Metrics
Ultimately, metrics are only effective in changing behavior and improving impact if they are relevant to the company, their employees and the communities involved.
This section provides information on the different types of economic indicators and how a company can develop relevant and meaningful indicators:
- Types of economic indicators
- Economic Indicator Development Framework
From both the statistics and the CSR field there are volumes written on developing meaningful and relevant indicators. In this section we apply some of the general learning to indicators specific to economic development.
Generally, economic development indicators can be divided by what they measure (substantive) and their direction. For a greater sample of indicators please review the indicators located in the Indicators Database.
Substantive Indicators
- Process:
These indicators demonstrate how the company is interacting with the community regarding key economic issues. Even if the impact cannot be measured easily or directly, if the company and the community can come to agreement on the priority for company actions, then the community will benefit. Example: company has a policy to promote the use of local and small supplier; company has a policy to hire from low-income and disadvantaged communities.
- Input:
Indicators used to measure the amount corporate resources used to enhance economic impact. For example, human resources budget dedicated to diversity issues.
- Output:
These indicators provide a clear indication of what the company is contributing to the significant communities. For example, dollars contracted with local firms, wages of local employees, amount of employee volunteer hours, etc.
- Outcomes:
Indicators used to provide a measure of the change in the economic status of the community. They would include measures such as: net jobs created or retained due to sourcing, increased local tax base due to sourcing, etc. It is quite difficult to develop and implement such measures, and so we expect that relatively few of the measures that we develop for corporate use will be of this type. These measures are appropriate for development and use by public sector organizations, who have the staffing and the legal ability to gather the data needed to use the indicators successfully. Here also would be twin indicators that refer to the potential business gains.
Directional indicators
- Predictive/Forward thinking:
These are indicators that provide insight on the company’s future activities by measuring the current investment. These indicators are very useful for outside evaluators/stakeholders such as SRI firms to determine if the company is investing today to manage its risks and improve its economic performance in the future. Managers who are looking at the long-term prospects of the company's brand value and reputation can also use these indicators as a management tool. Sample predictive indicators include: Training dollars budgeted for next year; Research and development dollars spent on developing products for the low-income market.
- Rear view snapshot:
These indicators demonstrate what the company has done. They help stakeholders understand past performance. Currently, most social reports concentrate and providing a report card of how companies are performing. Sample rear view indicators include: Dollars spent on Hispanic-owned suppliers; Number of women on the Board of Directors.
From both the statistics and the CSR field there are volumes written on developing meaningful and relevant indicators. In this section we apply some of the general learning to indicators specific to economic development.
Generally, economic development indicators can be divided by what they measure (substantive) and their direction. For a greater sample of indicators please review the indicators located in the Indicators Database.
Substantive Indicators
- Process:
These indicators demonstrate how the company is interacting with the community regarding key economic issues. Even if the impact cannot be measured easily or directly, if the company and the community can come to agreement on the priority for company actions, then the community will benefit. Example: company has a policy to promote the use of local and small supplier; company has a policy to hire from low-income and disadvantaged communities. - Input:
Indicators used to measure the amount corporate resources used to enhance economic impact. For example, human resources budget dedicated to diversity issues. - Output:
These indicators provide a clear indication of what the company is contributing to the significant communities. For example, dollars contracted with local firms, wages of local employees, amount of employee volunteer hours, etc. - Outcomes:
Indicators used to provide a measure of the change in the economic status of the community. They would include measures such as: net jobs created or retained due to sourcing, increased local tax base due to sourcing, etc. It is quite difficult to develop and implement such measures, and so we expect that relatively few of the measures that we develop for corporate use will be of this type. These measures are appropriate for development and use by public sector organizations, who have the staffing and the legal ability to gather the data needed to use the indicators successfully. Here also would be twin indicators that refer to the potential business gains.
Directional indicators
- Predictive/Forward thinking:
These are indicators that provide insight on the company’s future activities by measuring the current investment. These indicators are very useful for outside evaluators/stakeholders such as SRI firms to determine if the company is investing today to manage its risks and improve its economic performance in the future. Managers who are looking at the long-term prospects of the company's brand value and reputation can also use these indicators as a management tool. Sample predictive indicators include: Training dollars budgeted for next year; Research and development dollars spent on developing products for the low-income market. - Rear view snapshot:
These indicators demonstrate what the company has done. They help stakeholders understand past performance. Currently, most social reports concentrate and providing a report card of how companies are performing. Sample rear view indicators include: Dollars spent on Hispanic-owned suppliers; Number of women on the Board of Directors.