Wednesday, 5 December 2012

If It Wasn't for Money, We'd All be Rich

Here's an interesting calculation - for geeks anyway. How much is your life worth, in money? A strange question perhaps, but one with a message.

I can think of two ways to work this out. The first is economic, using Gross Domestic Product (GDP), around which so much seems to revolve these days. UK GDP is about £1.5 trillion per year (that's 1.5 followed by 11 zeros). Divide that by the UK population of 63 million and you get a figure just under £24,000 per person. But that's per year so let's assume that on average each of us can expect to live a further 40 years. That gives the total value of around £950,000 for each person alive.

However, there's a second way to value life that includes human and emotional costs - trauma, loss of loved ones and so forth. The Department for Transport uses it to assess the cost of road casualties, and hence the value of safety improvements. It's a structured, recognised approach, the latest version of which values a human life at just under £1.88 million*. Similar figures are used elsewhere in government, for examples in calculating the cost of suicide**.

So why the difference between these two valuations? For a start it demonstrates there's more to life than money. Indeed, including human costs roughly doubles the economics-based figure. OK, this is a valuation rather than 'real money'. There isn't enough money in existence to cover all of us to this value – not even counting that stashed offshore by tax avoiders! But it's a much more realistic appraisal of the value of life than merely pounds and pence.

That's why I support methods that value non-economic aspects of our lives, such as Social Return on Investment (SROI). Not necessarily in terms of precise valuation, but helping us understand what really matters to people and what we can do about it.

I've searched the Chancellor's Autumn Statement; the words "happiness" and "wellbeing" do not appear anywhere. Perhaps he needs to think about that saying "If it wasn't for money, we'd all be rich."

*Reported Road Casualties in Great Britain: 2011 Annual Report
**No Health Without Mental Health: White Paper, 2011

Monday, 19 November 2012

So What Is Poverty?

They're at it again! Coalition proposals to amend the definition of child poverty have produced Labour accusations that the government is shifting goalposts they were going to miss. The analogy is apt, because we're in danger of seeing child poverty used as a political football. Politicians trying to score points through statistics instead of delivering real change.

The consultation paper (Measuring Child Poverty, November 2012) makes some valid points about poverty being more than just income. It proposes a range of other factors including spending, education, housing and parents' abilities, to develop a broader definition of poverty.

But two things are missing. First, if poverty is not just about money, then what is it? The paper offers no alternative definition, although the small print refers to "the circumstances of your birth should not determine where you end up", and "a fair and meritocratic society". So we seem to be talking about outcomes such as life chances and the type of society we want to live in. But there are no indications of how these objectives will be measured. Let's hope it's not just through economic data such as total welfare spend.

Second, the paper simply picks on some statistical indicators where children seem to come off badly. There is a lack of cause-effect evidence, and in some cases an admission that links are poorly understood. Along with clarity of outcomes, we need clear connections to the things that cause those outcomes, not speculation about statistics. For example, if we want "a fair and meritocratic society", then doing something about the huge gap between the highest and lowest paid earners would seem a good start. But this sort of idea doesn't get a mention.

One more thing. To identify cause and effect we should also look at those young people who manage to buck the trend. Those who overcome immense disadvantage to become successful and fulfilled adults. Rare they may be, but if we can understand how these individuals succeed then we might really learn something. Here we need stories, not statistics.

The consultation paper lists 'Characteristics of a good measure', but misses the most important one of all. A good measure should inspire and drive change, not just fuel political arguments. Here the government has failed, and will continue to fail our children.

Sunday, 14 October 2012

Strategy Mapping - A Live Example

It's not often I use this blog as a sounding board. But there's an opportunity here to be interactive as well as informative, that's too good to miss.

The Leeds Community Enterprise Accelerator, known as Elsie, has been going for a year now, and needs its momentum built further. The forum (website currently http://leedscommunityenterprise.wordpress.com/about/ – will be revised) uses trained volunteers from all walks of life to give free advice and ideas to businesses, third sector groups and other enterprises. It's been described as "Puff the Magic Dragon's Den", which I rather like.


So how do we build it further, with more enterprises (clients), more activity and greater impact?


There's a technique I've used a lot known as strategy mapping. It's often used to develop Balanced Scorecards but its applications are much wider. It's basically a diagram that illustrates the intended outcomes for various stakeholders, and what the organisation does to generate those outcomes. Simply described, it shows cause-effect linkages, or 'what works' if you like.


Shown below is a draft – and I do emphasise draft – strategy map for Elsie as it currently exists. I'm sure this can be refined, but the aim is to understand what is working well and what needs improvement.


In this case for example, the strategy map raises questions such as:

  • Have we got the components and linkages right – is this how Elsie really works?
  • Are we clear enough on how Elsie benefits its volunteers, not just its clients?
  • How can we promote the benefits so that Elsie gets a steady stream of new projects to advise?
  • How can we assess the impact Elsie is having on the wider Leeds community?
Turning a strategy map into a Balanced Scorecard involves developing performance indicators for all of its components – outcomes, activities and core business. I'm not proposing to do that now, but would welcome feedback from anyone on the strategy map itself and questions above.

You don't have to be an Elsie member to respond. Let me know what you think and how we can develop Elsie to make a real difference.

Wednesday, 22 August 2012

Homelessness: Cost and Human Cost

£24,000-£30,000. That's the cost to government per year of each homeless person in the UK, according to a recent DCLG report. It takes account of costs in terms of health care, welfare benefits, criminal justice, and the work of local authorities.

What interests me is that only costs to central and local government have been included. No consideration is given to the human costs of homelessness - to homeless people themselves, to their families and friends, or to wider society.

This contrasts with cost estimates used by government in other contexts. Department of Transport analysis of road safety schemes is a prime example. If road safety improvements were based solely on the costs to A&E and emergency services of a few extra accidents, they would often be small in comparison to the cost of those improvements. In practice, DoT calculations also consider the human costs associated with injury, death and the suffering of relatives.

It isn't easy to put a financial figure on such things of course, but it can be done and is done. It's the same principle as used in Social Return on Investment (SROI); that of assessing what changes for everyone involved and putting a value on those changes.

I'm certain there are ways of doing this with homelessness as well, but the DCLG report does not attempt this. In consequence, the figures suggested, although significant, look fairly modest.

To be fair, the report is simply an evidence review and does not include any policy recommendations. It also recognises that homelessness is not a unique category, and that problems often overlap with drugs, alcohol abuse and mental health issues.

However I still think it is potentially misleading to imply that future policy on homelessness might be based on such limited evidence. It would be sad indeed – although perhaps not surprising in the current climate – if government policy were based purely on how much money government could save.

Friday, 27 July 2012

Exactly How Happy Are You?

The Office for National Statistics (ONS) has just published its first Annual Experimental Subjective Well-being Results. That's a happiness survey to you and me. It's based on questions around how satisfied with life we all are, broken down by location, age, ethnicity, relationship status and the like. It's been some time in the pipeline and I can't let its appearance pass without comment.

The popular press picked up on a few tasty snippets like happiest parts of the UK (North Yorkshire scores pretty well, if you're interested). But for me the big question is So What? What is the government (or others) actually going to do with these figures? Learning and improvement should be part of any evaluation, so how does it feature here?

To be fair, the question is not forgotten. There's a stated intention to use the data for policy-making as well as monitoring (and international comparisons!). The aim is to help decide which future policies or spending priorities will have the most positive impact on happiness.

How this will work in practice is much less clear though. ONS refers to a couple of research reports, but these are detailed academic studies which do not address policy issues in any detail. No examples are suggested of what sort of policies might be influenced, or how Ministers will pick this up. And there's not much cause-effect stuff to understand why some parts of the community are happier than others.

So I await further developments with interest. Will the government abandon its obsession with GDP, and with knee-jerk reactions to the latest media hype, and instead develop long-term strategies that make us all feel happier and more fulfilled? I'd love to think so, but I have my doubts.

Wednesday, 6 June 2012

How do we Measure Poverty?


The Government's targets on reducing child poverty are deeply flawed. So claims Rethinking Child Poverty, a recent policy paper from the Centre for Social Justice (CSJ). And I have to agree that this highlights a classic example of how not to measure actions and outcomes.

The headline target within the 2010 Child Poverty Act relates to the percentage of children in families whose income is below 60% of the national median. (This is a simplification, the detailed definition within the Act is impossibly complex!) The problem is that defining poverty just in terms of income is very superficial; the real causes of child poverty and deprivation are much more deep rooted.

Wrong measures and wrong targets produce wrong actions. In this case, they encourage financial responses to problems that really need social solutions. We are - fortunately - not in the Third World where basic food and medicine are lacking. Here, there is ample evidence that children's life chances are often not improved just by giving their families more money.

CSJ advocates redefining financial indicators, and also going beyond these to track poor parenting, unstable family structures, worklessness and other factors that cause poverty in this country. I fully endorse this approach; it follows the principle of improving outcomes by measuring and managing the factors that cause those outcomes.

Where CSJ falls short is in measuring the outcomes themselves. If it's not just about money then how will we know when we have reduced real poverty - beyond the general reference to "life chances and opportunities" in the paper? ONS are developing measures of national well-being and quality of life, but this is a long-term programme which will address the population as a whole rather than the future for today's children.

I can't offer an instant solution but can suggest some ideas. Firstly, some of it has to be about attitude. If we take the premise that those who succeed are generally those who want to succeed, then how great is that desire or ambition amongst today's young people? Has anybody asked them? Also, in an earlier blog I suggested measuring school performance based on the number of young people in employment, education or training (i.e. not 'NEETs') six months after leaving school.

The aim must be to measure poverty reduction using indicators which encourage the right behaviours and actions – both from government and the wider community. Money may help in some cases, but the real solution to child poverty lies in creating a better environment and more hopeful future for all our children.

Wednesday, 16 May 2012

Whose SROI Now?


That's Social Return on Investment by the way (and apologies to Connie Francis for the pun in my title).

I'm prompted by a recent Arts Council report on ways to measure the economic benefits of art and culture. It highlights SROI as relevant to capturing the wider social gain from organisations' work (and this applies across the third sector, not just to arts). This is particularly pertinent to organisations seeking to prove their worth when funding is in short supply - and there is increasing interest in SROI as a means of doing this.

I'm pleased to say the Arts Council report maintains a balance rather than overstressing the funding angle. It starts by asking why the evaluation is needed in the first place. Influencing funders (present and future) may be one reason, but there should be others including helping the organisation itself improve effectiveness.   In my view, this is where SROI scores well; it gives organisations insight into how they generate value, and from this understand how they can do it better.

People always tend to focus on numbers, and the SROI ratio (value generated per £1 invested) naturally attracts attention. We've not yet seen this taken as far as comparing SROI ratios in league tables, and I hope we never will. But it's a risk we need to be aware of and steer people away from, because the analysis is actually more important than this end result.

For example, a health charity can increase its understanding of clients and their situations. It can also assess the impact of its work, not just on clients themselves but on their families, on the NHS and other statutory services, and on the wider community. And with this understanding it can make changes that strengthen this impact further.

So whose SROI? Please, not just for funders, still less for consultants that compile it. Let's focus on organisations 'owning' the results of their own SROIs, and using these to develop their services further. It then becomes a return on investment in every sense of the term.

You can find more background on SROI here.

Sunday, 29 April 2012

Efficiency in the Third Sector

I'm reacting to a provocative piece in Guardian Professional recently. Alison Maclennan asks whether charities should measure efficiency and argues against reliance on tools such as the Balanced Scorecard. She suggests that some assessments can be manipulated and that "a hefty dose of intuition" is still needed.

Her premise that the voluntary and commercial sectors are different is indisputable. But this surely means they should measure performance differently, not that one should neglect measurement altogether.

Without detailing the definition of Efficiency (see my blog of 12/1/11), we're basically talking about getting better results from the resources invested - and resources here can be assets and volunteer time as well as cash. Put this way, it's unthinkable that any charity would not want to improve efficiency. This is not just about convincing donors their money is well spent. It's about achieving more in terms of the organisation's core purpose, what it exists for.

To improve you have to be able to measure. This doesn't mean though you have to do it daily to three decimal places using complex models and systems. For the third sector in particular, the effort that goes into measurement must be proportionate to the size and resources of the organisation. It must however answer three basic questions:

  • How well are we achieving our aims?

  • Are we improving?

  • How can we get better still?

There are many ways of doing this, and the Balanced Scorecard is indeed one. But I strongly believe that the real value of this framework lies not in the mechanics of the scorecard itself but in the thinking behind it. That thinking, and the associated principle of Strategy Mapping, is all about identifying cause-effect links. To improve the impact we have, what is it most important to do better? It then applies appropriate measurement to the things that really matter.

This fundamental thinking underpins many assessment models - SROI, EFQM, PQASSO as well as the Balanced Scorecard itself. It goes beyond simply assessing efficiency, to understanding what change you are achieving, and how you can achieve more. And that surely must be critically important for any third sector organisation.

Wednesday, 28 March 2012

Dementia: Measuring Up

Dementia is in the news this week, with the Prime Minister’s challenge issued on Monday. It includes some sound principles and interesting ideas, but also has echoes of political headline-grabbing - the kind of initiative that may be old news by the time this blog appears two days later.

The old maxim “What gets measured gets done” must apply here. The difference between real change and empty rhetoric is whether, say five years hence, we will be able to look back and say yes, things really have got better. So what measures of success does the challenge include to demonstrate this?

Well, the Dept of Health paper mentions a lot of input measures: funding for research, care and other initiatives. But these just count money spent, not whether it does any good. Plenty of actions in there too, and some output measures such as the levels of diagnosis and the number of PCTs offering specialist memory clinics. But again, how much actual difference will this make to people's lives?

Only at Annex 2 do we find any real outcome measures, in the form of eight statements that express the aspirations of people with dementia. Fine as far as it goes; these are real outcomes that if achieved will mean real improvement.

But I see two problems: firstly these outcomes focus just on the person themselves. Very important of course, but surely 550,000 carers deserve a mention too – how will their quality of life (not just their ability to care) improve? It’s also disingenuous to imply that long-term cost savings aren't part of the agenda as well, through more research and better community support. What return on initial investment is expected here?

My second concern is that we may have a measure without a metric. If these aspiration statements are the outcomes, how well are they achieved now and how will we measure progress? The Alzheimer's Society conducted an excellent survey earlier this year, but their questions don't directly match the Prime Minister's challenge and it's not clear if/when the survey will be repeated. The National Dementia Alliance also describes seven outcomes in its 'Call to Action', but again these don't quite match the Prime Minister's challenge.

So frankly I’m not convinced. I’d like to think (as a carer) that things will change but unless we can establish and track some consistent outcome measures then I fear that history will repeat itself. In a few years time another strategy/initiative/challenge will come along to grab the headlines (or votes, depending on timing), and we’ll be in a very similar place again.

I really hope I'm proved wrong.

Check my web site at www.real-improvement.com for more information and ideas.

Thursday, 1 March 2012

NHS: Public or Private?

Previous blogs have voiced my frustration at NHS inefficiency, and questioned what we are trying to "save" in the context of the NHS Bill. This doesn't mean I support the Bill; this blog looks at its implications from a performance management perspective.

Current focus may be on the NHS but this is just the latest of many government initiatives (CCT, Best Value, CAA, NHS Modernisation) aimed at bringing some private sector motivation and efficiency into public services. If you believe that the public sector is inept, inefficient and incapable of change, then something radical has to be done to control spiralling costs. Commissioning plus direct private sector (and third sector) involvement  is one way to do this.

The counterargument is that private sector organisations will prioritise profit above care, ethics and anything else that matters to the NHS, hence equality of access and standards of care will fall.

Of course, neither of these stereotypes is true for these sectors as a whole - although it's never hard to find striking examples of each. But it's equally possible to find great examples of innovative improvement in the public sector, and outstanding examples of care from private providers.

From a performance perspective, I don't believe there's anything inherently 'bad' about either the public or private model. It's as much about mind-sets as mechanisms, and a carefully-constructed performance framework could support this by demanding the right balance of clinical, financial and patient-based outcomes. So for examples, private providers would have to demonstrate their ability to deliver equitable services as judged by patients, and that they don't just cream off the most profitable business. And those in the public sector would have to demonstrate an ability to manage within plausible financial limits, and that they don't view the NHS as a bottomless pit of money.

My real reservation with the Bill is one of transparency. As others have commented, it seems to allow the Government to make future budget cuts without being accountable for any consequent reductions in service. Whilst it could be argued that this is a further stimulus for greater efficiency, experience suggests that few organisations have the capability and maturity to respond in this way. It's much easier just to make cuts and blame someone else.

What we need is honesty about money and honesty about the outcomes - community as well as patient-based - that we want to achieve, together with a transparent framework that captures these outcomes. And then have everyone working towards those goals.

Check my web site at www.real-improvement.com for more information and ideas.

Wednesday, 8 February 2012

Outputs, Outcomes and Impact

What's in a name? There is an increasing preoccupation amongst public and third sector organisations with demonstrating the value of what they deliver. This is often - justifiably - connected with funding from commissioners or other sources.

The easy bit is moving beyond outputs, which simply measure the volume of activity – number of people seen, units processed, activities undertaken or whatever. Most people appreciate the drawback that this fails to measure what those activities actually achieve, although sadly such output indicators still form the basis of many service agreements.

So we're trying to measure the change, what difference we make, right? Is this outcome or impact, or doesn't it matter? Such issues of terminology are commonplace, not helped by parts of the consultancy profession who try to convert the latest jargon into their USP (Unique Selling Point – more jargon!).

Let's illustrate with an example. Suppose we have an organisation dedicated to helping disadvantaged youngsters find full-time work. Output will be the number of young people they deal with, regardless of how these individuals progress. Outcome could be assessed in a couple of ways: short-term outcomes might be qualifications achieved, longer term outcomes could be how many young people get and keep a full-time job. In both cases, the benefits may go beyond these to include greater confidence, self esteem and life chances generally.

Impact takes this a step further, by looking at wider change beyond direct beneficiaries. Here, it could include the families and friends of those young people, the local economy, and wider society through greater prosperity and reduced welfare expenditure. Social Return on Investment (SROI) uses a definition of impact that takes account of these various perspectives, and also measures the achievement of the particular organisation in question by excluding external factors such as what might have happened anyway and the contribution of other services.

The key is not really about words at all. It's about understanding everything that changes as a consequence of the organisation's work, and being able to see that from the perspective of those affected – 'stakeholders' if you'll pardon the jargon. Measuring real value in this context is crucial to overcoming financial constraints and achieving real benefits to people and communities.

Check my web site at www.real-improvement.com for more information and ideas.