From 1st January 2021 Social Value becomes mandatory in all Central Government procurement. In this article, we will explore why the new model is so important and why private sector organisations should embrace it.
Procurement Policy Note 06/20 (PPN06), which was published in September, is seismic news for Central Government departments; their executive agencies; non-department public bodies; and of course the Government’s 34 strategic private sector suppliers who will be spending the final quarter of the year familiarising themselves with the new Social Value Delivery Model which comes into effect in January 2021.
Yet the new model also has huge implications for any organisation in the public sector supply chain - whether directly or indirectly. In fact, the model may well prove to be the catalyst that finally moves Social Value to the top of the corporate agenda and transforms how Social Value is delivered across the board.
A new era for Social Value
Fundamentally, the release of PPN06 is not just about the public sector updating its procurement procedures – after all, the public sector very rarely leads the charge when it comes to business innovation. Rather, it is a response to wider trends and cultural pressures that are forcing all organisations to change how they operate.
At Samtaler, we regularly speak to private sector organisations that are still struggling to understand the commercial benefits of Social Value. But whether you call it Social Value, ESG or CSR - investors, employees, customers and other stakeholders are increasingly demanding that organisations demonstrate positive impact beyond profits and those that don’t will ultimately find it affects their bottom line.
Research from 2018 showed that 89% of job seekers expect companies to have a clear mission and purpose and three-quarters would turn down a job if a company’s values didn’t match their own. The 2020 Edelman Trust Barometer shows that both competence AND ethics are essential when it comes to building trust with consumers while other studies show that more than half of UK consumers want to buy goods and services from companies that stand for a shared purpose and reflect their personal values and beliefs.
Just as Central Government is moving Social Value from being something that should be ‘considered’ to something that needs to be ‘explicitly evaluated’ - to the point that it holds enough weight to become a differentiating factor in bid evaluations - so too the general public is increasingly holding organisations to account. As such, social value can no longer be a ‘nice to have’ or a niche add-on; it is something that has tangible commercial benefit and should be embedded within your operational strategy and objectives.
A framework for best practice
The wonderful thing is that whether you work in the public or private sector the new Central Government Social Value Delivery Model offers a ready-made framework that tackles two of the biggest challenge that organisations face when creating Social Value:
The Model sets out five themes which organisations can use as a starting point to identify their priorities and then a menu of specific suggestions of how to create and benchmark Social Value in these areas.
The key themes are:
1. Help local communities to manage and recover from the impact of COVID-19
Some of the groups most impacted by the pandemic are people suffering from poor mental health, lonely and isolated older people, victims of domestic abuse, immigrants, the homeless, the unemployed and people with long-term health conditions.
2. Tackling economic inequality by:
3. Fighting climate change
4. Prioritising equal opportunities by:
5. Prioritising wellbeing by:
Many of these suggestions are things your organisation should already be doing, but by pulling these threads together you can more effectively develop a Social Value strategy that will be deliverable, measurable and most importantly, impactful.
Challenge and change
Wherever you are on your Social Value journey, it’s important to understand that “Social Value” is fundamentally a principle that should inform everything your organisation does. Far too many organisations are still addressing these issues tactically or delegating them to a particular department, when to be truly effective, these changes need to be integrated into every aspect of your operations.
A specific organisation-wide Social Value strategy is a good place to start. Get senior management around the table and involve every department in assessing which key outcomes are most important to your stakeholders – both internally and externally. View these in the context of your spend and align them with your strategic priorities.
Once you have a strategy in place, make sure everyone in your organisation knows about it. Your staff are busy, stretched and many of them are working from home. They need leadership from the top to help them understand and implement this properly. Don’t underestimate the need for training in changing your organisation’s culture and processes. Identify areas where you need support and consider bringing in a third party who may work with you on an ongoing basis to tackle specific issues such as unconscious racial bias.
PPN006 is a reminder that these issues are no longer something that organisations can prevaricate about or address half-heartedly. The public have already moved Social Value to the top of their priority list, it’s time for organisations to follow suit. Only then will businesses begin to see the commercial benefits of doing these things well.
As Claire Bodanis, author of “Trust Me I’m Listed”, told us recently: “People are starting to recognise that value isn’t just about financial value and that there are long-term benefits to businesses that actively address these issues. Ultimately companies that continue to just prioritise profits won’t survive in the future.”