Indicators are designed to inform us about the state of things. They give us an idea of what’s happening, and help us understand whether we’re making progress towards our social impact goals. How useful is that!? Well… it depends.
If we design indicators that tell us where we are at, but don’t connect to any other information that helps us make sense of this, we might end up feeling a bit lost:
For example, perhaps the indicator is the percentage of social enterprise participants employed. In order to usefully interpret the information indicators provide, it’s helpful if they are grounded in context. For example, what was the state of things before? This could mean before participants were involved with your social enterprise, before you started the new initiative you’re tracking, or before the current measurement period – e.g. what was the proportion of participants employed last year?
Ah-hah! So now we know that we seem to be going somewhere, because the indicator value has moved up from where it was before – but are we there yet? In order to answer this question, we need to know where our final destination is. For example, maybe we’d ultimately like all of our social enterprise participants to gain the kind of employment they want.
That’s better – we know where we were before, where we are now, and where we’d eventually like to be. Even if we’re only halfway there, we can still tell if we’re heading in the right direction to get where we’re ultimately trying to go.
Finally, it would be nice to know if where we’re going is any better than where we’d end up without doing anything. Incorporating information about the current state of things can help us to interpret the information our indicators provide. For example, the proportion of our social enterprise participants who are now employed might be higher than it was before – but how does it compare to the average unemployment rate for the relevant local population?
Having a benchmark such as employment rates as a reference point shows us whether we have progressed things beyond where they would otherwise likely be. In this example, although we may not have reached our final impact goals yet, we can still see that we’ve made some good progress compared to the usual state of things. Hooray!
If you’ve been feeling a bit lost in making sense of indicators, we hope this post helps you find your way!