Social value is a passion for Darren Knowd, Head of Procurement, Sales and Business Services at Durham County Council, and he considers it important for organisations as it builds engagement with the community around it. Although it's a newly-popular term, social value has been around for quite a while.
"When I came into the local government from the global private sector, people were talking about sustainable procurement, which was social economic and environmental mental outcomes," said Knowd, who previously worked in the automotive industry at Nissan Europe after he left his tenure at General Motors.
"My career has always been in procurement," he says. "The green aspect was very dominant [back then when I joined the local government]. Then, during the period of austerity, 2010 onwards, the social and the economic aspects of sustainability came very much [notable than before]."
Knowd said the last couple of years has been quite interesting as the council, which handles about £600mn pounds (US$792mn) a year, did its best to manage the pandemic. From his perspective, the public sector is currently very far ahead from a social value point of view when compared to the private sector.
"That shouldn't really be a surprise because fundamentally, a council's job is to improve the social-economic and environmental wellbeing of its local communities," he said. "It shouldn't really come as a surprise that we take it seriously, invest in it, train and educate and seek to deliver it."
Much of this has come as a result of the UK’s Social Value Act, passed a decade ago and followed up with other, supporting legislation since. The effect this has had, and the convergent movements in other countries that are pre-social value legislation, was covered in our April issue in a story you can find here - a story in which Darren Knowd also featured, alongside Guy Battle and Social Value Portal.
Embedding social value in supply chains and along value chains is now imperative to corporate operations worldwide. Knowd and County Durham, hold lessons with global implications.
COVID-19; a period of social impact, and a period of social impact assessment
The pandemic has been a hectic period for all sectors, including the local and central governments. The common denominator boosts the relationship between the two.
"There's been a lot of, as you might imagine, reactionary procurement going on. We buy things that we never ever thought we would need to buy, like PPE, body bags, temporary mortuaries, and [other] things to protect the community. So it's been a real challenge for the whole of local government," Knowd says. "And if I'm honest, whenever there's a problem in the country, and nobody seems to know how to solve it, it tends to end up in the local government's sphere of responsibility."
"The relationship that we have with the central government is far, much stronger than it was at the beginning of the pandemic. We, as local government, had an opportunity to work with them and influence a lot of their policy direction," he says. "The national procurement policy statement came out last year from the government that sets out government priorities for public sector organisations whenever you are procuring."
The pandemic, in addition, served as a chance for all sectors to perform a social impact assessment on their process and performances. Knowd sees that both the businesses and the community show more tendency of wanting to do good things in communities than before.
"I think that was one of the benefits of the pandemic. People are far more appreciative of where they live, where they work, and what they can do to improve things."
Having social movements also adds value to the business from the perspective of the younger generations, who all data indicates are more morally, socially, and ethically conscious. However, with the pandemic, they might also be some of the most vulnerable.
"Coming out of the pandemic, there are some pretty obvious inequalities that we knew about before but have really been brought to the forefront," Knowd sayd. "Social value does give us an opportunity to try and address those things, particularly with relation to things like young people who I think have been disproportionately impacted by the pandemic."
Seeing the actual impact of these social movements might not be as instant as most people think. Knowd says embedding social values into the many aspects of businesses is a journey instead of an overnight process.
"People obviously want quick results, quick outcomes, want to see tangible progress quite naturally, but social value doesn't happen overnight. It is a journey. Every organisation is different. Every category of spending that you work on is different," he says. "I think this is where the intelligence comes in in terms of strategically managing your procurement spend effectively."
Knowd believes that fundamentally, social value is about social, economic and environmental factors. Businesses are able to maximise those outcomes by using their influence through not only procurement but also sales, recruitment, or just any part of the business.
"Procurement is very important, but I also try to think diversely," says Knowd. "I'm currently working on a project called the County Durham Pound, to work collaboratively across organisations to better understand what social value might look like in the county.
“We are all serving the same customer, just through a different perspective or a different lens. So by collaborating, we've got a better chance of maximising social value outcomes."
Measuring social impact and explaining its value
Taking a leap into the world of social value can only happen when organisations understand what social value is and the benefits it can deliver. A procurer or a procurement professional might need to educate their corporate management team to understand the point of incorporating social value.
"A commonly asked question is, should it be a bottom-up thing or a top-down thing? Should you write a policy and get the chief executive just to cascade it through your organisation? Or should you work bottom-up with procurement to get the organisation to deliver social value? There's no right answer. To be honest, I think it really depends on how your organisation works," Knowd says.
The DCC itself took a hybrid approach. The council worked bottom-up by trying to convince the service managers about what social value is and the kind of opportunities it provides. Then, it implements a procurement strategy that sets out its obligations and ambitions regarding social value.
"So we have done top-down communications as well to staff, but also to politicians because local government is a politically led organisation," he says. "In a global setting, the stakeholders, the people who can influence your business, [you need] to get them to understand what social value really means and what the opportunities are."
When the Social Value Act first came in in 2012, people talked about social, economic, and environmental outcomes. Quite often, the question was about the goals, the aim of the approach or the project itself.
"Therefore, in the public sector, it's difficult to include those factors in your decision making because in the public sector, legally you've gotta be open, fair, transparent,” says Knowd. “If you can't articulate what social value is and you can't measure it, it could be tricky to try and to deliver it."
Social impact assessment, according to Knowd, can be hard to do - but is not impossible. Defining social, economic, and environmental factors and putting a financial value on them is half the battle.
"Another valuable lesson is you can never, ever do enough early engagement," he adds. "Likewise, you can never do enough supplier market engagement to understand what's out there, what the opportunities are, what the supply base could deliver would be interesting to deliver because there are some people who assume wrongly."
Engage, assess, and you shall deliver (social value).