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Demonstrate impact through effective stakeholder impact analysis

Stakeholder impact analysis evaluates how actions affect diverse groups, focusing on responsible, sustainable outcomes.
Written by
Unmesh Sheth
Published on
August 11, 2021

Stakeholder impact analysis merges social value principles with five impact dimensions, offering an actionable approach for effective assessment."

Stakeholder Impact Analysis

In this article, "Stakeholder Impact Analysis," we explore the intricate world of understanding how actions impact various groups and individuals, with a focus on achieving responsible, sustainable outcomes. This post delves deep into the essence of stakeholder impact analysis, especially in the context of integrating it with management practices, revealing deeper insights into stakeholder voices and aligning actions with social value principles.

We emphasize the importance of starting with engaged stakeholders and collecting reliable data as feedback. The article guides you on asking the right questions to understand all five dimensions of impact: What, Who, How Much, Contribution, and Risk. These dimensions are critical in evaluating both positive and negative impacts, determining the level of outcome against standards, and understanding the significance of the outcomes.

Fig: Principles of Social value

Moreover, we explore questions around the scale, depth, and duration of the outcomes, offering insights into how much of the outcome occurs, its depth, and its longevity. The role of contribution and risk is also considered, questioning what would happen in the absence of the enterprise's efforts and assessing the risks to people and the planet if impacts do not occur as expected.

Join us in this comprehensive journey to better understand and manage the effects of your actions on your stakeholders, ensuring a positive, lasting impact. For more resources on impact measurement and management, visit SoPact and SoPact University.

Stakeholder analysis steps

The first step requires enterprises to understand who their customers or stakeholders are. You can begin by collecting data on their demographics and seeking feedback on their wants and needs. 

  • Start with engaged stakeholders.
  • Collect reliable data as feedback from stakeholders.
  • Ask the right questions to understand all five dimensions of impact.

This article will show how to ask the right questions to understand all five dimensions of impact. According to the impact management project, to understand any impact on people or the planet, data is needed across all five dimensions: What, Who, How Much, Contribution, and Risk. The impact can be positive and negative - the crux of the matter is to ask and collect data on the right questions. 

Fig: Stakeholder Analysis

Stakeholder Impact Example

An enterprise may ask for specific feedback from stakeholders. For example, what other kinds of positive and negative impacts do they experience while engaging with the enterprise for the product, or service? 

The key here is to ask,

  • Is enterprise generating a negative or positive outcome?
  • Is the enterprise delivering an outcome level above or below a national or international performance standard?
  • Is the enterprise creating unimportant outcomes?

To manage the impact, the enterprise will need data on the most important effects on the stakeholders. And the degree of change (How Much) has occurred for each.

Four Impact Data Categories are required to assess “What is changing ?”

  • The level of outcome experienced. The outcome can be positive or negative, intended or unintended.
  • The threshold for a positive outcome. The level of outcome that the stakeholder considers to be positive or ‘good enough.’ The threshold can be a nationally- or internationally agreed standard
  • Importance of outcome to stakeholders. Stakeholders’ view of whether the outcome they experience is important. 
  • Alignment to Sustainable Development Goals or other globally recognized goals.

Let us understand with an example. A Fitness company that provides high-quality, low-cost services may ask, “When you first visited a fitness club, what improvements in your life were you looking for”?

what is stakeholder impact analysis?

Image credit: Using self-reported data for impact measurement report


Who experiences the outcome?

 How underserved are the stakeholders concerning the outcome? There is four impact data category that describes the WHO dimension.

  1. Stakeholder The type of stakeholder experiencing the outcome 
  2. Geographical boundary Where the stakeholders are while experiencing the social and/or environmental change. 
  3. Baseline outcome level: The stakeholder's level of the outcome before engaging with the enterprise reaching well-served populations reaching underserved populations
  4. Stakeholder characteristics Socio-demographics and behavioral characteristics of the stakeholder to enable segmentation.
stakeholder impact assessment

Image credit: Using self-reported data for impact measurement report

Continuing with the same hypothetical example, the Fitness company could determine, out of all the people who join the Fitness, how many of them are overweight.
This gives them a good understanding of how underserved the people are, giving them a good baseline to measure their impact effectively.

How much of the outcome occurs across scale, depth, and duration?

Scale The number of individuals experiencing the outcome generating the outcome for few? Are you creating the outcome for many? 

Depth The degree of change experienced by the stakeholders. Are you delivering a small degree of change towards the outcome? Are you providing a significant degree of change towards the outcome? 

Duration How long has the stakeholder experienced the outcome? Are you creating long-term change?

Screen Shot 2020-03-01 at 1.50.54 PM

For example, if the Fitness company identified many people as overweight in the "Who" dimension, they could ask if many people lost weight. This tells the enterprise the degree to which the stakeholder experiences the outcome.

What will happen if you do not contribute?

What is the enterprise's contribution to what would likely happen anyway? 

Depth counterfactual The estimated degree of change that would occur anyway for the stakeholder contributing marginally or not at all, relative to what would have happened anyway? Are you contributing significantly relative to what would have happened anyway?

Duration counterfactual The estimated period that the outcome would last for anyway.

For example, the Fitness company could ask its stakeholders if they have used services from some other company or used other products to experience weight loss. This would indicate if the outcomes experienced by the stakeholders can be attributed to the Fitness company.

Understanding Stakeholder Impact Analysis

Image credit: Using self-reported data for impact measurement report

What is impact risk?

What is the risk to people and the planet that impact does not occur as expected? 

Impact Risk type The type of risk that may undermine the delivery of the outcome taking a low level of impact risk? 

Impact Risk level The level of the risk specified in risk type (e.g., High, Medium, Low)

Risk is an essential data category. In the example, the Fitness company could continuously measure the number of people who drop off after starting the program. This gives them the drop-off rate, which can effectively tell them the risk they are running toward the product or services they offer to people.

Once results from a large enough population are collected, enterprises can classify each effect, as shown in the impact scorecard. Investors can use the information presented for their due diligence. Once the investment is made, investors can request yearly improvement to monitor improvement year after year.

Impact Cloud's innovative impact strategy allows a better alignment between investors' impact framework and the enterprise's intended impact. Both investors and enterprises can collaborate to create self-reported data that can easily align with due diligence and recurring monitoring and evaluation results that investors may be looking to learn.

Once you have designed a survey, you should test the survey's effectiveness with a limited group. Once finalized, use whatever mechanism is best suited for the given situation. Data collection could be door-to-door when collecting data in areas with a poor network or online if network connectivity is functional. 

Gradually, over the last decade, an alternative model for measuring social change has emerged. Keystone Accountability helps organizations understand and improve their social performance by harnessing feedback, especially from the people they serve. 

Learn More

How to ask open ended questions

Learn how to ask open-ended questions effectively with our insightful guide. An effective way to learn stakeholder voice.
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