Corporate South Africa’s funding of Enterprise and Supplier Development (ESD) initiatives is often based on the belief that these programmes will improve the performance of small and growing businesses alongside their socio-economic circumstances. However, despite the optimism with which corporates have developed and implemented ESD strategies and invested in a range of ESD programmes, there has been less effort devoted to a fully objective analysis of the impact thereof in terms of desired outcomes. Impact reporting is a crucial component to measure the success of these initiatives and more focus should be given to this element of ESD programmes.
Since the introduction of the B-BBEE Codes of Good Practice in 2007, pressure is mounting for corporates to prove that their ESD programmes are making a tangible and quantifiable difference. It needs to be seen that these programmes have led to increased employment opportunities within Small, Medium and Micro Enterprises (SMMEs), improved capacity and capability of these businesses, increased SMME participation in the formal economy, and their enhanced and sustained operational efficiency. Impact reporting is a metric that can showcase the impact that a company’s ESD programme is having; and this is essentially the missing link.
Some may say that impact reporting is the “so what?” element of an ESD programme, where corporates and their ESD implementation partners are held accountable for what has been achieved. If executed correctly, it enables corporates to showcase the measurable success of the programme. Impact assessments should then consistently be conducted to establish whether a particular ESD programme produced the intended outcomes – for example, did the provided training enable the small business to adopt new business practices?
Good impact reporting should not be treated as a “tick box” exercise and is intended to promote a culture of transparency and accountability. It goes beyond merely setting loosely-defined Key Performance Indicators (KPIs) as it encompasses robust Monitoring and Evaluation (M&E), and enables corporates to establish whether their efforts are actually making a quantifiable difference, thus determining if continued support is needed.
To better understand the role of impact reporting, it is important to distinguish between Monitoring & Evaluation. Monitoring is a continuous task that makes use of the systematic collection of data on specified indicators to provide management and stakeholders with information relating to the implementation status. Evaluation is a selective exercise that aims to systematically and objectively assess the achievement of the medium-term results (the outcomes) alongside the long-term results (the impacts).
There are certain steps required to develop a fit-for-purpose M&E approach. They include choosing outcomes, selecting KPIs, setting baselines, selecting target results, evaluating project performance, analysing and reporting data, and interpreting and learning from the findings.
In order to measure the progress of the programme, indicators are needed to help the SMMEs, ESD implementation partners and corporates understand how the ESD programme is performing against critical project objectives and goals, as well SMME development and overall business KPIs.
But most importantly, good impact reporting must be based on best practice. In line with this, an impact report should address the following:
- Clarify targets, goals and the ESD programme problem statement
- Plan evaluations at the beginning of the ESD programme
- Establish baseline data and ESD programme records
- Realise that impact assessment is about demonstrating causality
- Build valid comparisons into analysis by comparing observed phenomenon to the counterfactual
- Use several techniques to assess the impact of ESD programmes
- Recognise that ‘good enough’ is good enough
- Commit the level of resources needed to design strong evaluations.
Unfortunately, the culture of impact reporting is not yet commonplace within the industry. Corporates are generally not able to report sufficiently on impact, especially when they do not receive comprehensive M&E reports from their ESD implementation partners. At the same time, implementation partners are not always able to provide all the required information to enable the achievement of this outcome.
Setting out the objectives
Impact reporting must cover the socio-economic, commercial and business objectives of an ESD programme. On a socio-economic level, corporates want to work with SMMEs in the communities in which they operate. This activity must therefore be measured against how it stimulates entrepreneurship and enables SMMEs to be economically active.
In terms of economic objectives, impact reporting must speak to the fact that SMMEs are the lifeline of any economy, so supporting and enabling them must contribute to the overall objective of creating and sustaining jobs in the country. Commercial objectives strictly relate to the procurement relationship. Impact reporting must thus show that the enterprise is procuring from a supplier that offers best value for money – not just being the cheapest, but also the most well-suited.
ESD is not only about regulatory compliance but also about ensuring that successful ESD programmes and initiatives are expanded and replicated, and ineffective ones redesigned or eliminated.
Beyond the numbers
Many corporates believe that it is sufficient to simply demonstrate tangible growth in turnover and job creation, as well as the number of procurement opportunities generated for SMMEs through an ESD programme. While these financial KPIs are an important part of impact reporting, they have essentially become a universal truth, almost embedded in the minimum desired output from any implemented ESD programme. At the very least, SMMEs that are involved in ESD programmes should grow and do so sustainably.
However, often overlooked in impact reporting are the non-financial KPIs that focus on empowering the small business owner with the knowledge and understanding to steer their company towards growth and sustainability. These KPIs affect almost every sphere of the business from an operational perspective. However, the decision to adopt specific indicators depends on the goals of the ESD programme. Corporates and ESD implementation partners need to therefore clarify the specific goals and objectives of the ESD programme or initiative upfront.
In order to conduct good impact reporting, an organisation must be very clear about the indicators it wants to set out for the SMME, the ESD implementation partner and for itself, even before launching an ESD programme. These objectives can then be actively tracked and monitored over the life of the programme, enabling corporates to measure their true impact.
Zevoli Growth Partners