Bottom-line bonus is the order of the day

When it comes to selling in flexibility to the board, warm soft benefits do
not figure – directors want bottom-line bonus. In order to establish whether
flexible working is right for your business we have created a simple model that
reflects the traditional profit and loss account. The difference is in the
addition of "cost savings" as a third category.

Revenue

Let’s take revenue first, for which there are four main indicators:
increased productivity from your existing resource, increased output from the
additional resource, positive corporate PR and the revenue which will accrue
from meeting the demands of 24-hour culture. The measurement for increased
productivity from existing staff should be measured pre and post flexible
policy, or with control groups in a pilot study. This measurement can comprise
five or 10 indicators for each individual’s performance, which can then be
measured against their dealings with colleagues, customers, suppliers and
management. Certain assumptions can then be made looking at low (5 per cent),
medium (10 per cent) and high (25 per cent) increases in revenue per employee
as a target.

The increased output from a new resource – such as that achieved by job
sharing – needs to be measured against a suitably adjusted scale. For example,
a typical job share will yield the company a six, rather than five-day week,
therefore if the target revenue per employee is £10,000 a month you will need
to adjust it to £12,000 per month for each job share.

With positive PR, you will need to borrow the methods of the communications
industry and estimate the number of opportunities to see that any publicity
generates, and therefore the conversion to likely revenue. And, for 24-hour
service (if this is relevant to your organisation), opportunities for sales at
various times should be researched and tested.

Overhead

There will, of course, be overheads – in other words your budget allocation
– but some will be one-off expenses such as creating a current audit status,
what are you doing now, what the business needs are , what staff want, setting
up a new system, training it in and internal communication. There may also be
extra head count with attendant tax and National Insurance, and possibly extra
staff benefits including car, pensions and childcare allowance. The final item
in the overhead column should be operational logistics, the investment in
remote access technology.

When calculating the overhead remember that the Chancellor’s latest budget
gives business incentives to invest in research and development, so whether you
go it alone or bring in consultancy support, grants may be available.

Cost saving

When it comes to cost saving, there is more good news. Reduction in costs of
recruitment and training through better staff retention, cost-effective office
space (will you need such big premises in the future, can you locate in a less
expensive area, will your staff be able to hot desk?) and tax relief for
implementing a flexible policy.

What all these P&L measurements should show is a realistic picture of
how flexibility can drive your business through bottom line contribution.
EasyJet can certainly show that it has driven its business: by creating a
business environment which reflects its business strategy, it experienced a 60
per cent increase in revenue and a 30 per cent reduction in costs – a
traditional model would give it an increased bottom line of 200 per cent.

By Carol Savage, Managing director, The Resource Connection

Comments are closed.