Turn "Soft" Benefits into Hard Savings

Remember King Midas - the legendary king who could turn anything into gold with a single touch? Why not be the King Midas of your next business case project? Just cleverly convert "soft", or intangible, benefits in your business case into the hard gold of tangible savings. You'll get projects funded that no one would have believed possible - like the HR system proposal that returned from the dead after a business-case team flushed out $8 million in undiscovered savings by converting "more effective training" from an intangible to a tangible.

Here's a simple process for finding the overlooked gold in your business case. Before you begin, carefully consider what terms you'll use. Senior decision-makers love "tangibles". These benefits have an agreed-upon monetary value, such as "reducing labor costs by 15%". In contrast, intangible benefits, although important, have no obvious monetary value. Examples include "improved customer satisfaction" and "happier employees".

To locate powerful intangibles that can be converted to tangibles, you should stop, look and listen.

Stop to think past the naysayers. Here are three examples: Increasing customer loyalty spurred profit growth $800,000; closing financial books faster saved $1.6 million; and reducing employee turnover costs reduced labor costs by $2.3 million. From where did these savings come? The first example came from finding overlooked connections: lower cost of sales from repeat customers. The second example came from closing financial statements five days earlier. Faster, better sales data enabled the managers to more effectively schedule part-time workers. The third example came by identifying the real costs of employee turnover. These costs can easily equal at least half the annual salary of the departed employee, once the true expenses of job vacancy, rehiring, training, etc. are considered.

The next step is to look for the published tangible payoffs of others: These "data nuggets" can be worth more than their weight in gold because they add credibility to your analysis. Fortunately, these data nuggets are all around us. Looking for savings from "increased employee morale"? Search the Internet for that topic. Also watch the press. USA Today ran an article on tangible costs of inadequate policies for granting time off for grieving employees (more than $33 million annually for one firm). A past Fortune magazine article cleverly explained how to calculate the hard money savings of improving customer loyalty.

One-day brainstorming sessions revealed
$3-$8 million in undiscovered savings opportunities.
After looking, listen to the right people and then sign them up as believers. If you're searching for inventory benefits, talk to the inventory manager. Consider setting up a "benefits discovery" brainstorming session of 10-15 people who are knowledgeable about the areas that will experience the largest impacts. I recently participated in several one-day sessions like this, each of which revealed $3 to 8 million in undiscovered savings opportunities. Not bad for a day's work! Projects that deserve to be funded shouldn't die because of insufficient tangible payoffs. Show upper management the overlooked gold and the King Midas crown will be yours.

For suggestions to help you get started, drop me an email requesting the white paper "20 Ways to Find Tangible Savings That Others Miss." Also, let me know of any successes you've had in converting soft intangibles to hard dollars.

Jack M. Keen is the founder and president of The Deciding Factor, a Basking Ridge, N.J.-based international consulting firm www.decidingfactor.com specializing in tools, best practices, and workshops for building better business cases faster. A frequent guest speaker, Keen has advised more than 200 organizations in 15 countries. (Datamation copyright © 1997. All rights reserved. Reproduced by permission of Datamation magazine.)

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