Lessons from an impact pioneer: Measure your value and mean it

The Furniture Resources Centre (FRC) is a pioneering social enterprise with a fine-tuned approach to impact measurement that empowers “beneficiaries” and drives better social business decisions. Adam Richards, impact manager at FRC explains how they do it.

I’m often told that the barriers to using the social return on investment (SROI) framework are the extensive resource requirements. And yes, of course there are resource demands, but I personally don’t believe these are sufficient to stop any organisation having a go. 

At FRC Group in Liverpool we have developed social value budgets for a number of existing and potential activities. These run alongside our financial budgets, and yes, a lot of time has gone into their development, but we see that as time well-spent. We’re a social business, and we have always known we do good things; in fact visit us and you will see that phrase in our reception. But how can we truly claim accountability to our key stakeholders and maximise our social impacts, and do as many good things as possible, if we don’t understand what they are?

At this stage, this may sound daunting and a distance from where you are now, and the familiar alarm bells of limited resources may be ringing – but start simply by asking those people that understand your impacts best, be they your customers, clients, employees or partners. This is the thing I like most about the SROI framework – you simply cannot do it without involving the people that matter most.

By asking key stakeholders for their experiences (or those they anticipate), we are able to effectively measure our KPIs. At FRC Group these include trainees securing work, and the number of low-income families receiving good-quality furniture. These are relatively straight-forward outcomes that you would expect to measure, but they are not the only things that have changed. What about other important impacts – both positive and negative?

So now, not just resource intensive and complex, he wants us to measure and report on negative changes. How are those alarm bells sounding now? So, let’s ask a question; Why wouldn’t you want to better understand the impacts of your organisation, in order to manage these? This is not measurement for the sake of measurement; it is to improve understanding and decision-making.

What to use it for?

Before providing a brief outline of FRC Group’s approach to social value budgeting, let’s address a common criticism of SROI; external comparison, the limited potential for comparing organisations in terms of their social impact. I’m sure I don’t need to remind anyone that any investor worth their salt wouldn’t base their decisions on a single indicator, without also seeking to understand the context of the number, yet there is a potential danger that the SROI ratio is taken in itself as ‘proof’ of impact. But where we can see the real value of SROI is as a framework that supports internal decision-making. 

I’ve been working with the FRC Group and SROI for about 8 years now, starting with the same intentions as most – we wanted a way to externally demonstrate our impacts. And whilst we still see the value in this for some interested stakeholders, we have realised over the years that the real potential is to improve our strategic decision-making. Comparing results internally, where there is consistency of indicators and financial proxies, immediately eliminates the argument that results cannot be compared, and equally, any over-inflation of results will only be to our detriment.

What we have done is to understand the difference in social impact analysis that has the level of rigour to satisfy external audiences, and that which is detailed enough to allow us to make better decisions. By creating the necessary systems to collect and process social impacts information we have embedded the approach at all levels of the organisation. From each team leader inputting social impacts information, to reporting to Board level on a quarterly basis, budgeted social performance is compared against actual social performance. Through this process, still in the early stages of use, we have already seen that we have again improved our understanding of our social impacts, and significantly where we can make things better.  

As an example, we now understand that many participants on a work-experience programme improve their confidence to find work. But what we now also better understand is that if these people do not subsequently find work, their confidence can be further reduced. This is a negative social impact – and it is our responsibility as an organisation to address this challenge. We will continue to work with our members to improve their chance of securing employment, and this may involve making some tough decisions in the future about our activities. But we are confident that we are making decisions that hold us to account to our key stakeholders – ultimately working to better improve the lives of long-term unemployed and people on low-incomes.