Making it count - more boringly known as return on investment

It seems such a dull mantra  - always calculate your ROI – spoken more by finance geeks than anybody else it seems.  The reality of course is that every individual needs to make sure that if money is spent, it is spent wisely.  And if other resources are used, that they are also used wisely.  And what ‘wisely’ means depends on what they want to achieve by the use of the particular resource.

So I chatted with Stefanie Shedd of The Solution  Shedd who is also working with us here at Firm Beliefs, and is known as our internal SROI ‘guru’, about this issue.

Why is the skill of evaluating ROI so important for organisations at the moment?

I think there are two reasons:  

First, just good management .  If you are spending any money in the current climate, or indeed using any other type of resource, somebody somewhere, hopefully you as well,  will criticise you if it does not bear fruit of some sort. 

Second, we need to gauge the impact that the organisation is having on stakeholders and society in general.  And we need to see which resources have played the greatest part in contributing to that impact.  We can learn a lot about using resources to make an impact by looking at the return on our investment in the various resources.

Basically its about answering the question “What are the likely consequences (be it financial or otherwise) for developing, managing and maintaining a programme and service.” So we work out what we want to achieve, what resources we are using, and then identifying how to measure the resources are impacting the most/least, and how and why, as the programme progresses.

Now I find most organisations do some type of ROI or Cost Benefit analysis when developing an idea, but interestingly very often many take the finger off the pulse as the programme or service evolves.  This means that often the organisation’s programmes are not achieving the desired aims and - worse still – are not financially or resource effective.

Whilst it’s understandable that management focuses on costs and especially cost reduction in this environment, having the ability to assess the organisation’s return – financially, socially and strategically all in equal measure – is crucial to maximizing what is important to your organisation but being financially prudent at the same time.

And why is the concept of SROI so significant for both profits and not for profits?

Just to clarify, when you say SROI you are referring generally to the concept of SROI (Social Return on Investment) and not specifically the performance framework developed by RedF?  There are a lot of tools out there that intertwine the social and financial elements of running a business – from Social Accounting, Economic Rate of Return, Social Impact Assessment and of course SROI.  Some look more at the social elements and others try to paint a composite picture of operational performance.

They all are important insofar as highlighting that no organisation functions in a vacuum and, in terms of cause and effect, everything it does has a social impact.  Understandably not-for-profits want to maximise social impact and implementing some type of performance system to gauge its success is crucial for securing sustainable funding.

But equally society in general has become much savvy about making informed decisions and so companies that try to marry investor or quasi financial needs with positive social sentiments that can be tangibly proven have a stronger hook for consumers, which ultimately should filter into profits – creating a win-win environment.  Basically, I think companies are finding it harder to be unscrupulous or purely financially motivated.  Society expects more.

 Why do you think individuals or organisations do not use those skills?

That is a difficult question so why don’t we look at it from the not-for-profit sector’s perspective?   

ROI or SROI is not a perfect science and what charities often do is fill a gap that cannot be funded freely through the market.  So they have to balance financial costs with a social impact – and the return is not necessarily straightforward.

Plus it gets more complex.  Charities that close down elements or stop offering services run the risk of a backlash from their stakeholders – be it those people they are trying help or the groups that support it.   To be honest sometimes one could argue that it’s easier not to do to the analysis as the stakes may just be a bit too high in terms of some types of risk and some organisations might not want to alert their stakeholders to that!

That said, if you give anything away for free away, someone will benefit.  But that does not mean it is always worth paying for that benefit.   

Profits and not-for-profits have a responsibility to spend money wisely.  Doing ROI or some type of cost benefit analysis is about being a good steward. 

Only then can one make an informed decision and therefore being able to calculate ROI is a business critical skill in this challenging economic environment.

Sara was talking to Stefanie Shedd of The Solution Shedd.  You can follow Stefanie on Twitter: @SolutionShedd    

Sometimes 'Removing Change' can be quite beneficial

All too often, clients have introduced consultants into their organisations to act as ‘change managers’ or ‘change consultants’ or some such other descriptor.  Usually the title is communicated to the staff in the organisation.  This elicits either a rolling of eyes or a comment such as ‘here we go again – lots of upheaval but nothing actually really changes’.

So change can mean the objective to be achieved being different in some way from the existing objective, or the process used to achieve that new objective.  Either way,  tension, opposition, cynicism abound.

There are plenty of articles written about change (this of course being one of them!) and plenty of programmes in organisations based around models of change, concepts of change, change outcomes, change processes, change in the title of the job. 

Imagine if you were not allowed to use the word?

We once ran 2 parallel projects for a client in which the word change was not allowed to be used in one of the two similar projects – either in the job labels of those involved, the project aims or the process to be used. It was enlightening!

We noticed that:

1.       Not using the message ‘this is where and how we need to change to meet the needs of the future’ and substituting ‘this is where we would like to be in the future’ elicited a positive response in the 'change word is banned' project than in the other, where the ‘old style’ of communication was used.

2.       Those who felt under threat from the potential ‘changes’ engaged less readily than those who had initially felt equally threatened by ‘new methods’ when such language was used.

3.       Managers tasked with ‘change’ felt an obligation to minimise pressure on their teams, often leading to stress for themselves; whereas those tasked with ‘new outcomes’ felt energised themselves and were able to enthuse teams around them.

4.       The implementation of the ‘changed aims’ worked less effectively than the implementation of the ‘new way’.

Of course, objective post-projects work and feedback threw up many reasons why there might have been differences in the comparable project process and success of the outcome.  But the interesting part of the feedback was why the participants in the projects explained the success differences – simply dropping the use of the term ‘change’ was key they felt. 

This is possibly a slightly whimsical article – not particularly learned, not full of management jargon.  But it does just pose a thought amongst the hurly burly and challenges of the sector world that you inhabit - by all means employ consultants, use change models and change processes in the future – but see what happens if you ban the use of the word ‘change’. It might actually make a difference to the attitude of those who are part of the process. Which in turn could make a difference to the success of the process. And in turn to the outcome.  Give it a go...

 

Pakistan - why the silence?

Those of us who have spent even just a few years in Pakistan will know what a mesmerising place it is.  Once experienced, never forgotten.  And its people are like all people - wonderful and flawed, diverse and disparate - but now they are desperate. 

I have looked for a way to help, via the International Bar Association, via the Law Society etc - no guidance on how lawyers/ex-lawyers can use their skills and contacts to assist.  No call by them to raise funds within law firms for this, and other, humanitarian disasters. 

As individuals we are all doing what we can by donating to those NGOs who have the ability to assist right  now on the ground.  Clearly as individual lawyers we may give a few hours' pro bono to Advocates for International Development or Lawyers Without Borders - usually, but not always, sanctioned by law firm employers.

But as a profession, what are we doing? Should we not be planning now how to support the lawyers in Pakistan as they deal with the numerous issues that will arise as the country tries to get back on its feet , how to support the families and individuals who will have lost everything?  Why are we so silent?

The City - past historic, future perfect....

Accompanied by a multi-cultural group of folk (Scot, Dane, French and American) I waited with baited breath to hear Nick Anstee, Lord Mayor of the City of London, identify what steps the City will be taking to meet the needs of its stakeholders as the 21st century progresses. After all, the title was 'past historic, future perfect' - as any business knows, an identification of the path of the future requires some stakeholder analysis. And I waited... And waited...

 

Nick Anstee, of SJ Berwin, accountant by trade, seems a decent enough man.  Hard working.  Earnest.  I would like him on my team in any project which knew where it was going and needed a firm steady calm hand to get it there.  But, and here I have to say I would possibly have to think twice, if my firm were undergoing a paradigm shift such as the City of London and the financial sector is experiencing I am not sure he would be the front man - at least based on the speech that he gave.  I waited for him to identify and analyse changing stakeholder needs in today's world.  He didn't.  My impression from the speech was one of ‘we were good in the past; we need to retain our pre-eminent place in the world as we always have done because we want to, please don't make us change too much; we are happy to tweak at the edges but ultimately... and if you make us change too much, we won't survive and then you will be sorry' etc etc. 

Mr Anstee has worked in a sector, the legal sector, which has seen the most interesting challenges to its raison d'etre.  So he should know better than to simply apply same old principles to same old paradigms and tweak a bit to maintain status quo and keep those in power happy for just a wee while longer before they retire.  Now, of course, it he alone cannot change the entire focus of the entire City's view of itself and of its entire stakeholder community's views of it. He only has a year in post - what can a man do in a year?  There may be all sorts of attempts by him behind the scenes to encourage the City to change its process of thought about the role that it plays in the future. We don't know to be fair. His calm, moderate tone may hide all sorts of passionate debates that he has with his cohorts in the City when not standing on a podium in front of a very varied audience, many of whom clearly gave scant credibility to his words.

But I was interested in the number of times he mentioned that OTHERS are needed to help the City deliver on its services: ‘We need the government to provide a competitive business environment underpinned by policies that offer predictability, stability and clarity, to ensure that the City remains a valuable cluster of specialist international expertise.' And  ‘The net result of all of these threats is business uncertainty. Uncertainty which  will harm the  UK and the EU as well. What the City needs is predictability, clarity and certainty from our politicians.'  Where is the financial sector itself in this ‘need' for action?  I know that the city and government and world global order is a complex interplay between competing forces that ultimately need each other BUT at a time when businesses and individuals are trying to take control of their own futures by throwing out old thinking and taking control of their own destinies, is it so hard for the financial sector to do the same?

Energy?  Drive?  Vision?  I didn't see evidence that the sector is doing that from his speech. Any sector or business can only drive itself forward based on demand for its services. Demand comes from others - not from its own wish to survive...  If the world, Europe, the UK, the individual does not demand that the City provides what it has done, in the way that it has done, then the City must rethink its raison d'etre. 

There was a hint of the bigger picture when Mr Anstee mentioned a forthcoming speech: ‘Last month, Stephen Green, Chairman of HSBC, spoke here about values creating value; and on October 4 I will be holding another event here called "Trust in the City: beyond Law and Regulation," about how the financial services industry relates to wider society. I strongly believe that we can approach that future perfect the City is striving for: the ideal fusion of good old fashioned values of honesty, fair dealing, and ethical behaviour and modern transparent business practise.'  The mention of ‘wider society' gives one hope that some stakeholder engagement and analysis is being undertaken with a wider stakeholder community.  But who knows?  We wait and see.

In case any of you think I am being unfair, you can read his speech at: http://www.gresham.ac.uk/event.asp?PageId=39&EventId=1069   Also, this speech was part of the Gresham College Free Public Lecture series.  Excellent range of talks; great concept that they are free.  Maybe parts of the City do have a purpose in a world where so much knowledge and information is accessible to the rest of society - for free...

A day of sustainability - and the future

On Tuesday morning, I attended a breakfast seminar, titled "What's next for Sustainability - is the message getting through?", and in the evening was a Firm Elite dinner, with the conversation focussing on "Communications in a digital world - how do we need to adapt in order to ensure our organisations' sustainability in tomorrow's political, social, environmental and economic atmosphere?"

In the morning, we were a collection of (mostly) businesses, with a few thoughts from invited guests Doug Johnston - Director of Ernst and Young's Climate change and Sustainability Services team; Alan Knight - sustainable development advisor to many corporates including Body Shop, Coca-Cola, the UN, and currently the Virgin Group; and Harry Wallop - Consumer Affairs editor at The Telegraph.

This was a day of discussing Sustainable Business, and how we talk about it, communicate how we are doing and engage stakeholders. One thing became very apparent by the end of the day - it doesn't matter what field you work in, how close you are to sustainability or how senior you are, some people JUST DON'T GET IT!

Example - I brought up the idea of creating sustainable partnerships between civil society and the private sector at the breakfast meeting. Among the good and the great of sustainability and some of the top 'CSR Professionals' in business. I was asked to clarify what I meant. I didn't use any big words, I didn't use particularly long sentences. I simply asked what they thought of cross sector collaboration for social and commercial benefit, and how we (as a group of enlightened souls) can take this concept further.

So I asked again: Partnerships between businesses and charities not only contribute significantly to the aims of charity and philanthropy, but they also have the ability to make considerable savings within a business. So is it not possible for businesses to look outside their sector to other stakeholders when trying to effect sustainable change?

The response was, in essence, "well, it's really the job of the charity to come up with the idea" How infuriating.

I compare that with my experience of Sara Dixon's Firm Elite Dinner I attended in the glorious Caledonian Club, yesterday evening. My co-host Simon Card OBE introduced the discussion for the evening - how do we ensure sustainability?

Around the table were professionals from law firms, banks, charities, professional services firms and consultancy. We had a really interesting and diverse group of people, all talking about how we can sustain our organisations, and the really interesting thing was that it wasn't anyone's day job to think about this stuff. But all of us got it.

Conversation was lead by Brian Bannister, Communications Director at PwC and Filippo Addarii, Exec Director of Euclid Network - an ACEVO spin out and joint venture.

Brian gave us some very interesting anecdotal evidence from his experience of change management and crisis management within a large, global corporation. Some of his key messages were:

*Broaden your outlook to engage those who shape your environment.
*In our digital world, by the time you know you have a problem, it's usually too late!
*Talk to your most harsh critics. Battle with them and the other fights will be won with greater ease.
*The era of Corporate Philanthropy is over.
*Corporate leaders need to be brave to survive. Neither success nor sustainability will come from shying away from problems.

Filippo gave us an international perspective - we must focus on solidarity, and look to reclaim the magic we once had.

His story was from his first years in London - when all was opportunity and possibility. Now our fair city has lost its claim to be the most innovative in Europe, and Filippo's question was "Where have all the optimists gone?"

He went on to say that civil society is the secret weapon - the silver bullet to regain our global standing. People connect about problems and passions - civil society is passionate about solving problems, so surely it must play a significant role in bringing back optimism.

Brian followed this by reminding us all of his Liverpudlian roots, and letting us into a spot of scouse lingo with which few were familiar: Optipessimism. This is a state of mind through which one can share in the joy of great things, but revert back to the outlook of Eyore in the blink of an eye - never disappointed! I'm glad to say not many were keen to adopt this!

But as we moved around the table, hearing from our diverse group, it became clear that we were more optimistic than many. There was an agreement that in order to achieve sustainability, we need to make things realistic, rather than remain in the doldrums of ideology.

We agreed that perception matters - look to our colleague and fellow diner Heidi, reputation manager at Project Associates for cases of how important it is. We agreed that in order to understand how we are perceived we must look to all of our value chain, not just colleagues, or suppliers or consumers as individual groups, but also the way they connect to form a perception landscape.

Trust comes from this - public opinion, branding, all of these are based on how we communicate, and how we are seen.

We talked at length about CSR and philanthropy, and again agreed about how the narrative has indeed moved on to one of sustainability - a move to the pragmatic and away from the ideological.

Charities have excellent public trust, very often good branding, and are perceived as a paragon of virtue. So how can we, the diverse group of people around the table, learn from this? Also, many corporations would love to be as well networked as their colleagues in the third sector (I think here of Stephen Bubb of course - who has more business cards than most business leaders, and most importantly, knows what to do with them!)

I made a point that we can not just learn from it, we can use it. Business and charity can work together, creating sustainable supply chains, engaging consumers in a range of ethical and virtuous activities and both benefit in absolute equal measure. And this, we finally agreed, is the much debated (and misunderstood) Big Society - in action. Working. Without intervention from government, before it even entered our lexicon.

This is something we can work on, can develop and bring forward. But slowly - as another very astute diner pointed out, patience is a virtue - let's do things with consideration to achieve sustainability.

Final thoughts were around two things - firstly, Al Gore's comment that to go fast we go alone, and to go far we go together. We need to do what John Wayne did best - build a posse and tackle the problems together.

Secondly, Filippo asked "Where are all the optimists?" A clear sign that this was his first Firm Elite Dinner, as we were all at the table.With thanks to our hosts Richard McKelvey of ACEVO, Simon Card OBE of Card Associates and Deborah Jeff of Seddons.  Returning guests were Sara Dixon of Firm Beliefs, Philip Henson of Bargate Murray, Ann Paul of Macmillan, Trish McNicholas of Allied Irish Bank, Karelia Scott-Daniels of Manse & Garret.  We welcomed new guests Kamal Shah of Stephenson Harwood, Peter Barber of  Culture Shock Media Ltd,            , Simon Price of Gifford UK and Soledad Gompf of FINCA.  We were honoured to have conversation sparked by our conversation leaders Filippo Addarii of Euclid and Brian Bannister of PwC.Blog by Richard McKelvey