Written by Dan Townshend, Research Manager, Insights

Housing associations have recently come under fire following the revelation that many have been refusing to house homeless people on the grounds that they are too much of a financial risk. This of course causes great reputational damage to the sector as it arguably goes against their founding social mission – to house the poorest and most vulnerable in society. However, it is not just organisations with a founding social purpose that are damaged by a failure to deliver overt social value.

Whilst social value has always been an important feature of an organisation’s corporate reputation, in recent years its importance has ballooned. It is no longer a nice-to-have or merely just a factor amongst others, but rather one that influences everything else: everyday service delivery; financial responsibility; and governance and accountability.

The dynamics shifted so much, in fact, that if you do not demonstrate social value, your overall reputation is negatively impacted. The 2019 Edelman Trust Barometer points to this change, highlighting an expectation amongst employees that their employers effect a wider societal impact.

Social value is a contested concept, but it can be broadly understood to mean maximising outcomes that support the public good in the areas in which an organisation resides or impacts. The wooliness and variability of the term is one of the bigger challenges to wider spread adoption but the benefits of such an agenda are clear.

Such benefits include the strengthening of relationships with local stakeholders to better meet local needs. This could be through the creation of employment programmes, supporting local business or contributing towards health and wellbeing initiatives. These benefits work both ways with the local community having its needs met and the organisation getting the buy-in and continued license to operate by its local stakeholders.

So why has the significance of social value increased so markedly in recent times?

Societal trends and failures, for one, play a huge part in this. Currently 1 in 5 people in the UK are living in relative poverty and by 2022 1.5 million more children are projected to be living in poverty. Additionally, we face a number of health-related issues (such as poor air quality) and social problems (such as social isolation in an ageing population). There is a debate to be had around accountability for these issues but ultimately businesses are being looked at as part of the solution in the current political climate – especially in the context of austerity, with local governments being too stretched to address these issues alone. Businesses have opportunity to help tackle these challenges and in doing so build more credible and sustainable reputations.

The Social Value Act (2012) has started this trend, through government contracting. It requires the consideration of economic, social and environmental wellbeing in the evaluation and contracting of public sector services. This means that in some cases, as much as 20% weighting is given to social value in procurement evaluations. For organisations looking to win such contracts, social value not only affects reputation but it also direct effects their ability to operate.

Cultural factors have also played their part with a recent Deloitte survey showing that millennials are increasingly less trustful of multinational organisations to be anything other than corporate moneymaking machines. Increasingly, employees want to feel that their work is making a real positive contribution to society. Employers must therefore demonstrate that they have a credible social purpose in order to attract and retain the best talent.

Ultimately, doing nothing to demonstrate social value will result in reputational decline and therefore moving backwards as an organisation. To avoid this, organisations must be proactive in demonstrating the impact that they have in the communities they serve. Social value should no longer be looked at as a deliverable but rather a core part of why you exist as an organisation.

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