Under Clause 135 of the Companies Bill, 2012 (the ‘CSR Clause’) requires targeted companies to spend a prescribed amount on CSR for the applicable fiscal year on activities specified under Schedule VII of the Act and to report on the same.
Neeti Sharma & Vikrant Pande
Seth Godin, in his trademark tongue-in-cheek style says, ‘Measurement is fabulous. Unless you are busy measuring what’s easy to measure as opposed to what’s important.’ CSR spending in India and measurement thereof is experiencing something similar. Companies measure impact using metrics which are measurable rather than those which make sense.
India has set itself apart from all other countries by mandating Corporate Social Responsibility (CSR) spends by law. Under Clause 135 of the Companies Bill, 2012 (the ‘CSR Clause’) requires targeted companies to spend a prescribed amount on CSR for the applicable fiscal year on activities specified under Schedule VII of the Act and to report on the same. The 2% requirement is a nudge from the Government to corporate India to do good and report their actions. For Indian companies, this is an opportunity to begin switching gears on their business strategy in favour of the long term and integrating sustainability and CSR in their brand promise.
Historically in India, CSR has been perceived as philanthropy. However, in the last few years, CSR has gained significance in India as companies realise that for participation in the global economy, investment in sustainability is essential.
CSR obligations can be fulfilled by taking up activities like eradication of hunger, poverty & malnutrition, promoting preventive healthcare, setting up homes for women, orphans and senior citizens, animal welfare, environmental sustainable, protection of national heritage, promoting education and livelihood improvements and few others.
Vocational skilling of the underprivileged youth is another area where a lot of CSR funds are being used. While most of these programs are being delivered through skill development partners, the efficacy of utilization of these funds is still debatable.
Albert Einstein had rightly put it ‘not everything that counts can be counted and not everything that can be counted, counts.’ In the quest of focusing on measures for CSR spends, companies often tend to use lazy metrices like total number of people trained, total jobs created and miss out on finding ways to measure social impact like learnability, change in family income etc. which are not easily quantifiable.
We make a case here to develop measurable outputs for all stakeholders – Trainees (beneficiaries), Organization (CSR Committee/ Board) and the Community. While some cannot be ‘measured’ in a traditional quantifiable way, focus on them is critical.
Here are 5 ways of measuring efficacy. It can be defined as ‘ACCEL’: Apprenticeships, Career Growth, Change in Income, Employment and Learnability
Apprenticeships - Apprenticeship combines education with training and enables the industry to first take a test drive, which eventually becomes their talent pipeline for entry level hires. Apprenticeships should be substantial in depth and duration in order to prepare the apprentices to work autonomously and competently in a specific occupation. A direct measure of success should be the number of trainees getting into full time employment or setting up their own business.
Career Growth: Labour migration from the informal to the formal sector is common in India. A vocational skills program undertaken by the job seeker should enable him to get into the formal sector at a higher role and better salary with statutory benefits. The ‘delta’ change in income and career is a direct measure of the difference a learning program can have. Other measures to be considered are Competencies and Job Satisfaction.
Change in Income: A marginal change in income can have a cascading effect. This can be measured easily.
Employment: Any skill acquired during a training program should have a direct linkage to the kind of employment it can generate. Unless the skill leads to a decent wage employment and has a wage premium, the skill program is of very little value. Needless to say, the employment should also have direct correlation to the skills learnt.
Learnability: By definition, Learn ability is the ability to acquire knowledge or skill by studying, following instructions or by way of experience and that is exactly the measure we need to monitor once a beneficiary has completed his / her learning. The short term learning programs are only a starting point for most learners and during the time spent learning a skill, the learner should also be taught ways and means of continuous learning.
During any CSR implementation, it is also critical to create a conducive environment for all stakeholders such that right from mobilization, assessment, counseling, training, apprenticeship and placement are implemented and monitored effectively. Identifying role models whose lives have changed, makes an impact in ways which cannot be always quantified. These create very powerful communication medium for all involved.
The best time to plant trees was twenty years back. However if you have missed it the next best is NOW. It’s time companies started measuring and focusing on the impact and efficacy of their CSR funding and make meaningful difference to India. Just as every penny counts, we must make every rupee work to its hardest.The authors are with TeamLease Services Limited