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INNOVATIVE MEASUREMENT OF SOCIAL VALUE BLENDING THE PUBLIC, PRIVATE AND THIRD SECTORS IN THE UK



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INNOVATIVE MEASUREMENT OF SOCIAL VALUE BLENDING THE PUBLIC, PRIVATE AND THIRD SECTORS IN THE UK

123.Jaroslava Hrabětová – John M. Daly – Marie Dohnalová – Steven McCabe



Abstract

In contemporary society there is an increasing importance attached to measuring social value and social impact organizations in the public, private and third sector create. In particular public and third sector organisations as a result of ongoing austerity measures face persistent uncertainties in regard to revenues which impact upon services and need to prove quality, efficiency, purpose and transparency for varied stakeholders including commissioners, funders grant stipulations, oversight agencies, and community. This paper presents results of three social value analyses: a) Willmott Dixon a private company in the construction and property sector (2014), b) Made in Corby third sector arts project, Northamptonshire (2015), c) West Midlands Fire Service (2015) public sector procurement pilot. The chosen quantitative methodology for social value analyses is the Social Earnings Ratio (S/E Ratio) the fastest growing metric currently being adopted in the field of social value measurement, a disruptive, social innovative metric based on international General Accounting Principles (GAP) converting sentiment into financial value. The approach has been developed by the UK based Centre for Citizenship, Enterprise and Governance (CCEG) providing a low cost, high volume measure of social impact intangibles or social value providing a single benchmarkable metric of organisations across all sectors.


Key words: Social Value, Social Impact, Social Innovation, Social Earnings Ratio, Public, Private and Third sectors
JEL Code: M14, M49, Z19

124.Introduction


In contemporary society there is an increasing importance attached to measuring social value and social impact organizations in the public, private and third sector create. Social value represents intangible and non-financial value. In particular public and third sector organisations as a result of ongoing austerity measures face persistent uncertainties in regard to revenues which impact upon services and need to prove quality, efficiency, purpose and transparency for varied stakeholders including commissioners, funders grant stipulations, oversight agencies, and community.

125.1 Innovative Measurement of Social Value: Methodology


Social Earnings Ratio® (S/E Ratio®)0 was the chosen quantitative methodology for social value assessment in all three case studies, the Social Earnings Ratio (S/E Ratio) is an officially recognised social impact metric translating sentiment into financial value and is compliant with EU Social Value procurement regulations and the Social Value Act 2012 (SVA2012). Since the advent in the UK of the Act from January 2013 (HM Government, 2012) more and more local authorities and public sector commissioners are considering the potential social value offered by bidders in addition to cost in their procurement processes to deliver additional economic, social and environmental value in the tender. The Social value Act, for the first time, places a duty on public bodies to consider social value ahead of procurement and to deliver social impact through procurement. This will impact not only on public sector bodies to articulate their social value delivery but private companies bidding for contracts and third sector organisations in receipt of grant funding.

The target level of created social value is typically in the range 10-20% of the contract or project value. For example, a €500 million house build contract can be expected to produce up to €100 million of social value. It is being used in local government, health, social care, emergency services, indeed any public sector tender with some 20,000 UK organisations expected to comply therefore the need to embrace this ethos is required by private companies bidding for local authority contracts, public sector organisations to attain the social economic and environmental impact required of the social value act and third sector organisations to quantify the social value delivered through grant funding.


1.1 Introduction to the Social Earnings Ratio (S/E Ratio) Theoretical Framework


The burgeoning of Intangible Values in our society is at the centre of developing international legislative frameworks such as the UK Public services (Social Value Act) 2012 (Hrabětová, Dohnalová and Ta’eed, 2015) and to measure these intangibles the Social Earnings Ratio (S/E Ratio) has become the fastest growing metric currently being adopted in the field of social value measurement harnessing sentiment analysis and big data to allow scientific rigour in soft intangible discovery generating a one number metric that purports to be the currency of non-financial value. The S/E metric is a powerful all-encompassing disruptive financial metric based on General Accounting Principles (GAP) that operates at all levels and has been created under open source Creative Commons 4.0 license illustrated in Fig 1. It has been developed by the CCEG and highlighted in Lord Young’s Social Value Act report in February 2015 (Cabinet office, 2015) as a quick, low cost, high volume way to assess social impact providing a single metric.

Fig. 1: The Social Earnings Ratio Model Levels of Value

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Source: Centre for Citizenship, Enterprise and Governance, 2015

The Social Earnings Ratio® extends market theories that calculate capitalisation as an artefact of financial sentiment. The propensity of sentiment analysis and big data has allowed the same instruments to be used in a multi-stakeholder citizenship framework. The S/E Ratio® is the corollary of the Price Earnings Ratio (p/e) which is the single number metric that articulates financial value.

Total Value = Financial Value + Social Value = p/e + s/e (1)

The mathematical formulation of S/E Ratio has been well delineated elsewhere (Hrabetova and Ta’eed, 2015) but as an overview S/E purports to turn sentiment into financial value, effectively digitising value across micro, meso and macro levels using the same metric; it aims to be the currency of non-financial value in the same way as the € is the currency of financial value. In summary, it is the broadening of financial sentiment determining shareholder value, replicated to non-financial stakeholder value through the determination of social sentiment.


1. 2 Synthesising Big Data and Sentiment Analysis


Facebook likes, LinkedIn links, Twitter trending, are consumer manifestations of feedback sentiment in action. Similarly in business eBay feedback, NetPromoter.com RAG, TripAdvisor stars, are differentiators. The necessity for feedback is already part of EU GECES Social Impact Measurement (GECES, 2014) recommendations demanding that two questions are asked from the receiver of the intervention – did they want it, and what do they think if it? Without it would result in the previously accepted concept of CSR with no regard as to the outcome of the intervention but purely focussed on the resources applied ie. Output, not Impact (Ta’eed, 2014).

An important element of the The Social Earnings Ratio® scoring that was used in all three highlighted case studies was the synthesise of sentiment into the calcualtion this Sentiment Analysis is a result of Web 3.0 Semantic Web development where words are examined in the context of surrounding language to articulate support for an organisation in terms of positive/neutral/negative sentiments, strength and passion harnessing social media search and analysis platforms that aggregate user generated content from across the web into a single stream of information. It allows tracking and measuring what people are saying about an organisation across the social media landscape in real-time including: Twitter, Facebook, YouTube, Google.


126.2 Social Value Analyses Case Studies – Private, Public and third Sectors

2.1 Willmott Dixon a private company in the construction and property sector (2014)


Since the introduction in January 2013 of the Social Value Act 2012 in the UK there has been a requirement stating “public authorities to have regard to economic, social and environmental well-being in connection with public services contracts”(HM Government, 2012:1). Willmott Dixon (WD) is moving towards a GRI (Global Reporting Initiative) type measuring and reporting framework. Using the Social Impact SE Ratio metric, the analysis shows a direct correlation between Willmott Dixon’s progression from CSR, to Sustainability, to Social Impact and the company’s 2009-2011 initiatives of WD Sustainability, WD Rethinking and the current WD Foundation. In continuously reexamining and renewing the corporate core values, and building on rather than replacing programmes, the Board has perhaps more intuitively than planned remained on agenda and aligned to current thinking. Perhaps more surprisingly, despite a deep recession at the time and the inevitable restrictions on social expenditure that created.

Willmott Dixon has managed a year on year increase social impact index score since 2011 (fig 3), the S/E Ratio. The total value of an organisation being both their social value (S/E Ratio) and their financial value (P/E Ratio). The key mechanism for this growth appears to have involved a remarkable articulation of its core values through its organisation at every level, ensuring a close proximity and interaction between the staff and the communities in which they engage. This ‘degrees of separation’ between social output and impact - on average less than one for Willmott Dixon – has ensured a high index report and rapidity of translation to social outcome.



Fig. 3: Willmott Dixon Social Impact Metrics

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Source: Ta’eed & Pryce, 2014

Willmott Dixon is an exemplar in the field of private companies adopting a social value agenda into thie business strategy developing a model to deliver a more blended and coherent solution of private, public, third and community sector intervention closely aligned to the WD Foundation’s stated goals of seeking social impact within a youth exclusion framework. Formulated around three key areas of



  • Skills Development through the WD Academy accredited by a University

  • Leveraged funding through the WD Social Enterprise Intermediary,

  • Local Intervention together with statutory bodies, multiple corporate partners, and voluntary groups

An example been a project undertaken for Nottingham City Council to address significant post-riot gang warfare issues in Basford and Bulwell; partners led by Willmott Dixon and partnering with the Co-Op Group, PWC, Blackberry, Fire Service and Babcock as well youth engagement CIC -The Future Melting Pot. Since the introduction of the Social Value Act 2012 local authorities are increasingly looking for ‘Big Society’ type interventions using legislation to leverage social value delivery through private tenders contractual obligations (Ta’eed & Pryce, 2014).

2.2 Made in Corby third sector arts project (2015)


Made in Corby (MiC) is a sustainable 3 year programme funded by the Arts Council England as part of its national Creative People and Places programme. The aim is to deliver lasting change in Corby through a three year programme of new arts events and activities and to inspire more local people than ever before to take the lead in experiencing, creating and taking part in high quality arts and cultural activities. Historical and current social, economic and demographic status of Corby signposts potential benefits from greater involvement of local people in the arts, as well as strengthening of ambition and confidence of local residents (Hrabětová, 2015).

The MiC project is performing well with impressive delivery of social value achievements as illustrated in fig 4. Those engaged are drawing a great deal of social value from MiC, but hitherto tend to be from the more wealthy backgrounds. Rather than this being a failure of inclusion, however, it is in itself a success. Using the lure of High Art, MiC has managed to pursuade a significant number of people from London, a more affluent area of the UK, to journey to Corby, which has areas of deprivation. Wealth does not negate the impact of Personal Value (Hrabětová, 2015).



Fig. 4: Flow of Value of MiC Project



Source: Hrabětová, 2015

2.3 West Midlands Fire Service public sector procurement pilot (2015)


Since the advent in England of the Social Value Act (2012) from January 2013 more and more local authorities and public sector commissioners are considering the potential social value offered by bidders in addition to cost in their procurement processes to deliver additional economic, social and environmental value in the tender. The Social value Act, for the first time, places a duty on public bodies to consider social value ahead of procurement and to deliver social impact through procurement (HM Government, 2012).

Interim results of a longitudinal research study commenced in 2015 investigating West Midlands Fire Service (WFMS) embarking on a social value roll-out measuring the current and future social value of the organisation, measuring the leveraged social value procurement bidders offered, investigating the impact of the social value delivered by the winning bidder in a pilot ‘learning excellence’ tender and developing digital GIS mapping of WMFS’ third sector collaborations and impact in the community synthesising the theoretical framework of social impact theory with WMFS high impact data and hyperlocality mapping. WMFS driver was to illustrate it’s presence as a ‘Force for Good’ allowing it to articulate their lifetime value creation for Commissioners delivering social value both internally and in the procurement process (Daly et al., 2016).

The challenge for WMFS was to put into the pilot tender a social value requirement to deliver an aspiration of 20% of the financial value of the contract as social value in the form of social, economic and environmental added value through exploring a blended solution between the public, private and third sectors. The social value offering of bidders in relation to a Learning and Development Tender was measured using the social earnings ratio tool. The tender process carried out in May 2015 highlighted that the social value score which was worth 10% of the overal scoring was a differentiator in the awarding of the contract as highlighted in table 1 wherby organisation E won the contract over organisation D.

Tab. 1: WMFS ‘Leading Excellence’ learning tender scoring, 2015


Tenderer

Social Value (10%)

Total (100%)

Tender A

8.20

61.10

Tender B

6.80

46.09

Tender C

7.06

38.15

Tender D

5.52

63.52

Tender E

10.00

67.37










Source: Daly, Hrabětová & McCabe, 2016

The initial research highlighted that as a key public sector figure and “Force for Good” WMFS are in a perfect position to act as an exemplar model for fire services in the delivery of social value both internally and in the procurement process by taking up and embracing awareness of the social earnings ratio metric to measure social value and use procurement strategy to contribute to the funding gap for non-statutory firefighting work (Daly, Hrabětová & McCabe, 2016).


127.Conclusion


This paper demonstrates that the measurement of social values (intangible values) can be adopted by various organizations across blended sectors utilizing one single measurement tool, The Social Earnings Ratio® a quick, low cost, high volume way to assess social impact providing a single metric allowed for benchmarking not only within a single sector but across the private, public and third sector organizations to measure social value generated. Practical commissioned examples of this multi sector adoption since 2014 delivered by the Centre for Citizenship, Enterprise and Governance (CCEG) highlighted the measuring of social impact of Willmott Dixon a private company in the construction and property sector (2014), the arts in Corby a third sector project (2015) and Social Value Analysis of West Midlands Fire Service the third largest public sector fire and rescue service in the UK (2015). The commissions allowed all the organizations measured to evidence their quality, efficiency, purpose and transparency based on the use of a single socially innovative measurement of social impact/ social value delivery. Since the advent of the The Social value Act 2012 in the UK, placing a duty on public bodies to consider social value ahead of procurement and to deliver social impact through procurement the need to articulate social value delivery through an innovative single benchmarkable measurement applies across the blended sector of private companies bidding for local authority contracts, public sector organisations that need to attain the social economic and environmental impact required of the social value act and third sector organisations to quantify the social value delivered through grant funding.

128.Acknowledgment


West Midlands Fire service (WMFS), Centre for Citizenship Enterprise and Governance (CCEG), Seratio Ltd (SERATIO), Birmingham City University (BCU), Charles University in Prague, Faculty of Humanities.

129.References


Areti, S. (1970). General System Theory - Bertalanffy, LV. American Journal of Psychology, 126(8), 1187-1188.

Cabinet office. (2015). Social value Act review. London: HMSO.

Center for Citizenship, Enteprise and Goverance. (2015). Measuring the Movement of Non–Financial and Intangible value. Northampton: Centre for Citizenship, Enterprise and Governance.

Daly, J., Hrabětová, J. & McCabe, S. (2016). Measuring and Leveraging Social Value through Public Sector Procurement in the UK. Praha: Mezinárodní online open-access konference Výzkum v sociálních a humanitních vědách – nové pohledy Global Scientific CZ.

Daly, J., McCabe S., Brook B. & Ta’eed O. (2016). Social Value in UK Public Procurement-Longitudinal Study of West Midlands Fire Service. 25th IPSERA Conference, 20–23 March 2016, Dortmund: Germany.

HM Government. (2012). Public Services (Social Value Act) 2012. London: The National Archives.

Hrabětová, J. (2015). Social Value of the Arts: Made in Corby, Social Value & Intangibles Review, 1(2), 49-50.

Hrabětová, J., Dohnalová, M. & Ta’eed, O. (2015). The Paradox of Intangible Values. In Dvořáková, Z. & Fedorová, A. (Eds.). CSR: University Builds Country. Praha: Ústav personalistiky.

Latané, B. (1981). The psychology of social impact. American Psychologist, 36 (4), 343-356.

Latané, B., Liu, J. H., Nowak, A. & Bonevento M. (1995). Distance Matters: Physical Space and Social Impact. Personality and Social Psychology Bulletin 21(8), 795-805.

Lubov, D. (2015). The Vatican Has Long Promoted Intangible Values; Can They Be Measured? Olinga Ta’eed, Man Who Developed So-Called God Metric, Says They Can & Should. Zenit.

Ta’eed, O. (Ed.) (2014). Social Value in Public Procurement. Northampton: Centre for Citizenship, Enterprise and Governance.

Ta’eed, O., & Pryce, A. (2014). Willmott Dixon – Measuring Social Value withing SCAPE Framework. Northampton: Centre for Citizenship, Enterprie and Governance.
Contact

Jaroslava Hrabětová, JUDr. Mgr.

Charles University in Prague, Faculty of Humanities

U Kříže 8, Praha 5 – Jinonice, 158 00, Czech Republic

Jaroslava.Hrabetova@fhs.cuni.cz
John M Daly BSc (Hons)

Birmingham City University, Birmingham City Business School, Faculty of Business, Law and Social Sciences

The Curzon Building 4 Cardigan Street, Birmingham B4 7BD, United Kingdom

john.daly@mail.bcu.ac.uk


Marie Dohnalová, Ing. PhD, Assoc. Prof.

Charles University in Prague, Faculty of Humanities

U Kříže 8, Praha 5 – Jinonice, 158 00, Czech Republic

marie.dohnalova@fhs.cuni.cz


Steven McCabe PhD

Birmingham City University, Faculty of Business, Law and Social Sciences, Director of Research Degree Programmes

Birmingham City University, Room 257 Curzon Building, City Centre Campus, Cardigan Street, Birmingham, B4 7BD, United Kingdom

steve.mccabe@bcu.ac.uk





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