Social value is an increasingly important factor in government contracting and it is becoming the winning factor in many tenders. Specifically when the differences in the product, price and service between competitors are not significant. It can account for 30% of scoring, making tangible and specific social value planning something to focus to win business. As a result making social value cost also key.
Social value is in the hands of many people in companies. Some companies have social value teams, whilst others split social value related tasks between HR, leadership, marketing etc. Social value consists of investments in community engagement, value driven employment, environmental practices and supply chain contributions to social value. It is clear that social value is a complex matter, and therefore involves lots of manpower and processes.
Companies usually monitor quite specifically how much their marketing, product or sales spend is. The complexity of social value and the difficulty of tracking its implications has left social value costs largely unattended.
Why are we at whatimpact concerned about this?
The complexity of social value and recent regulations making it mandatory in government tendering have created uncoordinated and nonstrategic decisions on how social value is managed. It seems, in some companies the internal coordination and administration costs overrun the impact the company is trying to make. There are more tick box practices and systems created to oversimplify social value, rather than actually doing something additional to deliver on promises and create social value.
In some cases it might be the opposite – which can create inefficiencies in impact too. These social value departments may create initiatives, be present in locations where contract work takes place and write impact reports by collecting data. Again, the labour and consultancy costs are high, yet we could generate the impact with a much leaner model. There are existing local initiatives related to all aspects of social value that a company can efficiently support through partnerships. The efficiency comes from the network effect and choosing the right role for a company when aiming for certain outcomes.
If companies do not consider efficiency, they leave very little resources to make a real difference on the ground, as they also need to make a profit
The add-on aspect of social value criteria (the spirit of PPN 06/20) is helpful when monitoring the cost of social value in a specific contract. This thinking helps to define the investments in social value in the bidding stage. Contract related social value costs should be extracted from overall company social responsibility costs. These costs entail donations, skills contributions, employment partnerships costs, social value coordination in supply chain and reporting on top of the internal labour and consultancy costs.
The investments in being ‘bid ready’ e.g. net zero requirements for companies bidding for over £5M contracts are not really specific contract related costs. They are basic operational production costs as one could not do the business at all without meeting those criteria. The same goes with mandatory employment requirement and fair business practice costs.
When specifying the added-on social value costs, the company must consider what is a fair percentage of the contract work to invest in social value. The ultimate goal being to win the tender but also run a profitable contract. This thinking should directly motivate a drive to minimise admin costs in order to focus on making the biggest impact.
Partnering with various local, professional environmental and social organisations helps companies deliver most effective impact. Also, using technology for management, evaluation and centralising of the social value team to connect them with partners is essential.
This efficiency is, at the end of the day, a defining factor in the future and legacy of your company.
You can read more about social value management and get more practical guidance from our recent Social Value Management Handbook. Find out more and get your copy here.
You can also read our article for Open Access Government about the three key principles for impactful social value here.
whatimpact’s inherent mission is to help reduce the cost of social value planning, every day delivery and reporting, so more could be put into societal and environmental good. We advice companies to think, whether to hire employees and consultants to manually find local community engagement partners and write social impact reports, all of which could be managed with well-through-through tech like ours. We also advice companies to focus on keeping their social value delivery promises and providing validated impact data as evidence. Accusations of ‘greenwashing’ and ‘socialwashing’ can put a company in a very serious position financially and legally
