Striking a Balance between Social Value and KPIs

Modern Procurement often feels like a balancing act. As the remit of the profession grows, so does the number of ‘masters’ (read stakeholders) that Procurement needs to serve. And while this juggling may be in hand for the most part, there are times where it’s impossible.

This issue is no more prevalent than when it comes to trying to achieve both traditional KPIs (Cost; Quality; Delivery), and set an example when it comes to Environmental, Social and Governance (ESG) aims. Both are critical for the long term success and sustainability of an organisation. Both will be core strategies in different parts of the organisation, but often will seem to be mutually exclusive.

So what can Procurement do? Public scrutiny and shifting trends are placing a higher premium on ESG outcomes, leading organisations to focus more on them. However, the reality is that traditional KPIs and ESG don’t need to be in competition with each other. Procurement just needs to strike the right balance.

The Problem with KPIs

A core part of Procurement’s day-to-day role within an organisation is to deliver on traditional KPIs. No matter the type of organisation, or even how forward thinking they are, traditional Cost, Quality and Delivery metrics will be at the heart of this. And why not? They are the lifeblood of the organisation, without which it cannot exist. 

We’ve talked a lot on Procurious about KPIs – using them to create successful supplier relationships; what the optimal number of KPIs to use is; how KPIs can help kick-start sustainability projects; and using them to measure ‘unmeasurable’ factors to name but a few. 

KPIs are a fundamental part of Procurement, but for all the times they provide a benefit, they just as often are a cause of confusion or end up measuring the wrong things and fail to provide good, usable data to help improve performance.

Pushing Social Value with KPIs

It’s worth bearing in mind that, even though we are discussing how traditional measures seem to run contrary to Sustainability and Social Value aims, these are being promoted and measured using KPIs too. 

Consider two major construction procurement frameworks in the UK – SCAPE and PAGABO. In order to gain access to these frameworks, contractors and organisations have to sign up to these KPIs and detail what benefits they will provide. These organisations then have to provide additional Social Value and Sustainability outcomes for individual projects.

All of this is tracked and measured using KPIs, a major positive for ESG aims considering the notion of ‘what gets measured, gets done.’ 

There are, however, still contradictions in these measures. For example, organisations may be tracked on the percentage of spend with local suppliers, while at the same time being measured on spend with Social Enterprises. Both are key aims, but what happens if a local region doesn’t have many Social Enterprises to engage with? 

It might feel like a matter of choosing which KPI to fail on. However, it is possible to deliver positive outcomes on both with a bit of time and investment from Procurement.

Helping Social Enterprises Develop

Social Enterprises, businesses that trade for a social or environmental purpose and reinvest any profit to support their core mission, offer huge potential for positive social impact. Procurement can engage them for supply of a range of goods and services, helping to provide positive outcomes required under framework or customer-led KPIs.

However, many Social Enterprises lack the scale, resources or experience to navigate highly complex corporate or public sector procurement processes. For many, completing processes to become approved suppliers or to qualify for frameworks is highly challenging, inhibited by a lack of time or resources to complete paperwork or electronic Pre-Qualification Questionnaires (PPQs). 

This will ultimately lead to fewer opportunities for both the Social Enterprise and Procurement. However, Procurement can support these organisations through the use of supplier development programs. These will help to create strategic partnerships, build capabilities and put processes in place that enable Social Enterprises to access opportunities, while still providing positive social impact. 

It requires investment from Procurement, but allows organisations to both better access social value, while still meeting the traditional procurement requirements and KPIs.

The Faculty Roundtable Members

Do you want to understand how to bridge the gap between Social Enterprise and organisational procurement requirements? Sign up to The Faculty Roundtable’s masterclass on 19th June with Matt Perfect, ‘Strategic Supplier Development for Social Enterprise’. In this session, you’ll learn how to:

• Grasp the theoretical foundations of strategic supplier development for social impact. 
• Acquire practical tools and strategies to implement the concepts within the organisation.
• Drive positive change through procurement activities. 
• Foster sustainable and socially responsible supplier relationships.