Performance measurement is one of the hottest topics in economic development right now. This month, IEDC will hold a webinar called Measure What Matters: Top Metrics in 2017 (January 18) and C2ER will host a webinar on Promoting Evidence-Based Policymaking by Sharing State Administrative Data (January 25).

Our own article on the State Economic Development Performance Indicators White Paper we wrote with CREC was among the most-read posts of last year. (Check it out here in case you missed it.)

Given the level of interest, it’s a good time to review the foundation for selecting good metrics. Our infographic outlining steps for Managing Incentives for Transparency & Accountability is a useful starting point.

Set Goals

Review your community’s economic development strategy. What are you trying to achieve?

Identify specific ways incentive policies and programs support that strategy. Are your incentive programs aligned with your economic development goals?

Determine how progress toward those goals can be measured. What indicators best convey how incentivized projects contribute to positive community outcomes? 

Think beyond job counts and investment tallies. What additional indicators represent progress toward economic development goals such as sustainability, equity, innovation, and prosperity?

When we guide communities through this process, we begin by drawing on goals as articulated in strategy documents, statutes, program guidelines, and program or project reports. This is how we connect program activities to the larger economic or community development mission and start to identify the benefits that are expected to come from the incentivized projects.

Define Terms and Metrics

Once goals are articulated, it’s time to translate those concepts into measurable indicators or metrics. We prefer indicators for which we know quality data is available (or accessible) and that enable comparisons across programs.  

To make the metrics as useful as possible:

  • Create standard definitions across programs. Using consistent metric definitions across programs enables comparisons and eases the burdens of data reporting for businesses and data management and reporting for economic developers.
  • Consider data sources and availability when selecting metrics to make sure data collection does not require time or money beyond your organization’s means.
  • Choose metrics that are appropriate to the timeframe, scale, and geography of the project. To illustrate the latter point, it probably does not make sense to use community-wide poverty levels as a metric for a brownfield redevelopment project.

Following these steps to develop better metrics and supporting data is worthwhile to help us explain why we use incentives and demonstrate how incentives help us attain our economic development goals.