Having a double bottom line requires successful social enterprises to measure both financial and social outcomes and impact. Evidence, as a driver to scale, involves both collecting and acting on the data appropriately to improve business operations and employee supports to reach long-term strategic goals. For the social enterprises profiled in this learning guide, there are three main ways evidence has been used to achieve their social goals and grow their businesses simultaneously:
- Performance Management. Measuring and managing for performance improvement involves collecting real-time data on employee outcomes, work processes, quality of product/service, and financial indicators. These measures help social enterprises determine whether they are on track to meet their goals for employee outputs and outcomes, whether they are creating a quality product or service for their customers, and whether they are on track to meet longer-term strategic goals and make course corrections where necessary.
- Financial Discipline. Over the long run, social enterprises cannot achieve their intended impacts without financial stability and sustainability. Achieving this goal requires ongoing tracking of key indicators measuring the financial health and growth of the business. Similar to performance management, changes are made when opportunities present themselves and problems are identified.
- Measuring Impact and Return on Investment. Evidence is used to demonstrate the impact a social enterprise is having on its employees and the return on investment it is delivering to funders and/or the larger community. The most rigorous approach to measuring impact requires having an independent third party conduct an evaluation using experimental or quasi-experimental methods. However, collecting data on the long-term outcomes of employees can also be a valuable way to estimate individual and community-level impact.
Approaches to Evidence
The table below summarizes each enterprise’s approach to using evidence to facilitate growth. While all have systems to track and monitor key indicators, they vary in terms of their focus on financial versus social outcomes and the extent to which they are able to use the data in real time to identify problems and make course corrections.
All of the social enterprises are using data and evidence to measure both financial and social outcomes and progress. However, some are more sophisticated in their ability to use this information to manage toward both short- and long-term operational and strategic goals. For example, both Juma Ventures and Goodwill Central Texas have created sophisticated data systems and management reports that help them assess progress toward their social outcomes, while HT has a similarly sophisticated system designed to track financial and business-related goals.
As Juma started expanding its model to multiple sites, executive staff began to realize that upgrading its systems for data collection and performance management was necessary to assure efficient business operations and fidelity to the Juma program model. Juma hired a consultant to develop a data system in Efforts to Outcomes (ETO) that would track key participant/employee outcomes across the organization and eventually hired a Director of Learning and Evaluation to create, disseminate, and monitor performance at all levels of the organization. Dashboard reports, reviewed on a monthly basis, help staff identify and address problem areas. These reports include: (1) student dashboards for case managers to track student progress, (2) caseload reports for case managers and their supervisors to track the progress of their caseload as a whole and by cohort, (3) program-level dashboards for site directors to monitor all student and business-related outcomes in a geographic location, and (4) a variety of higher-level reports that track larger organization-wide success factors and progress on strategic objectives. Having reports at all levels of operation helps Juma drill down on problem areas. For example, if a site has low savings rate, executive and site staff can determine whether a small handful of students are not saving or whether it is a more systemic issue and make changes accordingly.
Similarly, Goodwill Central Texas created a Performance Excellence division to help the organization track progress toward short- and long-term strategic goals. The division is responsible for tracking key indicators and improving data collection processes across the organization and creates three key reports. On a monthly basis, the Services and Employment Report (SER) tracks the number of people served in each program, course completions and certifications, the number placed in jobs, and average wage at placement. The Balanced Scorecard, also updated monthly, tracks indicators specific to goals in the strategic plan including its financials, intakes and job placements, jobs created, zero waste (recycling goal), donations, and staffing goals. These monthly reports help GCT use a forward-thinking approach whereby employees are able to track how far ahead or behind they are with their annual goals and adjust monthly goals accordingly. At the end of the year, the Outcome Management Report tracks whether each division has met these annual goals. The Performance Excellence division also measures GCT’s overall community economic impact based on the number of jobs created, people employed, wages earned, and taxes paid.
Other enterprises have more sophisticated systems to track the financial and business-related outcomes. HT tracks a range of financial metrics, including overall financial performance by business line, region, and contract; financial and employment growth by line; and a new rolling performance measure that tracks profitability relative to funding. As part of its business metrics, HT also tracks the performance of its services. Metrics tracked include: orders processed and shipped, number of items returned, items shipped without defect, and accuracy in order processing.
HT shares the performance metrics with both current and prospective clients to prove the effectiveness of the employees, but also to shine a light on the strict discipline HT brings to all of the work they do. HT Chief Operating Officer Greg Frank says these numbers “are really eye opening, especially for customers wary of what people with disabilities can do. They also help customers realize they can offload their administrative burden to HT, since the quality is higher than in other places.”
Measuring Impact and Return On Investment
Some of the social enterprises have gone beyond performance measurement to measure long-term social and economic impact. A few have done this by tracking the collective community economic impact of their work (e.g. number of jobs created, total earnings, total tax revenues, etc.), while others have made a greater effort to track the long-term outcomes of their employees. For example, Goodwill Central Texas was interested in learning more about how their participants fared once they left their job at Goodwill and moved on to unsubsidized employment. In order to learn more, GCT staff worked with researchers from the University of Texas in 2011 to track employment and earnings data for former participants. They found that many former participants were either out of work or earning very low wages. As a result, GCT took this information as a challenge to improve the type of training and job opportunities it offered, and it helped shape the direction of GCT’s 10-year plan, which included a greater focus on high-demand jobs that put participants on track toward living wage employment. A few years later, the GCT Career Academy was launched to help participants pursue professional certifications, including in Heating, Ventilating, and Air Conditioning (HVAC) and as a Certified Nursing Assistant (CNA).
To date, CEO is the only social enterprise of the 10 profiled that has conducted a randomized control trial (RCT) of its social and economic impact, and the research proved to be critical to its growth and expansion. In 2004, CEO participated in a RCT of organizations that serve “hard-to-employ” populations, funded by the Department of Health and Human Services and conducted by MDRC. Results published in 2010 show a 4:1 benefit-to-cost ratio of CEO’s program and an over 20 percent reduction in reconviction and returns to incarceration. CEO had the biggest impacts on the most high-risk subgroups of program participants. The MDRC evaluation also showed that recently released ex-offenders who enrolled at CEO had significantly lower rates on all measures of recidivism a full three years after their participation in the program.
Results from the evaluation highlighted CEO’s track record of reducing recidivism and demonstrated a commitment to rigorously evaluating impact, helping to secure and shore up funding. Recently paroled ex-offenders are a particularly challenging group to support, with high associated social costs. Being able to prove that CEO is a cost-effective solution to this problem increased the demand for its services.
Clearly, evidence can support ambitious goals for growth by allowing organizations to create standards across a growing organization, identify deviations from those standards, and make course corrections in real time. Using evaluation to prove impact and cost-effectiveness demonstrates value to funders and customers and benefits the social enterprise field more broadly. Experiences from these social enterprises provide some critical lessons for the field:
First, evidence to inform decision-making improves performance. The value of a well-structured performance management system is that it allows staff at all levels of the organization to work toward their goals and identify problems as they arise. Such a system requires: (1) that each employee has what they need to do their job and make course corrections, and (2) a culture of transparency to facilitate an honest assessment of what parts of business operations and employee supports are working well and not working well.
Second, proving long-term impact attracts funding and new customers. Quantifying impact— both from a social and economic perspective—will help clearly articulate the value proposition of the social enterprise, putting it in a better position to secure ongoing funding for growth and expansion. Conducting rigorous, experimental evaluations is a major investment of time and resources and should only be undertaken when both the program model and business are on a firm footing so the evaluation is measuring the impact of a fully implemented intervention. However, formative or developmental evaluation strategies can be employed to measure progress toward social outcomes and impact for organizations still implementing and perfecting their program model.