measurement tools as the "elephant in the room" for social enterprises. "There are lots of measurement tools and toolkits out there, but none is universally recognised by procurement officers," she says. But, she says, it will always be difficult to compare, say, an employment service with a smoking-cessation service because they use different measurements to show the social difference they make.

Sarah Forster, director of development at the social investor Big Issue Invest, says she understands Young's concerns about the need for consistent measurement, but does not agree about the approach he advocates. She says: "Lord Young seems to talk about social value in monetary terms and about value for money for commissioners. Using these criteria could make it easier to compare bids, but there's a danger of missing the essence of what we're trying to achieve in terms of social value creation. The focus should be on achieving better outcomes."

There are metrics that can indicate the effectiveness of an organisation from a social perspective, Forster says; for example, when assessing a healthcare organisation, one might want to see data on customer satisfaction and staff retention levels.

Verity Timmins, impact manager at the Liverpool-based social enterprise the FRC Group, says social enterprises should use social value measurement more widely, making it as much a part of how they conduct business as doing their financial accounts. But she says they shouldn't be required to adhere rigidly to a specific measurement tool. Instead, she says, public bodies that purchase services should become "more informed buyers" and understand the key principles behind social value measurement. She says: "Social enterprises need to feel confident that commissioners are discerning consumers of social value data who can identify instances of over-claiming value or social value statements that portray an unrealistic level of social value."

In his report, Lord Young cites a number of measurements that more social enterprises should consider using, such as social return on investment and cost-benefit analysis. Graham Randles, managing director of NEF Consulting, an arm of the think tank the New Economics Foundation, urges caution about using such measures as the basis for awarding contracts. "A detailed study of social return on investment will come out with a ratio, which is a useful figure in the right context," he says. "But we don't want people who are carrying out procurement and commissioning to be comparing different providers or services on the basis of a ratio."

NEF Consulting has recently been working with Portsmouth City Council and local social enterprises to create a common approach to social value. Randles says commissioners and providers often don't speak a common language when it comes to social value. "Having such conversations helps the local authority understand how social enterprises measure their social value and see the diversity of approaches to it," he says.

Randles says social value measurement is more suited to a bottom-up approach: "I don't dismiss a national approach, but I think it should be more in the way of guidance than something more rigid."

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