Measure What Matters with Aaron Lambie

I’m excited to be speaking with Aaron Lambie, the President and CEO of Social Awareness Group. Community engagement is often a requirement in industrial projects and as part of the formal RFP process, but there starts to be a bit of conflict around aspirational goals for what you’re going to do with community engagement and actual measurable outcomes that you’re committing to as an organization. Aaron’s got a great story and tool that he has developed to help impact and quantify the impact of community engagement in the construction industry. Aaron, it’s great to have you on the program.

It’s good to be here.

The construction industry is an interesting space, in particular, this idea of measuring social impact. Tell me a little bit about your backstory. What brought you to this place? How did you get into the business of measuring social impact?

Over the years, I’ve been working as an industrial contractor in the Alberta Marketplace primarily responsible for strategy, sustainability, profitability as its leader. What I have observed over this time period is a narrative shift and the requests for proposals that were coming out from the private market from the lowest price wins to some scenario where you have the total best value. What we’ve found over the years is corporate social responsibility is starting to play a more significant role in bid evaluations.

Being a Northern contractor, what it meant to us was what is our role with indigenous communities, with indigenous businesses and with indigenous people? That led us down a path and me to look at how best to work alongside communities. Unfortunately, where the market settled was this focus on what is your indigenous project plan? They never shifted off of what are you going to do in the next project rather than looking back and saying, “Historically, you’ve committed to some requirements and projects, what is the data that’s falling out of it? What are the impacts you’re having?”

That’s an important shift. We see that in the general contracting business. Most RFP’s questions around community engagement are about what will you do. What ends up happening is everyone talks a great story aspirationally about what they’re going to do. The reality is they often don’t do what they said they were going to do. What you’re starting to talk about, Aaron is a bit of a show-me way of being. You say that you believe in indigenous economic reconciliation, give me the evidence that you’ve been doing that for some time and let’s look at that as opposed to what you might be able to do on the next project. That’s a powerful idea. You’ve developed this tool called Nisto Link. I’m interested to know a little bit more about it. What prompted development? What’s unique about it?

Through our journey down this path of connecting with indigenous communities, what we found was the measuring stick by which industry now displays how successful they are in the indigenous marketplace is something known as a direct indigenous spend. The direct indigenous spend is a supply chain exercise in measuring how many dollars have we spent with either indigenous business or dollar spent with non-indigenous businesses that have a strong relationship with an indigenous community.

The challenge with that being the meaningful metric is, it doesn’t speak to the impact that project development is having in the community. When you look at the consultation and regulatory process, which has a bit of a relationship and narrative between project owners and indigenous communities, the supply chain exercise has to measure how many dollars you spend with indigenous business. It doesn’t support stronger relationships and stronger projects.

We came up with this product called Nisto Link and we believe that through measuring your accounting and supply chain decisions through measuring your hiring practices and your hiring data, we can start to get some sense of where you were as a company as it relates to your corporate policies. Nisto is a word in the Cree language that means three. We believe that there are three real metrics that underpin strong relationships between non-indigenous businesses and indigenous communities which are project benefits, community investments, and indigenous employment.

We’ve done a lot of indigenous work over the years and we always had this sense that we could do more. A lot of that ends up being an invitational tender that’s pushed out from indigenous services Canada. Often will have a cash allowance in the tender for local content. We’ve done a decent job of engaging the local community with hiring locally but we fell a little bit short and could have had more impact. A lot of the challenge has to do with were there and we’re building a project for a year, but it takes 4 or 5 years to develop tradespeople. While we may be able to create some jobs while they’re there, they’re not there on a go-forward basis. That starts to be part of the challenge. You’ve done some interesting work around business models to support this. Can you unpack that a little bit more?

One of the challenges and the most challenging issue in that impact market when it comes to either indigenous or social impacts is nobody has any baseline data. As I described years ago, we started talking about corporate social responsibility and doing something more for the community, however you define community. Nobody seems to spend the time to measure the results. When you have a project that’s presented to yourself where there’s a 10%, 20%, or 30% target for a social impact or an equity-seeking group, we don’t know if that’s a realistic number. Oftentimes, in the Fort McMurray market up until the economies went downhill, there were always these 10% or 20% targets for local indigenous participation in your project.

The challenge in a hot market is anybody that wanted to work in the Fort Mc market had employment so it was hard to meet those targets. Every time that was sent out, you were setting yourself up for failure. There needs to be some foundational work done around what is a realistic number based on the type of trade, the market, region, corporate strategy, and none of those foundational elements have been measured with any certainty. There’s this question about what is the objective data frameworks that need to be in place to start to understand what these baselines can be? The other challenge with not having frameworks baselines and standardized questions is it creates this disorganization in the vendor supplier market.

You’re going to interpret what indigenous impact or social impact means to Chandos so you’re going to have a series of questions by which you evaluate your subcontractors. If your competitors ask different questions, what that does is it causes disorganization at the vendor supplier level that they can’t ever get organized. You might prioritize training or hiring. Somebody else might prioritize indigenous business or equity-seeking group business. By this disorganization, it’s further causing a lack of consistency in the social impact and indigenous impact markets.

We’ve had the experience when we implement software in the business. It’s one of the greatest opportunities to systemize the core process that we’re talking about because you can’t do it in sixteen different ways with one software package. That starts to be part of the value for the construction industry of a platform like Nisto is it forces the conversation across the whole ecosystem about what is this? How do we measure it? How do we report on it? By virtue of you working in this space, you’re leading some great change there. What are other barriers that you might see in this endeavour?

The one I come across the most is ego. It’s a good thing but it’s a challenging thing. One of the things I ask companies to do is if you’re looking at your corporate social policy as it relates to equity-seeking groups or indigenous groups, have you written that policy from their perspective, or did you write it from your perspective? Do you want to knock it out of the park internally for yourselves or do you want to have a meaningful impact? One of the questions that I always ask of the vendors and suppliers we work with is, in your request for proposals, are you asking subjective questions? Are you asking objective questions? It leads to two different outcomes in the indigenous or equity-seeking groups that you’re trying to have an impact on.

I can illustrate this by saying if you have a question that says, what is the training and employment requirements on this next project versus what was your indigenous payroll or equity-seeking group payroll that you paid to underrepresented groups last year? One is going to be looking at a reflection of who that company truly is rather than some proposed strategy that may lead to a positive outcome by shifting the questions that we’re asking with requests for proposals. I believe the largest driver and the catalyst of change are going to be organizations like yourselves or project owners that are spending the dollars that have the influence. You start asking more objective questions to sort the data or evaluate subcontractors. You’re going to start to see a change in the marketplace.

Can you give a little bit of an example of what we’re talking about? For me, at least one that pops out is the number of new employees on a project so we can count the number of people and we hired fifteen people in the last fiscal year. We can also quantify what our total dollar spend was with that group. Can you unpack a few examples of how you measure these things and how you measure it the way you do?

I’ll give you some of the cynical ways to measure. When I start to try and understand, I look at a large midstream infrastructure project in Canada and I’m trying to get a sense of are they truly committed to equity-seeking groups or indigenous communities? I start to look at the KPIs that they’re measuring. The KPIs can be as high level as, have we had any disagreements with these groups? They can be how much training have we provided in these groups? Fundamentally and what I’m asking people that work alongside me is put yourself in the position of that community. If it’s my family, do I care about the training? Do I care about employment?

I put myself in the position. I say I went to university. I got an education not because I particularly enjoyed the field, I was in I did but I did it because, at the end of it, somebody was willing to pay me for my skill set, I was able to pay back my student loans, put food on the table, and keep my home. We need to focus on the metrics that you’re using to evaluate success by what is important to that equity-seeking group or to that indigenous community. It’s jobs and revenues suited to the community that can help underfunded programs, help improve roads, helps improve infrastructure, or help cultural events. These are the meaningful aspects and the meaningful elements of what is a strong supply chain or a hiring policy can drive.

We had an interesting conversation on a project in Vancouver and it was all around a goal of 10% of employment on the project be with underrepresented groups. To give an example of how you can go down the rabbit hole on that, that can be 10% of all the people on the project for three years. It’s a three-year build. That’s going to people in the thousands that come in and out of that project. Ten percent of them with underrepresented groups, that’s one way of coming at it. Another way of saying it is the project’s $86 million and roughly half of the project is labour. Half of 86 is 43 and 10% of that is 4.3. That might be a way of coming at it. There’s another way of expressing it by saying it’s new hires on the project.

Over the course of three years, we anticipate that we are going to hire 150 new positions. We want to have 10% of that be with underrepresented groups so that’s fifteen hires over the course of three years. The metrics matter and another way of also thinking about it are what happens if a contractor shows up and they already have people working for them who are from underrepresented groups? They can assign people to the project and game the system, so to speak. Where we landed on that particular project, as we said, “That’s okay as long as the individual has not worked with you for any less than a year.” Relatively new hires, you’re creating opportunities. That seems to make some sense.

One of the things that Chandos did is we partnered with SAP, a large global software company from Germany. SAP and Chandos together signed the Buy Social Canada Pledge where we both made a commitment to 5% of our addressable spend being with impact organizations. SAP did that globally and Chandos is doing that here in Canada. That’s an interesting segue around how to measure. What is addressable spend? What counts? What doesn’t count? Aaron, you’ve got some good perspective on this. How would you measure so there’s some consistency?

You illustrate the point that we’ve been talking about for a long time that I mentioned. There needs to be some standardization or a framework. It can be a dynamic framework but it needs to be something that people can work towards. You illustrated a great example of somebody already having representation of an equity-seeking group coming on the project. If you have a metric that says they need to be a new hire, they think that’s a wonderful metric but we need to work towards some standardization.

The one thing that I always talk about with any of our customers is we don’t want this to turn into an administrative burden. I believe that that’s what the market is. Generally, what is tracked is done in spreadsheets, emails, or text messages. One, that’s not sustainable and two, all the effort you put into a project years ago by focusing on equity-seeking groups speaks to who you are as a company. That data needs to be persistent and it needs to be reflected in either report that you use now because it’s where you came from and you start to get a sense of where you’re going.

When I talk about the data structure on how we integrate some of these policies and these plans into the metadata, what we’re talking about is metadata flags on employment records or vendor accounts. If you can start to track this information in your hiring packages, your payroll systems, and your accounting packages, we think that’s the level of effort that should take from an administrative perspective. We should be able to throw a points order, pull that information out, and create a vibrant and rich document that reflects the policies and practices that is Chandos Construction or any organization that wants to go down this path.

To continue a little bit on, I gave the example of the 10% labour. If you’re coming at this from a public policy standpoint and if you are a government that is implementing a CBA, Committee Benefit Agreement or has a policy around social procurement, as many municipalities and governments in Canada do, quickly you get into this conversation about what organization counts and not to be cynical but I could roll out of bed and start something that I call a social enterprise.

What makes it a real social enterprise? How do we know that there’s some scale and depth there that the Canadian Council for Aboriginal Business developed a certified Aboriginal Business Program? There’s a lot of value there. What’re your thoughts on how we can verify that the social enterprises or indigenous-owned businesses that are out there are the right ones to partner with on projects? What’s your take on that?

We need a refocusing of the lens in the project market. What I mean by that is I’m a non-indigenous person. It doesn’t matter how hard I try. I cannot be an indigenous person. I believe through all the research and all the experience I have working alongside indigenous communities that own-source revenues at the community level are a significant or a great way to help with indigenous prosperity. I believe that the way to economic reconciliation, there is a significant role at the community level for that to happen. If I can’t be recognized as owning an indigenous business because I’m not indigenous, what I can have an impact in is providing benefits to indigenous communities or equity-seeking groups.

If you shift the focus off of strictly being indigenous and I don’t want to say that being indigenous is not important, it is. What I’m saying though is myself as a non-indigenous person. If I can illustrate through objective data that prioritizing the hiring of underrepresented groups or indigenous people, it matters. If I can illustrate through objective data that my priority as a non-indigenous business is to hire indigenous businesses. The priority of our business is to ensure that benefits land in the communities that we work alongside, that should serve as some valuable metric on which to evaluate our company whether or not we truly believe in social impact and indigenous impact.

In our journey as an organization in terms of our own indigenous strategy, first and foremost is starting with authenticity. I can’t tell you how many times I get phone calls from people who know that I’m status Mohawk and they want to have a conversation about let’s put together this shell company and that shell company and we can structure it this way. I’m not interested in that. Chandos isn’t interested in it. What we’re interested in this as an organization is how we can authentically partner with indigenous communities and what is value for those communities. That’s key to the conversation. I’ll shift here for a bit. One thing that Nisto does that is cool is there’s a notification of indigenous communities of interest when contracts are let that are based on a relationship that exists. Can you describe the idea behind that? Where did that come from? Why do you think it’s important?

We believe in any market whether it’s the commercial market or the industrial market. When a project is awarded by the project owner to a non-indigenous business but the award was based on the relationship that non-indigenous business has with the indigenous community, we believe there’s an entitlement to that indigenous community to know that that project was awarded. Secondly, to know the value of that project.

Project owners report on direct indigenous spending. For example, you’ll have hundreds of millions of dollars a year recorded as direct indigenous spending for some large energy providers. The granularity into direct indigenous spending has never broken down by the indigenous community. Most indigenous communities would be surprised to find out that energy company X has spent $40 million with that particular indigenous community.

There’s a risk to the project owner on releasing that information. It’s important to that indigenous community to know that that’s being tracked against them. Nisto Link provides for indigenous sovereign governments a mechanism for them to be able to see what industry is tracking about that community. The reason that it becomes a fundamental element of the platform is that it allows for more meaningful and transparent conversations between indigenous communities and project owners. In a future that is even more regulated and has your regulatory environment, strong partnerships are founded on trust and transparency. By virtue of having this level of transparency and application, we’ll have stronger partnerships and hopefully more prosperous projects going forward.

I’m going to wrap this up a little bit. I’m going to ask you what’s your call to action for our audience? For you, what’s the most important next step that we need to take in moving from aspiration to real-world outcomes?

I’ve got ask of any company that wants to do a better job at engaging either their indigenous audience or their equity-seeking group audience. Have a bit of a meeting and look at your policies. Do those policies reflect the intent and the wishes of the people you’re trying to have an impact with? If not, tear it apart and come back together with something more meaningful. Secondly, is it objective? Is it measurable? Can you take your corporate indigenous policy or corporate social impact policy? Can you put numbers to it?

If you can’t, you should look into doing that because you’ll never know if you’re getting better, getting worse or where you even stand in the marketplace. That’s my ask in the industry. As far as a more aspirational goal, I invite any leader that wants to be part of the conversation on developing frameworks around some of the metrics that need to be developed that lead to better outcomes within the equity-seeking groups or indigenous groups that we’re trying to have an impact in. This is a broad conversation but if we can all rally around a set of frameworks and tools or structures that lend us to better outcomes, we’ll be a stronger Canadian economy and Canadian society as a whole.

Aaron, thanks for joining me. The work that you’re doing, I view it as critical for moving the conversation forward in Canadian society about how to measure impact through infrastructure. If there’s one way that I am thinking about summing that up, it’s less talk, more action. You guys are doing some great work in that area. Thanks for being on the program.

I appreciate being here. Thank you, Tim.