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Impact Measurement

Impact measurement

This post provides a practical guide to help companies measure their social or environmental impact.

Having started a business, one of the key questions is how to measure its impact. Whilst we know Key Performance Indicators are important, it is much more challenging to actually measure them. Although there is no one-size-fits-all formula, here is a basic guide to help you get started.

What is impact?

The Impact Measurement Project define impact as “a change in positive or negative outcome for people or the planet.”

What is impact measurement?

Impact measurement is the practice of measuring the risk of both negative and positive impacts, with the aim of reducing the negative and increasing the positive.

How to measure impact?

You may already be measuring your impact or just starting to create a framework. The following is a guide which you can use to either create or build upon your current impact measurement tools. Using the Impact Management Project’s categorisation scheme, impact performance is broken down into 5 different dimensions: what, who, how much, contribution and risk. Each of these dimensions is then broken down into further sub-categories of data.

How to calculate impact:

To work out a company’s impact, the business’s effects on people and the planet have to be combined. This can be calculated by assessing the impact of each individual action. The data used to measure the effects will depend on each organisation and what is being measured.

To put this into perspective, the example below shows the types of questions that fall under the dimension categories and the type of data that can be used to assess each category.

In this example, the healthcare enterprise’s overall impact is that it is contributing to solutions. This is because they have made a significant contribution to care workers wages, which is a positive change which would otherwise not have arisen; are creating positive effects for customers; and trying to reduce its impact on the environment.

Although impact measure is a complex process, it is a vital one which brings with it multiple benefits. Through measuring impact, companies can ensure that their product or service creates the intended social or environmental benefits and avoids bringing any unintended harm. Whilst this is good for society, it is also beneficial for business: the results of impact measurement can shape key business decisions, helping to make companies more resilient, sustainable and profitable in the long-term. So although it may take a bit of time to refine impact management processes, once up and running, it can become a key part of helping companies to achieve the triple bottom line of strong social, environmental and financial performance.

For more information on impact measurement, visit the Impact Measurement Project website.

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