Intangible Benefits | Business Rationale

Intangible benefits can often be estimated but not attributed to particular budget holders. They would not normally be included in the cost—benefit analysis, as accountability for the delivery of that benefit is diffused across the organisation, making it extremely difficult to attribute the achievement of a benefit to a particular change that the HR transformation programme has made.

Again, if we consider a move to on line recruitment, there should be a reduction in the time from a vacancy arising to when a new recruit arrives, starts their induction process, and subsequently contributes to the business. In this case, it is harder to pin down to whom this benefit accrues. The following table shows examples of intangible benefits for the same selection of HR services' constituent processes. However, whilst beneficiaries are identified, it is at the business function rather than budget holder level.

HR service	Constituent process
Resource management	Recruitment and selection
People development and performance management	Training and development
Retention and reward	Reward strategy and reward levels

Intangible benefit	Beneficiary
Reduced time from vacancy to hire	All business units and functions
Improved match of skills to roles	All business units and functions
Improved retention	All business units and functions

Whilst intangible benefits are not included in the cost—benefit calculation, beware of thinking that they are not as important as tangible ones. Intangible benefits that contribute to the development of improved public services for example, are often strategically significant. Therefore, it can also be useful to further distinguish intangible benefits in terms of their strategic importance. In the case of transforming the HR function, these are often the benefits associated with how the HR function will add value to the products and services that the company delivers to its customers. Often the benefits sought in this area are delivered through the business partner role, and it is here that measurement of these benefits usually takes place. However, this area of benefit is one that does not lend itself directly to quantitative measurement, and comparative and qualitative data are often used here.

Having considered the changes that each process will undergo and determined what the benefits are, whether each benefit is tangible or intangible and who the beneficiaries are, the next step is to determine when you expect each benefit to be delivered and what its magnitude is. The milestone plan provides a starting point for estimating when benefits will be achieved, taking into account the fact that usually benefits are not realised immediately upon implementation, but there needs to be a period of transition.

Estimating the magnitude of benefits depends on the nature of the benefit. For example, reductions in cost may be calculated by estimating how much less effort the new way of working will involve, and multiplying that by the number of transactions made and unit cost of performing each transaction. In order to do this, it is critical to have baseline measures of process performance from which estimates can be made.

In determining and estimating benefits a number of assumptions will be made which need to be recorded. If these assumptions change through the course of the programme then that particular benefit may need to be revised. Taking the Web recruitment example, typical assumptions include:

• How much do you plan to use the Web to recruit rather than agencies?
• Will agencies perform any pre-screening?
• Will you to continue to use specialist agencies?

Once the benefits identification and estimation process is complete across all process areas, then the individual benefits should be aggregated together to determine if the targets set at the macro-level can be supported by the benefits at the detail level. Typically, this process of aggregation and benefits identification and estimation is iterative.

Finally, one of the main levers for influencing achievement of the targets is flexing the scope of HR transformation. Clearly, increasing the scope should increase benefits and decreasing the scope should reduce benefits. However, this will of course have an effect on costs.