The Search for Impact: Don’t Measure Job Creation

Perhaps I could express this better by saying don’t just ask for a job creation indicator and call it a day on social impact measurement. Selecting indicators of social and/or environmental impact involves many challenges – but as a first step, you need to move beyond your mission statement to an understanding of the specific outcomes that are important to you (or to your investors), based on your core values.

Why the fuss about values? For starters, the need to develop reliable and ideally comparable social impact data has created a bit of irrational euphoria. Some of us are caught up in trying to measure as many different things as we can in an effort to demonstrate that our work improves the quality of life for the poor. Each impact indicator we look for, however, involves at least two types of cost. First, there is the direct cost of collecting and analyzing data. Second, there is the psychic cost to borrowers. By this I mean that microenterpreneurs and small business owners are not “objects of intervention”, they are individuals, with human dignity and their own unique values and aspirations. How much right do we have to invade their privacy to answer our own questions about impact?

Let’s assume that we do need to ask questions about impact (because we do). Rather than settling for things you can measure, or seeking measurements around every possible outcome, I challenge you to identify the types of outcomes that reflect your highest priority. Every investor answers this question differently. Some are concerned with job creation and income generation. Others want to see improvements in family health, education or housing. Once you know what matters most to you, think about what you would want to know in order to feel confident that you were achieving your goals.

Taking job creation as an example, do you care if the “jobs created” are full-time or part-time, permanent or temporary/seasonal? Would it be useful to know if created jobs offer a regular salary, benefits and/or advancement opportunities? If the jobs created are largely informal, are there other ways (different investments or interventions) that reduce the vulnerability of the target market?

Knowing what you hope to achieve and setting ambitious goals are necessary elements for the growth of impact investment. By all means measure job creation, but do it because this reflects a desired outcome, not as an easy way to answer the question “how do you measure impact”.

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