How Should Economic Development Organizations Measure True Impact?
By RDG Director of Innovation and Global Research Doug Radcliff
“Economic growth and environmental protection are not at odds. They're opposite sides of the same coin if you're looking at longer-term prosperity.”
This has been a prevalent discussion topic in the industry for years now, and if we have learned one thing, the answer to this question has no straightforward response and is ever evolving. Many times, instinctively, people look towards traditional economic growth measures, but I think we can all agree the impact that EDOs can, and perhaps should have, extends far beyond, including, but not limited to, the following pillars of community development:
When one thinks of EDOs, job creation and overall growth is by far the most common thing that comes to mind; EDOs can measure their impact on the development of the economy by analyzing the results of their initiatives – increased income, lower unemployment, more job opportunities, new businesses, etc. This is straightforward and clear, but not the only impact.
Workforce Development, Job Training, and Talent Recruitment:
Regarding other traditional measurements of success: the true impact of EDOs should also consider workforce development, job training, and talent recruitment. What new and unique skills was the EDO able to foster for the communities’ workforce? How prepared for employment were participants in the various programs? How quickly did they succeed? What types of employees and people was the county or region, through the guidance of the EDO, able to attract to its community? Are they from a diverse background?
The literal impact of EDOs becomes a bit tricky to analyze once other factors come into play. This is particularly due to the nature of the measurement. For example, a community and an EDO can feel strong economic growth and call it a success. However, there could be behind the scenes activities that negatively outweigh the success of the economic prosperity. Sustainability is one example.
A truly successful EDO is one that creates sustainable economic growth. Meaning its programs and activities do not only positively impact today’s generation, but lay the groundwork for future generations to reap the benefits and/or continue the programs in an adjusted manner. To achieve sustainability, the EDO must successfully balance economic, environmental, and social principles.
The impact on the environment is no longer a side discussion, with many companies and site selectors asking environment related questions early on in their search process. Some might argue it has become the core of any discussion on economic sustainability. It is of utmost importance that the EDO is helping the community to develop in an environmentally friendly way. Additionally, the ability to highlight things like the availability of alternative energy sources and the capability to reduce the carbon footprint of a company by identifying geographically closer suppliers will undoubtedly provide an advantage to the community in the market, and help them to attract foreign and multi-national companies (if they so desire). However, no matter how much money and investment a company brings to a community, destroying the local environment will no doubt damage the community in unforeseen ways in the future that could ultimately hinder longer-term growth.
With many more eyeballs focused on economic development activity it is important that EDOs remain aware of the business practices of the companies they are attempting to attract into their communities – from the treatment of their employees to how they do their work – manufacturing, logistics, distribution, etc.
These are just a few of the several areas of community development that can be factored into the equation when attempting to understand the actual impact of an EDO. Other areas could include youth development, access to education, etc. Not all of them are the direct tasks of an EDO, but they are activities that an EDO encounters and can impact through convening partners and the sharing of best practices.
Therefore, how can EDOs measure their true impact? They should examine how their actions affect the economy, how their programs help prepare people for the workforce, whether their programs and actions are sustainable for the future, and just as importantly, the profile of the companies moving to and/or expanding in their communities – are they environmentally friendly? Are they favorable to DEI and ESG?
EDOs have an impact beyond traditional measures such as job growth and capital investment; EDOs are no longer just about building economies, they are about building communities. It behooves all EDOs to get better at measuring all of the various ways they have an effect in order to paint a more accurate picture of what they do, and how well they do it.