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APM Benefits Summit 2016 - Hugo MInney SROI

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Association for Project Management holds an annual Benefits Management Summit. 2016 I spoke about non-Financial benefits using the Social Return on Investment (SROI) framework). Enclosed are the powerpoint slides

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APM Benefits Summit 2016 - Hugo MInney SROI

  1. 1. Measuring and reporting non-financial benefits using the Social Return on Investment (SROI) framework Hugo Minney (RPP, FAPM) Benefits Management Summit, June 2016
  2. 2. Contents 50 minutes practical session to cover: What does success look like? Measuring Success Why are “soft” measures important? Putting a financial value on non- financial measures Return on Investment – in a new light  10 mins introduction and explanation  15 mins understanding  15mins applying  5 mins sum up
  3. 3. Basics of Benefits Management A Benefit is a result that a stakeholder perceives to be of value. Benefits Management is the identification, definition, planning, tracking and realisation of business benefits
  4. 4. What does success look like?  Financial Cash Releasing KPIs – The ‘easy’ things to measure – Traditional Return on Investment  Financial long-term, and not-directly- financial KPIs: issues arising – How to show Logic Chain/ Chain of Causality? – How to assign a value?
  5. 5. Some examples KPIs  Easily quantifiable – Sales – Costs – Profit  Less easily quantifiable but possibly more important – Customer satisfaction – an indicator of future business – Staff satisfaction – R&R and productivity – IP portfolio  Not-for-profit and possibly non-financial – the real future of the organisation – Savings on other possible costs – A value assigned to Quality of Life, or Happiness – Future impact on the economy
  6. 6. Exercise – example measures What would success look like for each of these Programmes (based on FTSE100 Bakery/ high street eatery)? ICT investment – a new CRM system Fleet cars for management Ventilation system for a bakery Replacing bakeries in built up areas with a single bakery out of town
  7. 7. The SROI six stage process Used for identifying your stakeholders
  8. 8. Six stages of SROI 1. Establishing scope and identifying key stakeholders 2. Mapping outcomes – relationship between inputs, outputs and outcomes 3. Evidencing outcomes and giving them a value 4. Establishing impact (what would have happened anyway?) 5. Calculating the SROI – and sensitivity analysis 6. Reporting, using and embedding
  9. 9. Change happens because people make it happen  Who stands to gain?  Who stands to lose?  What do they care about?  What do they want to see change?  How can you measure that?  How can you minimise the effort of measurement?  What can you report?
  10. 10. How much do parents love their children?  How much is a parent willing to pay to have a child?  How do we know?  Is this a reasonable (conservative) cash figure for how much love is worth?
  11. 11. Customer Satisfaction – what does it mean?  How much does a customer cost to acquire?  How much is the lifetime worth of a customer?  How many customers will you acquire with your new capability?  Will you change their lifetime worth, on average?  How much difference do you think this will make, in financial terms?  What is the Return on Investment?
  12. 12. Staff satisfaction – what does it mean?  How long does the average member of staff stay?  What are the recruitment, onboarding and induction costs?  How much does sickness/ absence cost?  How much difference will you make to each of the above by your new programme?  What is the Return on Investment?
  13. 13. Chain of Causality/ logic chain  How much of the benefits we are measuring can be attributed to the programme we’re managing? – What else is going on? (changes in the environment, other projects) – Is there a logical connection? – What’s attributed to the sum total of “everything else”?
  14. 14. SROI and Sensitivity Analysis  RoI – Total return / total cost  Worst case  Most likely case  Best case
  15. 15. LM3 – Local Multiplier 3  A simple example of how money makes money  My company pays me £5000. I pay tax.  I spend what remains on cars/ insurance/ buying food and stuff/ entertainment and eating out. Each business pays tax.  They pay their employees. They pay tax  Each employee spends what remains on cars … eating out. Each business pays tax  Does the money run out?  If we’ve created £15000 from the £5000 that I spent (it touched 7 pairs of hands before it left the North East), where did it come from?
  16. 16. Some things to be aware of  Deadweight  Attribution  Causality  Believability  Standard approaches
  17. 17. Exercise – example measures What would success look like for each of these Programmes (based on FTSE100 Bakery/ high street eatery)? ICT investment – a new CRM system Fleet cars for management Ventilation system for a bakery Replacing bakeries in built up areas with a single bakery out of town
  18. 18. Exercise Reminder Six stages of SROI 1. Establishing scope and identifying key stakeholders 2. Mapping outcomes – relationship between inputs, outputs and outcomes 3. Evidencing outcomes and giving them a value 4. Establishing impact (what would have happened anyway?) 5. Calculating the SROI – and sensitivity analysis 6. Reporting, using and embedding
  19. 19. Exercise CRM System 1. Stakeholders (5min) 2. Inputs, outputs and outcomes (Chain of Causality) (3min) 3. Evidence and value (how will you measure?) (3min) 4. Impact (what would have happened anyway?) (2min) 5. Calculating the SROI – What is sensitivity analysis? (2min) 6. Reporting, using and embedding
  20. 20. Some useful tools  The ‘Guide to Social Return on Investment’ (Cabinet Office)  SROI Thought Leadership Guide  HACT measures library
  21. 21. Hugo Minney PhD, RPP FAPM, 07786 961837 Hugo.Minney@TheSocialReturnCo.org

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