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Measuring the Depth of Impact

As purpose, impact, and sustainability become more prevalent in mainstream business conversations the importance and complexity of defining them does as well. Currently, the business community is struggling to define and standardize a reporting method to measure metrics relevant to logistics, supply chain, etc. through this sustainability lens. Many organizations such as B Impact Assessment, GRI, ROSI, World Benchmarking Alliance are doing the research and organization to bring clarity to these constantly evolving concepts. Based on this research, 17 Ways has developed an equation to measure the depth of impact: Impact = # of people impacted x depth of reach.

Based on this equation we’ve identified 3 levels of impact: Community, Employee/Supplier, and Customer.

1. Community Impact — “Community” is the first tier of this impact hierarchy. Examples of this include employee volunteering, individual monetary contributions, local engagement, etc. These actions reach a relatively small number of people in a local geography or specific online community. This is not to say these acts are without value, but rather that the impact is confined to localized communities.

2. Employee and Supplier Impact — “Employee and Supplier” is the second tier of impact. A larger group of people is affected in a more meaningful way. Examples of employee impact include changes in internal company standards such as living wages, working conditions, skill development, diversity and inclusion, etc; some companies extend these standards as requirements to suppliers . These actions have a direct and sustained impact on the people that are part of a company’s operations..

3. Customer Impact — “Customer” has the potential for the most impact. Examples include improved products and services, efficient processes, sustainable and renewable resources, etc. By the end of the product’s lifecycle customers have been touched in a variety of ways.

Let’s apply this framework to a real world scenario for clarity.

Case Study: PayPal’s work toward SDG 1: No Poverty

Paypal’s mission “is to democratize financial services to ensure that everyone, regardless of background or economic standing, has access to affordable, convenient and secure products and services to take control of their financial lives” aligning the core of their company with SDG #1 — No Poverty. For the purposes of this article will be focusing solely on this SDG despite their work towards numerous others. (For more on their work toward other SDG’s see below.)

Recently, PayPal conducted a company-wide survey into employee’s financial health in response to red flags raised internally. The findings revealed that a staggering 60% of their employees had a net disposable income of 4%-6% requiring them to live paycheck to paycheck despite being employed by a global corporation with a market cap of over $285 billion. In response to this the company created a strategy to ensure their employees in addition to global communities, suppliers, and customers would not experience poverty.

Community Impact

Paypal engages in community impact across the world through charitable giving for a variety of causes prioritizing gender and racial equity as seen below.

An area for opportunity: Sharing internal lessons with localized communities

In this scenario, another way to deepen their impact more fully into the community sphere would be as follows. Leveraging internal lessons targeting employee impact, Paypal could empower their employees to take this knowledge into their communities in order to achieve similar benefits with other employers. They could offer to provide their framework to companies and guide them as they implement it. This would strengthen the communities where they operate and build loyalty in their employees as leaders in this realm.

Employee Impact

Initially Paypal created an Employee Relief Fund for employees to tap into during extreme and emergency scenarios. While this helped alleviate immediate and acute financial stressors for employees these individual scenarios remained a constant. This “bandaid” solution, while necessary and valuable, has limited reach and ultimately did not address the root of this more ubiquitous and compounding problem.

Once this was understood, Paypal pivoted to a strategy that would enable long term prosperity for their employees and ultimately their stakeholders. The employee relief fund transitioned to a financial wellness program. In addition to allocating resources to ensure employee health and wellness, the company introduced amended compensation packages including stock options, fully funded health care, and payment increases for hourly employees. Combined these adjustments resulted in an average increase of 16% net disposable income for their employees across the board — a significant improvement that led to employee retention and ultimately improved revenue.

“We were not going to create a separate foundation and put our good works and our thought leadership in a foundation,” he added. “We did it all at the core of the company.” — Franz Paasche, senior vice president for corporate affairs

An area for opportunity: Extending Paypal’s Impact to Suppliers

One of the easiest ways for Paypal to extend their impact would be to require Suppliers to measure the disposable income of their employees and provide similar benefits. Because Paypal had already created the methodology for measuring employee health and wellness, they could share it with their suppliers. They could build a relationship with those suppliers so that rather than creating punitive requirements, they could help them iteratively build their capacity for providing benefits to their employees.

Customer Impact

As a result of improved employee moral and financial wellness and performance turn over in some locations was halved saving the company millions in hiring costs. Long-term retention and loyalty to the company skyrocketed across the board.

“When people are stressed about money, it can negatively affect their performance on the job. By paying more, companies can help to reduce some of that stress — which can also lead to better performance,” Michael Luca, associate professor at the Harvard Business School

According to PayPal C-suite leaders, “the key to PayPal’s recent success boils down, in large part, to the company’s investment in its employees.” Due to this massive investment in human-capital PayPal was able to launch new products resulting in $11 billion in revenue in Q3 and 4 of 2020. This has allowed them to earmark 300 million toward new investments in tech and product continuing the cycle of growth. This immense growth will have an impact on the millions of people that use their current products and develop their future ones.

“Amid one of the most unstable times in modern history, PayPal is blazing ahead. It’s seen record new users, charged past revenue targets, and seen its stock price soar.”

In conclusion, measuring impact across companies is a wicked and complicated issue. Providing a framework based on deep contextual analysis can help illuminate the areas of most need of improvement to focus efforts for sustainability effectively. Our impact framework helps teams identify and focus on 3–5 goals selected from the UN’s list of 17 SDGs. We measure the current impact of each based on this matrix of impact. From here we recommended the most strategic course of action to provide the most concentrated impact to as many people as possible striving for renewed and improved systems on the customer impact level.

More on PayPal and Measuring Impact:

• Read PayPal’s most recent full Global Impact Report to learn more about their work toward other SDGs.
• View PayPal’s ESG Materiality Assessment for more examples of ESG strategy
• Read more about the nuances of the UN’s Sustainable Development Goal #1 — No Poverty