Why impact measurement is critical for organizational culture
Imagine a start-up with a dynamic, purpose-driven team. The environment is fast-paced, and the company values include elements like sustainability, inclusivity, innovation, and transparency. The company claims to be impact-oriented (focused on a specific improvement for people or planet, like youth mental health, improved treatment of psychiatric or neurodegenerative disorders, or making chocolate 100% slavery free). Employees have signed on in part because they believe in the mission.
However, as the company grows, how it holds itself accountable to impact starts to take a back seat. Impact data might be conflated with sales numbers and customer satisfaction, even though the company’s stated purpose is some form of improvement beyond that. Maybe impact numbers are collected only sporadically, or they exist but are more inconclusive than management acknowledges. While investors may not see a problem in companies not holding themselves accountable to impact as long as financials look good, their employees eventually will.
The business case is pretty clear: purpose-driven, impact-oriented companies are able to thrive financially while also contributing to meaningful social change. What is often overlooked, is how critical good impact measurement is to organizational values and culture.
Indeed, how an entity approaches its impact measurement and communicates its information internally and externally, is a bellwether of its culture. How honestly does it value transparency? How comfortable is its leadership with being wrong, or even failure? How committed are they to a process or product versus the vision?
Regular, robust, positive impact data is certainly important in motivating a team to succeed. Moreover, helping each employee understand how their particular role is contributing to this outcome, is critical in motivating them. According to the largest survey on employee engagement conducted by Gallup, deriving purpose and meaning from their work is a key factor in how engaged an employee is. Further, a 2019 Deloitte Global Survey found Millennials and Gen-Z are increasingly concerned with making an impact, and spending money on values-aligned companies. It also concluded that many don’t believe the companies are doing enough. Companies that can thus deliver on meaningful impact and communicate this clearly, both harness and retain talent, and end up providing a value proposition that appeals to this generation of customers.
However, even not-so-positive impact data can achieve this type of motivation, cohesion, and loyalty among a team. In fact, the way leadership engages with less rosy data is probably even more impactful for organizational culture. When leadership can talk openly (even if just internally) about missed targets, or can model taking an honest look at what is working and what isn’t about their impact model, it sets the tone and profoundly influences the culture and modus operandi of a team.
A strong impact measurement strategy includes a causal framework, like a Theory of Change, which enables the definition of clear and relevant metrics. Often sales figures or customer satisfaction ratings are used to show impact, but fundamentally both are indicators of profit, not necessarily a change in behavior or condition. If a company is looking to meaningfully contribute to solving a societal problem, then the metrics need to reflect that as well. For example, if the stated aim of a meditation app is anxiety reduction, but the tech only measures customer retention and time spent on the app, and never digs beyond the commercial numbers, it’s anyone’s guess as to whether users are truly experiencing less anxiety thanks to their app use.
Even if less promising impact data emerges, it can be leveraged by leaders and managers to strengthen a team’s performance and an employee’s sense of purpose and contribution. Sharing timely impact data regularly within a team — without assigning blame for negative results — enables everyone to take responsibility to problem-solve and iterate to improve on a product or service. It allows each team member to bring their unique skill sets to the table because they have more complete information about the situation at hand. This in turn only strengthens the value proposition of the company’s offering — AND employee engagement.
All of this is underpinned by a strong level of trust, which sound data can help foster. PwC’s Blair Sheppard identified ‘trust’ as one of the 5 most urgent global issues we face today. In a climate of extreme distrust, building trust among employees is essential for a cohesive and thriving team. Two of the ingredients for building trust are credibility and reliability, both of which rely on a sound set of information (data): credible data that links directly to the intended impact enables transparency about what is or is not known, and allows a team to know if they are honestly delivering on what they promised to.
Finally, given that employees driven by purpose are significantly more stressed and score lower for well-being, resilience, and self-efficacy, and are at a higher risk for burn-out, being transparent about impact, and using data for regular team discussions on the topic, is an opportunity to manage performance and expectations to maintain team energy and morale, even during tough times. An honest look at difficult numbers and the meaning behind them is an opportunity for leaders to prioritize and help their teams focus on what matters most. This is crucial if companies want to manage the wellbeing of their people.
The business case for being impact-oriented is inching towards the mainstream. It’s time to start valuing the role of impact measurement and its tremendous potential for enabling healthy, thriving, and engaged teams (which also drives business success).
Lilian Lehmann leads Impact for Masawa Nurture Capital. She has 10+ years of international experience in impact measurement and advisory, funder and stakeholder management, and project implementation. She’s consulted with and advised start-ups, non-profits, and multilaterals on impact management and data-use for decision-making.
