This piece was written by Kate Kewley, Associate Director at Social Finance.
“Performance management” is a curious phrase in the world of social impact bonds (SIBs). In non-SIB contexts, it mostly entails imposing an improvement plan on an underperforming member of staff — and this has had an important impact on how it has often been understood in SIB management.
Those reading about SIBs, for example elsewhere in this guide, will have already seen that while stakeholders may want to use SIBs to promote flexibility and innovation, in parallel it is considered necessary to develop complex structures and processes to predict, measure, analyse and understand the results.
Too often these structures take on a life of their own, and can in the end crowd out the very innovation that they are set up to understand and facilitate.
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In this piece we will not give a framework for “how to set up a successful SIB” — about which there is much written elsewhere, and a landscape of organisations who specialise in advising on and developing the structures and processes necessary.
Instead, we want to encourage consideration of what it takes to set up and see a SIB through to its desired outcomes, focusing on the “softer” ingredients that in our view are essential to ensuring success and sustainability.
At their most basic, SIB success relies on the same key component parts as all projects. The tools and processes for informing and measuring activity are important, but so are less clearly defined elements such as the motivations and commitment of the people implementing the project, a common understanding of success, communication between stakeholders, and an atmosphere of trust where admitting failure can help a project move on rather than move backwards.
It is difficult to overstate the importance of the project team
People: It is difficult to overstate the importance of the project team in the successful delivery of a SIB. Not only do a team have to master the project they are in charge of implementing, but they should be able to adapt to and see the value in those new elements that a SIB-structure brings — different governance structures for example, new monitoring and reporting requirements, often an increased and substantial cohort of stakeholders, and different financial flows.
Too often in SIB set-up we see a lot said about how “different” a SIB is as a project, but nothing done when it comes to recruitment to hire a team who really understand and are excited (rather than daunted) by that difference.
Shared vision: Related to the above, one of the common positive factors highlighted about SIBs is the number of stakeholders that a project can bring together, united around a common project that should — if successful — bring benefits for all.
Bringing a complex stakeholder group together at a high level however is not the same as truly understanding the nuances in their individual motivations and definitions of success.
Negotiation of and agreement on payment metrics and possible “baskets of outcomes” goes somewhere towards surfacing implicit assumptions about what success is and isn’t. However, going one step further and really getting under the skin of what success looks, feels and smells like in practical day-to-day terms is rarely done.
Communication: With multiple stakeholder groups involved in a SIB and often multiple layers of governance, it can seem hard to avoid a formal approach to governance and communication. This is rarely a successful way of getting a full picture of what is happening on the ground, with much of the useful detail “sanitised” on its way to formal reports to boards and advisors.
Like with vision, it is important to plan a project’s formal governance and communication processes, but it is also vital to take the time to work with stakeholders and understand preferences and possibilities for more informal communication, from which real relationships, trust and insights can emerge.
Where there is no trust, there is little hope for open communication
Trust: Building trust is one of those things that everyone acknowledges important but can be difficult to make time for. We hope that trust emerges from working together over time and assume that stakeholders begin a project with implicit if not explicit trust for their colleagues and counterparts.
One of the key insights that often arises in SIBs when you do delve deeply into people’s motivations and sense of vision, and when you begin to communicate authentically and openly, is that trust is assumed but often lacking.
Where there is no trust, there is little hope for open communication and in the absence of both of these any project that is acknowledged to be complex from the outset (as most SIBs by definition are) is going to struggle.
What to do differently
As the organisation that designed and led the roll out of the tools and processes necessary for SIB success, Social Finance is well-placed to have observed and now advise on the importance of the softer side of SIB performance management.
Our performance management v.2.0 goes back to that “underperforming member of staff” and seeks to coach and mentor them to success by understanding their particular strengths and weaknesses, communicating openly, and building trust — rather than imposing a fixed performance plan on a fluid and complex entity.
To do this requires development of how we as a sector understand and approach SIB management; it requires staff with different skillsets and experience, it entails careful and ongoing listening, and it has to be responsive, inclusive and supportive of all parties — particularly those implementing the project — who comprise the SIB.
Moving from success as determined principally by the set-up, we are increasingly aware of the importance of how you see a SIB through. Recognising the value of an active and ongoing supportive role will ensure greater success across the board. — Kate Kewley
(Picture credit: Unsplash)