What is Social Value?

“What is Social Value?" and "How do I create it?” are the two of the most common questions we get asked. Interestingly, once people understand what social value is, they rarely ask the other question you might have expected: “Why should I do that?”

Along with 'purpose driven', 'social value' has become something of a buzzword in recent years as consumers demand more of the companies they buy from and more public sector procurers include social value clauses in their tenders.

From the outside, social value can seem complicated and expensive. A quick search online reveals ‘social value’ being tossed around in many contexts, from a box to tick to an aspiration  – there isn’t even an agreed definition.   In truth, what social value is largely depends on what your organisation is good at, what your goals are, and the specific circumstances in which you are operating.

At its heart social value is about ensuring that communities and the environment benefit from the businesses that operate within them. Approached properly, social value is a virtuous circle creating stronger, more sustainable and more profitable businesses.

'Social Value' in practice.

In the UK the term Social Value is most commonly used in the context of public sector procurement after legislation which compels public sector procurers to consider what additional social, economic and environmental benefits can be derived from the services they are procuring.

In the private sector the creation of social value is more commonly known as 'corporate social responsibility' (CSR), a sector that is evolving as more and more corporations realise that society is now their biggest stakeholder.

There is a seismic and fundamental shift underway in the workplace and across society as a whole; organisations are increasingly being judged not on their products and services, or even on the value they create for their shareholders, but on their relationships with their staff, customers and stakeholders; their impact on communities and the benefit they generate to society at large.

With calls to #BuildBackBetter following COVID19, there is additional pressure on companies to prove that they add rather than extract value. Social value could soon be seen as a panacea for the shareholder first/profit at any cost economy we are emerging from, an ‘easy’ way to get businesses to pull their weight. If this is not to be a short term fad, shareholders, boards, management teams and staff need to understand and see the benefits that a sound and effective social value/community benefit strategy can bring.

As you might expect, we believe that social value creation can not only differentiate organisations from the competition and win political and societal backing, but ensure strong healthy companies, and strong, healthy communities.  Done well, social value creation is the most obvious thing in the world – when you see it working well there really is no reason to consider doing business any other way - but it’s not easy to get there.

Without exception every single one of the companies we've worked with has seen multiple benefits, from improved staff retention to an increase in new business won, from working to maximise the social value of their activities. So why don't more companies do it? Mainly because it takes time and it's not easy. Too many people think they can rush in, tick a box, and move back to ‘business (more or less) as usual'.

Social value may well soon be seen as the path that keeps the economy strong and companies healthy but doing social value well isn’t as straightforward as it sounds.  It requires a new way of looking at how things in your business are done, and the way different parts of your organisation work together.

Done properly, it can enhance the commercial value of your company. Done badly it can be a damaging costly exercise which can blow up in your face. So how do you do it properly?

Here are six tips to help you create social value in a way which will generate real benefits for society, as well as building commercial value for your business:

1. Don’t see it as an add-on.
Social value needs to be led from the top and should be strategically positioned within the operations function of your business. If it is the purview of the communications or marketing team it will be treated as an add-on and something you are only doing to look good. That never ends well.

2. Make sure you have the skills and talent within your business to do it properly.
You need people who understand both how your business operates and its financial drivers; have good communication skills; and can engage with your stakeholders and find out what they need. They also need to be senior enough in your organisation to be able to have an impact, and understand how the third sector and local communities work.   That’s a unique skill set but it’s absolutely vital if you are going to be able to join the dots and make the connections you need to do social value well.

3. Identify who your key stakeholders are and what benefits they need.
Some of the most meaningful approaches to social value are created when businesses use the same approach to creating social value that policy makers take to creating policy: spend a bit of time working out what the people who are most important to you want you to do, and then find ways of doing it that work for you.

If you’re creating social value for a public sector bid, align your offer with the strategic priorities of the organisation you are bidding to work with. Every public sector procurer publishes annual strategic plans. Read them.

If you are creating it to enhance your commercial offer, talk to your stakeholders, and conduct a socio-economic study to find out what challenges your industry, sector or local community are facing.

Then talk to the public, community and third sector organisations working to address these issues and ask them what they need, and (more importantly) what you could do to contribute to the solution.

4. Get ideas for things you could do by reading the policy papers published by government or think tanks outlining the things businesses could do to take action on a specific issue.

Here is a useful article which lists the main think tanks in the UK.

The UK Government also conducts a lot of public consultations and produces a lot of policy documents which you can read here.

As an example many of these ideas for practical ways businesses can contribute towards efforts to address climate change, were based upon ideas we found in publicly available policy papers.

5. Decide what social value you can create by identifying the recommendations which most closely align with your core business.
You won’t be able to everything, nor should you be aiming to but it's often small changes that make the most difference and having an open mind. For example, if you’re a heating supplier, could you support a local charity that support people who are struggling with fuel poverty?   If logistics is your business, could you incorporate more social enterprises into your supply chain? Could food manufacturers work with organisations helping to combat obesity, and recruitment agencies partner with organisations helping to tackle unemployment and improve the skills gap amongst the most disadvantaged?

The help they need varies widely and more often than not doesn’t have to be expensive. If you redirect some of your staff’s volunteer days more strategically for example that costs you practically nothing and most third sector organisations and community groups would really value professional help with their back office support functions such as HR, Finance, IT or Marketing. If you show you mean it, they would also love the opportunity to engage with your business and influence your activity. You might be surprised by what you learn when you look at things differently, and listen to their suggestions.

The key to success is to ensure that you are generating maximum value for both your business and the community you are trying to benefit.

As Rebecca Henderson, author of ‘Reimagining Capitalism’ says in this talk ‘How to Build a Better Future’ in June 2020 ‘businesses that do this can continue to be profitable – and in fact be more profitable.”

6. Measure, monitor and report on your activity.
For any corporation considering social value, the trick is finding the right projects to invest in, delivering what you promise, and then reporting back on the benefits.   There are a number of social impact measurement experts like Social Value Lab or Social Value Portal who can help with this.

Telling your stakeholders about it is crucial. Just because you aren’t treating this as a PR exercise doesn’t mean you shouldn’t talk about what you are doing. Just make sure you tell them after you’ve done it.

You might have to resist the demands of your PR people on this but if you do it right and invest in your relationship with them, you might find they tell people for you.

The benefits of getting it right.

Getting your social value offer right will inevitably require investment – but the payback in terms of winning contracts, credibility and positive public perception is potentially huge.

The reverse is also true – businesses that fail to embrace social value risk damaging their reputation and losing out to competitors. Especially in a world where news is instant – and even people who have no intention of ever buying your products can have a significant impact on your organisation.

If businesses as a group can work together to take on this mantle, there’s another big win – avoiding costly legislation when governments inevitably wade in to tackle problems by force. Think the sugar tax, minimum alcohol pricing and the landfill tax (to name just a few).

Social value has the power to transform the relationship between businesses, communities and the third sector. And when it is well thought-out and carefully delivered, everyone benefits.

In business that’s called a win-win strategy.

This article originally appeared in the Social Value Files. To receive more like it, alongside updates on the latest events, jobs, and original thought surrounding social value, sign up to the monthly Social Value Files newsletter.

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