Impact is the effect that a particular outcome will have if it does occur.
Impacts can be positive or negative. We call positive impacts 'upsides' and negaive impacts 'downsides'. A single decision may involve the potential for both upsides and downsides.
Considering impact helps us
- weigh up different possible outcomes against each other,
- to assess how bad they will be for the business (if they are downsides), or
- how much benefit they will realise (if they are upsides).
We can think of impacts as 'hard' and 'soft'.
'Hard' impacts affect areas of the business such as:
- financial: losing or making money; changing profit margins; changes in share price
- performance: changes in turnover; changes in business volumes; problems with quality, or improvements; losing or gaining customers; growing the business or seeing it decline
- business continuity: whether business operations can continue when problems arise; whether new demands, or peaks in demand, can be met; the availability of business-critical systems
- individuals and groups: physical safety; financial status and reward; working conditions; workload; level of responsibility; status and authority; prospect for the future.
'Soft' impacts affect areas of the business including:
- reputation and brand equity: how the business, its products or services and its actions in society are perceived in the wider world
- morale and motivation: how people feel about working for the business
- faith in management: whether people believe in mangement's abilities and vision for the future
- sense of community: whether people identify with the business and its aims and fell part of the business's culture
- social standing: people's sense of value or relevance to the business; their sense of authority or power.