Metrics That Matter
Strong VDOs place considerable emphasis on measuring both the impact of their activities (through their client's success) and the efficiency and effectiveness of their operations (through a series of performance measures). It is in the best interest of individual VDOs and the national VDO community to periodically take a sounding of their economic impact.
If a VDO can demonstrate and objectively quantify their economic impact, they can better support an argument for continued financial resources to continue their mission. Alternately, it is difficult to endorse financial support for a VDO – or any economic development initiate that does not track its impact and performance.
There are a vast number of measures one can use to assess the inputs for a VDO, the efficiency of the processes and programs used and the outcomes of VDO activities. RIAN is focused only on the direct impacts of VDOs on the client firms and the improvement in the VDO's impact based on client reporting.
Therefore, RIAN recognizes the following four impact measures and one performance measure that we believe should be adopted by all Venture Development Organizations. These metrics should be gathered and reported regularly and consistently by each and every VDO.
- Jobs Created – Net change in total direct employment of client firms that can be attributed to VDO activity and/or support, with an annual reporting period.
- Wages Paid – The total annual wages or salaries of new and retained FTE jobs at client companies.
- Investments Attracted – Additional capital, outside of investments made by the VDO, raised by client companies, distinguishable by local and outside sources. Organizations may specify funding by sources – equity, grants, etc.
- Revenues Earned – The revenues and sales of client companies.
- Time in place – The impact, or change, over time resulting from VDO activity in its region. It is important that this measurement occurs independently and without comparison to other VDOs in other regions.
It is important for VDOs to use other metrics as well that are appropriate for its operations, funding requirements, and regional needs..