Based on outcomes? Challenges and (missed) opportunities of measuring social outcomes in outcome-based contracting

Abstract

Although outcome measurement is a key element of outcome-based contracting, the main challenges related to the measurement processes in these programs are still under-investigated. To fill this gap, this article examinates the challenges and opportunities of measuring social outcomes in outcome-based contracting, focusing particularly on three main areas: the design of measurement processes; the definition of outcomes, metrics, and targets; and the practical implications of the measurement processes. The analysis focuses on four case studies in the UK. Regarding the measurement of payment outcomes, our results bring into question the viability of outcome-based contracting for providing evidence that can inform policymaking. However, the results highlight the opportunities emerging from the measurement of outcomes not related to the payment mechanism and from involving different stakeholders in the measurement process. Finally, we discuss future research on the influence of governance and bargaining power on the measurement of outcome-based contracting.

Notes

1 Outcomes can be defined as changes experienced by the target beneficiaries in the short term, thanks to the use of the outputs generated by the activity (Bengo et al. 2016; Jackson 2013; Verrinder et al. 2018). They differ from outputs, which are products and services directly generated by an organization. In contrast, impacts can be defined as the long-term effects of the organization’s activities on the communities.

2 We decided to focus here only on phase II of the program, since the evaluation design of the program was redesigned after phase I to be more comprehensive and accurate, including different methods and approaches.

3 A second phase, which entailed changes in both the financial scheme and the intervention logic, was launched in 2015 and ended in 2021.

4 Specifically, performance was measured in terms of a statistically significant reduction in reoffenses, on both the binary and frequency measures, assessed against a baseline pre-reform reconviction rate, namely, the expected level of reoffending in each area determined by the most recent reconviction data (2015/2016). The target was set as the proportional difference between actual reoffences and the expected number of reoffences.

5 OGRS scores estimated the probability that offenders with a given history of offending would be reconvicted and control for some offender characteristics.

6 Continuous employment is achieved if the adult moved off of work benefits or meets a certain earning threshold, if in receipt of Universal Credit.

Additional information

Funding

This work was supported by the Directorate-General for Employment, Social Affairs and Inclusion of the European Commission under the tender, “Study on the benefits of using social outcome contracting in the provision of social services and interventions—a cross-country comparative assessment of evolving good practice in cross-sectoral partnerships for public value creation.”

Notes on contributors

Benedetta De Pieri

Benedetta De Pieri is a research fellow at Tiresia, a research centre in the Department of Magament, Economics and Industrial Engineering at Politecnico di Milano. She completed her PhD at the Yunus Centre for Social Business and Health at the Glasgow Caledonian University. Her research focuses on social innovation, social entrepreneurship and the role of cross sectoral partnerships in supporting the generation of social impact. Benedetta worked at the Bocconi University as a research assistant and as a fundraising consultant for non-profit organisations in the fields of social exclusion, poverty and healthcare.

Veronica Chiodo

Veronica Chiodo has a Ph.D. in Management Engineering and she is Junior Assistant Professor at the School of Management of Politecnico di Milano. She completed her M.Sc. in Social Economy in 2014 at the University of Bologna. Her research interest focuses on socially oriented hybrid organizations and, impact investing. In 2017, she has been visiting PhD student at the University of Heidelberg and Centre for Enterprise and the Middlesex University. She teaches subjects related to social innovation, social entrepreneurship, impact measurement and business administration. She took part in the work of G8 Taskforce on Social Impact Investment. She has worked as consultant with venture capitalist, banks and microfinance institutions and as researcher in several projects funded by the European Commission in the field of social innovation.

Francesco Gerli

Francesco Gerli is currently a postdoctoral researcher at the Department of Organisation of Copenaghen Business School. He received his PhD in Management Engineering at Politecnico di Milano – School of Management at the research Centre TIRESIA. His current research examinates the organizational capacities of public organizations in sustainability transitions. He is also interested in social innovation and in the technological development of social entrepreneurship.