What’s the Similarity Between Kids Company, Top Consulting and Investment Banking Firms?

Going back to Kids Company, we're going to draw a parallel between that organisation, and firms like McKinsey and Goldman Sachs. How can you possibly do that, I hear you gasp? Simple.

We mentioned here the extract from the last Kids Company annual report, which contained the classic words;

Measuring the true impact of Kids Company’s intervention is not possible. Society has not developed evidencing tools which capture the potency of hope, the rekindling of imagination and returning children to dignity. So we are left with some inadequate measures which at best describe our output and capture aspects of our outcomes. We want to develop a more sophisticated narrative of efficacy in relation to work with vulnerable children and young people, which is why we have partnered with a range of academics and scientists.”

We said then that we would like to see more commercial and contract management disciplines applied to charitable spend, certainly when organisations seek and obtain public funds to support their work. We need and should have some sense of performance management, some measures of results, outputs or outcomes, if we are spending taxpayers' money.

But Kids Company, and other charities I suspect, respond by saying "oh you can't measure us by conventional means, we're different and special. You just have to take our word that we do Good Stuff and Good Things Happen".

Which is very similar to the response you might get as a procurement practitioner if you challenge the prices charged by top-end consulting firms, or various types of investment banking and corporate finance advice.

“You can't compare our fees with just any old firm. You can't look at us on a cost per hour / day basis. You can't measure our outputs in conventional manner - we're advising the CEO, we're doing something so special that you mere procurement person can't even comprehend our amazing genius."

Heard that before? That is exactly the sort of thing you get from certain providers in certain sectors , when you try and take a proper commercial approach. And that ranges from charities to top end professional services. And of course, procurement should immediately put their nonsense detectors onto full alert when we hear this sort of thing.

So if you cannot explain to me why your work has any value, why should we give you any money? It is one thing to accept that not everything will translate easily into bottom-line "savings", for sure. But it another entirely to state that it is impossible to measure in some way the benefits of whatever is being bought by the organisation's hard earned money.

We also mentioned Impacore last week, having featured them back in 2013. (We should have an update on them soon). But it is interesting that they ran into the same issues with certain consulting firms when they introduced their performance monitoring and management processes to the consulting industry.

"That won't work with us - we're different", was the message from some of the highest priced firms. But actually, it does work. Much of the data Impacore gathers is subjective to some extent, but over time, being able to benchmark and compare consulting firms and assignments leads to robust conclusions.

So maybe we need an Impacore type process for the third sector? Something that understands the challenges of measuring the benefits of the money being spent - but does not shrink away from doing whatever possible to quantify this, to some extent at least?

 

First Voice

  1. RJ:

    I Couldn’t agree more, Peter. I can very much see the parallels between the third sector and professional services firms and both should be striving for measures that can demonstrate both their efficacy and cost-effectiveness in delivering the outcomes they are looking for. Even if we have to look at non-traditional and non-commercial measures of wellbeing (e.g. the “National Happiness Index” that has made its annual headlines this week), “customer” satisfaction or employee engagement we have to look for ways that can demonstrate and justify our donation/investment.

    All too often, though, the fault lies with donors or stakeholders not asking the questions or being clear about their objectives in the first instance.

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