In practice your performance measures and the sources of information for those measures depend on the economic development tactics used in your community.

The purpose of this appendix is to focus on some economic development programs and the measurements being used to assess their performance to help you with the identification of performance measures for your community.

The four economic development programs covered in this appendix are business attraction, business retention and expansion (BR+E), new business development and export assistance.

Business attraction strategies

Economic development organizations employ a variety of methods to evaluate and monitor their business attraction programs.

Communities that receive investments typically want to know if they are better off as a result of the economic development organization’s effort and they must look at measures that capture economic benefit.

At the same time, the funding source wants to know if money is being spent wisely by economic development staff. Therefore, they tend to look at measurements of organizational efficiency or productivity.

Finally, the business itself, which is the target of all the effort, evaluates an economic development organization on the quality and utility of services offered to assist it.

Economic benefits

Most economic development organizations try to determine if they are achieving their main goal of improving the economic vitality of their area. Measures these organizations use to try to capture the economic benefit of their work include number of businesses, number of jobs, and investment in the community.

Number of businesses

Most economic development organizations appear to use this basic measure to evaluate their performance. When evaluating their performance, some count the total number of businesses in their areas, while others only count new businesses in an area. A smaller number have an organized system to determine which businesses they contributed to bringing to the community.

Organizations also usually compare the type of jobs attracted to the type of jobs the community wants to ensure overall economic goals are met.

Number of jobs

Many economic development groups also track the number of jobs to evaluate their performance. Most of these organizations track new jobs or jobs created. But it appears that relatively few groups measure jobs created as a result of their direct involvement.

Investment

Some organizations use dollars invested in the community to evaluate their performance.

Organizational efficiency

Organizations are increasingly called on to justify their budgets by reporting on staff efficiency and productivity. Government and private investors want to know more than the economic impact of a program. They want to understand if the dollars allocated are spent in a wise manner. Fewer organizations measure their internal processes than measure economic benefits. Measures typically used to evaluate organizational efficiency include the number of presentations made, the number of leads developed and pursued and the number of qualified prospects.

Number of presentations

Many business attraction programs use company presentations as a means of promoting their communities. These presentations may be at the request of an interested business, as a cold call to a potential customer, or as part of a broader marketing effort at a trade show or other event. There is insufficient data to suggest an appropriate number of presentations per person for various organizations.

Number of leads

This measure may be considered more relevant than the number of presentations, which helps account for staff time but does not measure the effectiveness of outreach efforts. The number of leads presumably focuses on firms that have a real interest in locating in an area and is a better indicator of a successful promotion program. Again, there is not enough information to determine what is considered an appropriate number of leads to develop.

Number of qualified prospects

This measure takes the number of leads a step further. The number of qualified prospects generally includes businesses that fit well with the community’s business attraction strategy and are seriously considering relocating in the area.

Customer-based performance measures

A third way to measure the performance of business attraction initiatives is to determine customer satisfaction. To be successful in the future, economic development organizations will need to measure performance based on what their business customers require.

Businesses considering relocating or expanding operations examine a wide variety of factors. The efforts economic development organizations make to attract businesses is one of the key reasons businesses have for determining if an area meets their needs. Economic development organizations can start to determine how well they serve their business customers by learning if they offer the assistance businesses want and then evaluating the quality of those services.

The first step in this process is to determine if the economic development organization’s programs address business requirements. Are businesses receiving the assistance they need?

Below are some issues that businesses often would like to be addressed by the attraction effort:

  • Does the business attraction program offer up-to-date, accurate information on the area and sites?
  • How well does the business attraction effort facilitate cooperation among government agencies and other local governments?
  • Does the business attraction program offer direct, easy to use assistance for site visits?
  • Is the business attraction effort flexible? Can programs be adapted to individual business needs?
  • In what ways does the business attraction effort help facilitate business climate improvements. These might include taxes, regulatory issues, infrastructure quality, labour training, quality of life, etc.
  • Does the business attraction effort involve established, local businesses? If so, what are their opinions about the area? If not, why not?

Not every economic development organization will be able to (or want to) meet every possible business demand under each issue. Each organization should focus on the issues that are most important to its business customers and best match the goals of the community and funding source.

Surveys

The most direct method of evaluating performance based on customer needs is to ask the customer through a survey. To be effective these surveys should go beyond measuring overall customer satisfaction. The objective should be to determine which services customers use, if they are happy or unhappy with them, and why. The survey should be an instrument for helping the organization constantly improve its services, not as an exercise in self-congratulation.

Survey questions should be directed toward customers. The questions should break out the organization’s different services for performance measurement, should try to focus specifically on the organization’s effort (separating out other factors if possible), and should contain a scale that is easily understood and comparable among questions.

For each business attraction service, the organization may want to determine the level of utility of the service, the quality of the service, the timelines of the service, and, if possible, the impact of the service on the final decision. The survey may ask the respondent to rate the service on a scale, and ask specific questions about quality of the service such as professionalism, accuracy, value, etc.

Business Retention and Expansion (BR+E) strategies

Economic benefits (output measures)

Like the performance measures often used by business attraction strategies, economic development organizations use broad economic figures to determine how well their communities are faring in business retention and expansion. Typical measures include the number of new business licenses, number of companies that have expanded, number of retained companies, number of jobs, and total investment in the community. Additional factors that economic development organizations measure in their BR+E programs include number of business loans, tax base, square feet of development, and number/value of permits.

Organizational efficiency (output measures)

Evaluating organizational efficiency is an important step in the business retention and expansion process. While the ultimate objective is to solve problems for companies, it is first necessary to meet with those firms to develop a relationship and understand the issues they face before developing programs to address those issues or problems. Additionally, most organizations need to justify their budgets by reporting on productivity. Measures of organizational efficiency satisfy both requirements by evaluating the extent to which staff members are reaching out to the business community. Measures typically used to evaluate organizational efficiency in BR+E programs include number of business visits or contacts, number of companies assisted, and number of interviews and surveys conducted.

Customer-based performance measures (outcomes measures)

The best business retention and expansion programs start by determining if their initiatives address business requirements. Are businesses receiving the assistance they need? Following are some business issues that should be addressed by the BR+E effort:

  • To what extent does the organization reach out/be proactive toward businesses?
  • Does it have a cooperative attitude? Is it responsive?
  • How well does the business retention and expansion effort help businesses cut through red tape?
  • Does it work with other organizations to reduce red tape?
  • What mechanisms exist to help identify potential problems for business?
  • Does the effort help build relationships geared toward long-term business solutions?

Surveys

The most direct method of measuring performance in these program areas is to ask the customers through a survey. Through the business retention and expansion program, staff members likely already have established relationships with many business customers and are receiving regular feedback on programs.

The objective of formal surveys should be to understand specifically which services customers use, their level of satisfaction, and reasons for their satisfaction or dissatisfaction. The survey should be an instrument for helping the organization constantly improve its services.

Survey questions should be directed toward customers and should break out the organization’s different services for evaluation. The questions also should try to focus specifically on the organization’s effort and should contain a scale that is easily understood and comparable among questions.

For each BR+E service the organization may want to determine the level of utility of the service, the quality of the service, the timelines of the service, and, if possible, the effect of the service on a business decision. The survey may ask respondents to rate the service on another specified scale, as well as request ratings for specific aspects of each service such as professionalism, accuracy, etc.

In addition, a strong BR+E​​​​​​​ program may also want to evaluate its performance by measuring the number of problems identified, the number of regulatory barriers overcome on behalf of businesses, and the number and type of initiatives undertaken to improve the business climate.

New business development programs

An economic development organization’s performance for creating new businesses and helping other businesses to grow can be measured by looking at the following elements:

  • new business start-ups
  • expansions by existing businesses
  • area businesses assisted by facilities and resources
  • venture cap

Downtown development

Many cities and towns have established strategic plans for developing their downtown so performance measures are needed to measure progress towards achieving the goals of such plans. Short-term milestones and long-term goals can be set relating to any number of issues that a community views as being important for measuring the progress of its downtown.

Typically, these measures are relative to employment, retail and office space, development of new facilities and infrastructure, entertainment, arts and culture, tourism, housing, safety and security, cleanliness, accessibility, amenities and pedestrian accommodation. What follows are some common performance measures for downtown development/revitalization programs.

Economic development

  • number of downtown employees
  • downtown business opening and closings
  • number of downtown business expansions
  • number of vacant businesses
  • occupied office space by square foot
  • occupied retail space by square foot

Marketing promotions

  • special events produced by the downtown organization/other major downtown events
  • attendance at special events
  • articles in the press/media related to downtown development/revitalization activities

Other programs

  • physical/streetscape - physical/streetscape improvements
  • organization and collaboration - number and type of community organizations involved in the downtown development/revitalization program
  • crime - number of crimes committed

Export assistance programs

Performance measures used for export assistance programs that economic development organizations can track relate to the inputs and outcomes of export assistance programs.

Inputs

External

  • Seminars conducted
  • Seminar attendance
  • Surveys conducted
  • Trade fairs conducted
  • Trade missions conducted
  • Industry networks organized

Internal

  • Staff time identifying and analyzing targeted markets
  • Staff time counselling potential exporters
  • Staff time counselling exporting companies
  • Staff time working with business networks
  • Staff time working with allied agencies and organizations

Outcomes

  • Attendance at seminars, trade fairs and trade missions
  • Companies participating in industry networks
  • Individual direct contacts made at seminars, trade fairs, trade missions, etc.
  • Number of exporter-customers made
  • Joint venture opportunities identified by networks
  • Number of joint venture agreements
  • Number of export transactions completed
  • Increased export sales volume
  • Increase in jobs related to export sales
  • Jobs retained due to export sales

Summary

In all the economic development programs discussed in this section, performance measurement has been focused on the primary customer; the businesses that create jobs and help the local and regional economy grow. This is the case in business attraction, business retention and expansion, downtown development/revitalization and export assistance. The same is true for new business development programs.