How much is social value costing your company?

Social value is an increasingly important factor in government contracting and it is quickly becoming the winning factor in many tenders – especially when the differences in the product, price and service between competitors are not significant. Social value can account up to 30% of scoring, which makes tangible, explicit and specific social value planning something to really focus on when wanting to win new business and thus making social value cost also key.

Social value is in the hands of many people in companies. Some have specific job titles for the topic e.g. social value and community managers, CSR teams, while other social value related tasks are split between human resources, leadership, marketing, bid writings etc. Social value itself consists of investments in community engagement, value driven employment, environmental practices and making sure the supply chain contributes to social value as well. 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 and novelty of social value and the difficulty of tracking its various implications to company operations has left social value costs largely unattended.

Why are we at whatimpact concerned about this?

The complexity of social value and quite recent regulations making it mandatory in government tendering have created uncoordinated and nonstrategic decisions on how social value is managed. It seems, that in some companies the internal coordination and administration costs totally 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 delivery departments create lots of initiatives, they are physically present in various locations where contract work takes place and write comprehensive impact reports by manually collecting data from various sources. Again, the labour and consultancy costs are high, yet the impact could be generated with a much leaner model. There are plenty well-run, existing local initiatives related to all aspects of social value that a company can efficiently support through partnerships, matchmaking and reporting technology. The efficiency comes from the network effect and choosing the right role for a company when aiming for certain outcomes in their contract work.

If efficiency is not considered, very little resources are left to making a real difference on the ground, as companies need to make profit too.

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 – as they will not happen if the contract is now won. 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 the actual, added-on social value costs are specified, the company is ready to think, what is a fair percentage of the contract work to be invested in social value – with the goal 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 proper tools with partners is essential.

This efficiency is, at the end of the day, a defining factor in the future of your company and the legacy it leaves behind.

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 recent article for Open Access Government, a leading policy publication, 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 carefully 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 really focus on keeping their social value delivery promises and providing validated impact data as evidence, as ‘greenwashing’ and ‘socialwashing’ can put a company in a very serious position financially, legally and reputationally.

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