Common Questions in Commissioning Social Value
October 2013
Jeremy Nicholls, CEO of The SROI Network alongside Joelle Bradly, Research Manager at Leicestershire County Council and Jenni Inglis, Director of VIE have come together to try and answer some of the most common questions they have encountered regarding commissioning and social value.
1 What is social value?
Social value relates to changes (outcomes) experienced by people and the environment, much of which is currently not captured in financial transactions. However the outcomes of activities and services are experienced by a range of people and are all of different levels of importance. Social value is an expression of changes that occur and the relative importance of these outcomes to those experiencing them. Social value will be being created through existing expenditure.
2 How can we secure more social value?
There are many ways in which more social value can be secured. A great starting point is to understand the outcomes desired by communities and prioritising them according to their relative importance. When you consider what you might do to achieve these outcomes, forecasting the likely effects and reflecting their relative importance will help to choose the best solution. Lastly, when activities are being delivered, checking what the social value of the solution actually is can help to inform future commissioning. If you understand what these outcomes are and how these outcomes are delivered you can then commission based on the activities and outcomes that create maximum value. This can be many things – ranging from employment opportunities through to reducing social isolation. It is very difficult to be prescriptive in advance.
3 Why is social value important to us?
One of the purposes of the public sector, and a duty for some public bodies, is to achieve best value, or in other words continuous improvement in economy, efficiency and effectiveness. Assessment of ‘economy’ has not always questioned what need there really was at the start and too often assessment of ‘effectiveness’ has not been able to account for the importance of the changes secured, and even sometimes what changes happened. Social value offers us a way to understand and generate real value for money. So you need to know how much social value you are getting for what you spend and, in decommissioning or redesigning services to cut costs, you need to be aware of effects on social value.
4 When should we start thinking about social value?
Start now. Understanding social value and acting to secure more of it will require:
• better systems to understand and prioritise desired outcomes together with communities,
• the involvement of communities and suppliers in developing solutions and a broader assessment of value in options appraisal and
• changes to delivery mechanisms (whether staff roles or contracts for example).
• encouraging potential providers to think about the social value they may be creating for different groups through existing solutions and how they can measure and value it.
5 Can social value be quantified?
It can but there are three questions that need answering.
• What are the relevant and most significant outcomes for those affected?
• How are these measured?
• How important are they to the people that experienced them?
So outcomes can be measured and weightings can be given to the quantities of outcomes to express social value.
6 Why can’t we just let providers tell us what their social value is?
Avoid the risk, appealing through it may be, of adding a box to the tender for providers to tell you their ‘added social value’. It will be impossible to score fairly. Involve providers earlier on in generating ideas on how to create the most value so that it can be built into the specification.
7 Why can’t we just decide a list of things we think are the most important types of social value for our area and add these to tenders?
There is a risk that the things on your list may have limited relevance to the subject matter of the service specification, which may make your procurement process more open to legal challenge. Restricting what is and isn’t social value also runs the risk of missing significant opportunities for securing more value. If you involve providers prior to sourcing your solution you can better understand what they might deliver and better specify social value requirements.
8 Why can’t we just commission against last year’s strategy?
You should not make decisions without a thorough understanding of the needs and aspiration of your residents and stakeholders and how much they value outcomes. Such an understanding enables a weighting to be applied to different outcomes for different stakeholder groups. Without a way of prioritising intended outcomes it is difficult to know where effort should be focussed and could lead to commissioning the wrong things based merely on what has been done before.
9 Is social value always positive?
No it isn’t always; activities can both create and destroy value. Recognise this when anticipating the likely results of a course of action and when evaluating the actual results, so that where negative effects occur and social value is being lost they can be reduced or avoided altogether.
10 Who decides the value? Is there a standardised list of social values?
Social value can only be better understood through recognising the relative value of different outcomes experienced by people and the environment. Encourage decision makers to develop an understanding of relative value from the perspective of those affected and how this differs between groups. An off-the-shelf list of values is not always appropriate but a standardised approach to determining how to value them may be helpful.
11 Can this help me identify cashable savings?
Some social value can help free up resources depending on the priorities that your needs analysis arrives at. The extent to which these changes can lead to reductions in budgets depends on scale, business models, latent demand in the system and political decisions. Reporting on how your costs vary with scale helps inform these decisions. Identify the potential for, and difference between, cashable saving, resource savings, or reallocation of resources in advance.
12 Can social value help us work across departments?
Social value doesn’t work in silos. Many opportunities for increasing social value will come from commissioning outcomes that are managed by different departments. Understanding the value to other departments can also prompt and inform conversations around funding decisions if there is evidence of the benefits to them.
13 Will smaller providers deliver more if we take more account of social value?
Creating the most social value requires organisations to understand the holistic needs, assets and aspirations of the people they are working directly with and the communities they inhabit. Smaller organisations are often good at doing this but they can be excluded for financial risk reasons, or because of a belief in economies of scale. You should manage financial risk at a corporate level and allow increased financial risk in some areas so that organisations that may create more social value are not excluded before they start. You should also consider how you package work and how this may increase your options. You can also use the small lots concession to enable participation by SMEs in any large, homogenous, requirement. Smaller organisations may be good at delivery but may not have capacity to manage and analyse data on needs and outcomes. Consider how you can support them. For example, smaller organisations may have the capacity to collate social value information but not analyse it.
14 Do we really need to speak to people?
Social value is what your customers and residents want. They can tell you their needs and aspirations and how they may experience change. Different groups will have very different needs and aspirations and so you need to involve them to understand what the social value is in any given context. In exploring service options, design services with them and others affected.
15 When should social value be measured?
Social value may be created during delivery of a service, may persist after the service has stopped and the most significant social value may occur after the service has been provided. Contract management and information on when outcomes occur and how long they last will be critical for ensuring the social value is actually created and understood. If you want to know if your services are improving social value you will need to know how much you are creating at the moment. You need a baseline.
16 How can we embed practices to secure more social value in commissioning?
In order to embed an approach to maximising social value in commissioning you will need to further build on skills in a wide range of existing functions. For example listening to and asking open questions of a wide range of different people, collecting this data and identifying patterns and analysing relationships between activities and outcomes, and involving people in generating options. You may need to shift the emphasis in how you commission to consider value across organisational boundaries, to spend more time on gaining insight from needs analysis or to do more comprehensive options appraisals. You will need to nurture a shared understanding across staff levels and departments and this will take leadership. Make sure that appraisal of staff takes all these tips into consideration.
If you have any questions or comments on this article please email info@thesroinetwork.org
