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Sustainability & Organizations Institute

S&O Launches New Tool to Measure Social Responsibility Impact

In February, HEC’s S&O research center unveiled groundbreaking proposals to standardize social impact measurements for industry, development agencies, consultancy firms and NGOs.

Social Impact Assessment Strategy Report - HEC Paris

“By educating organizational members about the impact value chain, you can use the conceptualization both for managing the impact effort and for impact evaluation.” (p.37)

The sentence might read like a slightly esoteric approach to one of the tenets of measuring social responsibility impact. Yet, like the dozens of insights proposed in the Social Impact Assessment Strategy Report, it leads directly to a hands-on solution linked to the perennial, complex and vital issue of impact measurement. Thanks to this thorough and engaging 90-page study, three top researchers from HEC Paris Center for Society & Organizations (S&O) aim not only to disentangle measurement tools currently in use, but also to propose standardized methods to assess social impact in the business, investment and international development fields. 

Tackling the Challenges

The Social Impact Assessment Strategy Report is an important stepping-stone for the Movement for the Social * Business Impact (MSBI), initiated two years ago by the business school and five major French multinationals. Researchers Sookyoung Lee, Zacharia Rodgers and Rodolphe Durand propose a landmark assessment tool designed for the major CSR players and decision-makers at a time social impact gathers unprecedented momentum in global business and industry. “This is one of the first attempts ever to combine the visions on impact espoused by corporations, development agencies and consultants,” explains Professor Durand, Academic Director for S&O. “We’ve conducted a thorough investigation into the typical conceptual errors that have been made: the validity of an indicator, causal associations, inconsistency across time, projects and locations, and so on. All of these lead to biases of interpretation which are costly, misleading and ineffective. After pinpointing them, our report suggests dozens of ways of tacking these challenges.”

As part of its own sustainability drive, Schneider Electric has been a committed member of the MS*BI from its inception in November 2016. The company’s Sustainability Chief Officer Gilles Vermot Desroches feels this latest report marks a turning-point in what he calls the “indispensable hybridization of organizations to join efforts in implementing the UN’s 17 SDG Objectives.” He pursues: “This study demonstrates that ‘Giving a meaning to life’ is not only an individual’s aspiration but it is fermenting similar objectives in the world of business. The report goes even further, because it is both intellectually founded and a catalyst for concrete actions.”

Three-pronged Approach

The ambitious study is divided into three parts. It opens by identifying the major players, or “evaluators”, who conduct impact assessment, such as development banks, non-profit organizations and corporate groups. The researchers then explore the approaches to social impact measurement by these actors before providing six case studies. These vary from World Bank projects for youth employment assistance to the benefit-cost ratio for job placement by the Robin Hood Foundation.

Part Two highlights the seven measurement challenges posed by impact assessment and some of it might not make pleasant reading for business and development organizations: “These challenges are especially prevalent and damaging to impact efforts,” note the authors, before illustrating the obstacles that assessment actors are prone to: confusion, inconsistency, misunderstanding, blindness, over-simplification, partiality and lack of generalizability. For each of these cases, however, the academics offer highlighted solutions which are painstakingly mapped out in the final two parts: “Social impact measurement is enormously challenging in many ways,” insists research fellow Sookyoung Lee. “Not only do companies have to navigate the seven core challenges our research has outlined, they also have to figure out whether or not how and when to measure impact and how to communicate their findings – whether to be coy about their activities and how this will impact their credibility.”

Four Stages and Ten Tools

These complex factors are largely addressed in the third and final part consisting of over 30 pages of tools and strategies for readers to apply to their social impact measurement efforts. “We’ve developed a set of four steps or recommendations which are bundled with 10 practical tools,” explains researcher Zacharia Rodgers. “These will empower organizations to guard against and address the practical measurement and strategic challenges that we’ve outlined in this field. This constitutes a new standardized strategy that will help organizations to not only evaluate their efforts, but to set and revise their social impact goals.”

The proposals are as broad as they are deep. The academics, for example, suggest a detailed mapping of the impact value chain to allow both troubleshooting and innovation. These, they suggest, “help to identify where problems might occur in your impact value chain. These help to facilitate continuous improvement by identifying bottlenecks, measurement problems, and connection problems between multiple parts of a chain.”

The researchers base their conclusions on dozens of investigations of businesses and organizations worldwide. These vary from development programs for women empowerment and education, to New York City law firms and their CSR activities. These two examples had flaws, the former being guilty of what the authors call “hidden factor correlation”, the latter of omission errors. In both cases, the organizations miscalculate their actions’ impact. Often, it is economic growth which is the hidden factor affecting both fields. “If you are trying to maximize women empowerment and education,” they inform, “your social impact efforts might be more productive when focused on providing jobs to women in emerging economies, rather than empowerment trainings alone.” Other pragmatic ways are then suggested to pre-empt such miscalculations, like this one: “Causal diagramming can be a helpful exercise to determine what likely causes relate to the intended positive social impacts.”

Painstakingly, the three academics thus map out practical solutions to assessment challenges which have been dogging players in the multi-billion euro sector for decades. They seek to assess their corporate social responsibility initiatives by using a four-stage measurement framework which aims to improve effectiveness, scalability and return on impact initiatives. “Businesses and organizations have long been aware of the challenges such practical assessments pose,” says Rodolphe Durand. Schneider Electric’s Gilles Vermot Desroches concurs: “There needs to be coherence and consistency in measurement. It’s vital for building up the attractiveness of the employer’s brand and for exploring new paths of innovation, both in the technological and the business model fields.” While there is understandable impatience in finding universal measurement tools, Durand reminds people that this is still a relatively young domain: “Don’t forget that forging universal accounting standards took 150 years! I would say social impact prerogatives have only been around 30 years. However, it’s clear that there’s an urgent need for these tools, since standardization can reduce social- and green-washing. It’s one of the bricks in the wall to help build stronger evaluation methodology.”

The MSBI Movement has been working on transversal questions on social impact for the past 28 months. A total of 11 researchers have been focused on five major themes and business cases, each of which has resulted in one or two publications.
 

Download the report