Expressing value in numerical terms is a direct and concise way to describe value. Quantitative figures can compliment your description of the value of your enterprise, and are especially useful when communicating with investors or other stakeholders who like to know the facts.
Last week we talked about describing organizational information to express value. Today, we’re taking a closer look at quantifying information and using quantitative indicators to analyze and express your organizational value.
Defining and Reporting on Quantitative Indicators
The best way to collect quantitative data is by determining quantitative indicators. These indicators are your tool to collecting factual, measurable data about the value of your social enterprise. They can also provide counter-intuitive insight or a new perspective into a value you may not know you provide.
The indicators you choose should be important to your enterprise internally, speak to your organizational performance and reflect standard indicators in your field wherever possible. Don’t forget to also make these indicators measureable against a target or benchmark – otherwise, how will you successfully communicate when you’ve reached success?
Simply counting things, whether it’s people you’ve served, dollars you’ve earned, or “smiles generated” (like Vancouver’s own SHIFT Urban Cargo Delivery) can be interesting, but combining quantitative measures into ratios can open up whole new dimensions for understanding how your enterprise creates value. Expenses per hour, revenue per customer, support costs per employee-hour (just to name a few possible ratios) – these figures can be essential parts of management decisions.
With reference to a logic model for your enterprise, “outputs” are easiest to quantify, but long term impacts or “outcomes” are often harder to pin down and tend to be more qualitative. This is usually because profit is not the only intended result and therefore, it becomes more difficult to measure these outcomes using strictly quantitative descriptors.
It’s also recommended to identify and develop quantitative indicators collectively with your stakeholders. Everyone involved should see the selected indicators as important and feasible. And always provide complimentary information when analyzing your selected indicators, as it will help your audience interpret and understand your expression of value.
How to Use Indicators to Define Your Impact
It’s important to remember that indicators alone don’t show impact. Rather, they give insight into your work and changes that are occurring in the field you’re working in. While this insight can be useful, in order to use quantitative indicators to describe your impact and show that your work is creating sustainable benefits, you must make the connection between your activities and the observable outcomes of these activities.
Sometimes making this connection can be challenging because of the many factors that contribute to the outcomes of your activities. External factors such as other organizations working in the same field, or changes in policy and your operating environment can often have a major influence. It’s important to consistently monitor these outcomes, as they can change overtime.
Here’s some key tools for defining indicators and using them to define your impact:
- The Demonstrating Value Financial Ratio Analysis: our ratio analysis tool gives examples of key indicators and is useful in helping you understand your financial performance.
- Monitoring Ideas Library: there are some useful indicators in our own monitoring ideas library. Check out our indicators for business performance and organizational sustainability, specific environmental missions and social and cultural missions.
- KPI Library: this high-tech tool automates metrics reporting, enabling you to easily understand and analyze trends in your KPI’s.
It’s the combination of quantifying value, describing value and monetizing value that really strengthens your argument when communicating your value, so stay tuned for the final post in our three-part series: monetizing value.