The Key Role of Benefits

The key role of benefits

Much mention has been made so far of benefits, as they are central to the whole of programme management. So perhaps a little more discussion about them might be apposite here. The word benefits is an interesting one. The Concise Oxford English Dictionary gives ‘advantage’ as the definition most appropriate here, but this is not really the whole story. In the context of programme management, a benefit to an organisation is something which measures the achievement of a strategic goal or a desired outcome from a number of pieces of work (projects) that takes the organisation to a new place. It is the result of a significant change of some sort: new operating processes; new machinery to reduce costs; a significantly revised operational model; new business opportunities of which to take advantage, or anything else of a similar major transformational nature.

It is interesting to note that it would seem there are few European languages that can adequately translate the word benefit in one word. Many translations choose to use the English word, thereby ensuring there will be some discussion about its precise meaning. This is probably in part due to the fact that, even in English, programme managers use the word in a manner that differs slightly from the normal everyday usage. There is more to a business benefit, in programme management terms, than a simple ‘advantage’. The benefit should be a desirable change (at least in the eyes of key stakeholders) and a way of managing the programme of work effectively.

What we really want from a programme is the changed state, the desired outcome, the achieved strategic goal. But managing these goals is very difficult: they are, in a way, intangible and we have difficulty in defining them in a manner that allows others to buy into the concept, to measure achievement and to celebrate the eventual success. Benefits are, then, the measures of each of these and perhaps the best way of explaining it is to consider a simplistic example.

 EXAMPLE

A private company wants to increase its market share of the dining-table marketplace and intends to do it by moving onto the internet and selling the current range of products through an internet website.

The first question would be ‘Why do the directors of the company want to do this?’ Clearly, there will be a number of answers: improved market share and profitability of the company; increased share price; increased salaries for directors (and hopefully others!); an improved image of the company in more countries around the world; raised profile in other areas of business (perhaps, lounge suites too); setting the foundations for a global expansion into bedroom furniture at some stage in the future, and reduced reliance on a single group of products in case of a sudden change in interior design fashion.

All of these could be considered strategic goals, some of which will be met by the new programme of work while others are simply longer-term aspirations for the company.

Deciding when a number of these aims have been met could be quite tricky. Some are straightforward – the share price is currently 235p and a 10 per cent improvement would be a significant gain in, say, five years’ time. This can then be seen as a direct measure (benefit), although this may not be such a good measure, because a large number of other factors can also affect the share price, most of which are well out of the control of this company – a credit crunch to name but one!

What about achieving the reduced reliance on a single range of products? This is not directly measurable in any real sense, but measures could be considered for it. The percentage of sales for each of the different ranges of furniture could be measured today (as a baseline) and then again in five (or perhaps even seven or eight) years after the work has been done to assess the difference. If we set a target of no more than 20 per cent of total sales from any single range (which would of course need to be defined appropriately), this could be measured. This, then, is a benefit which we could use to measure the success of the programme and, more importantly, the achievement of the strategic goal.

General rules

So in order to make benefit management possible, it is important that a few rules are observed when considering the benefits for a programme of work.

  1. Benefits must be measurable. If they are to be used to assess the achievement of a strategic goal, there must be no doubt about the achievement of the benefit. Clear, well-defined measures are the only way to do that. It may be, though, that the cost of measuring a benefit outweighs the value of the benefit, in which case an acceptable alternative may be needed. Indicator measures are often used, but the linkage must be clear and also well defined, because it is rarely the case that indicator benefit measures are directly and unequivocally attributable to a single benefit or cause. Perhaps measuring the success of the paperless office could be determined by the number of paperclips used in the office. There are usually several things that will affect the benefit measure and these also need to be defined and managed: the world shortage of paperclips; the introduction of a stapler, and the court case arising from papers that were ignored as a result of being ‘mislaid’ by being filed in the wrong place as a result of the paperclip collecting extra papers.
  2. Benefits must be defined in a way that everybody understands and agrees is acceptable. If one party thinks a benefit means one thing and someone else thinks something different, there is going to be a problem.
  3. Benefits must be owned by someone who is clearly accountable for their achievement. The very use of the word accountable should immediately bring to mind that this owner must be senior in the organisation. They can only make the necessary changes and support the delivery of the benefit if they have the appropriate level of authority and accountability.
  4. Benefits are not only about finance. Clearly, financial benefits are both important and good in many circumstances, but they are not the whole answer. Financial benefits are good because of the relative ease of measurement – money! Obtaining the figures is sometimes tricky and, again, clear definitions of what is meant by profit, turnover, staff costs and so on are crucial. Nevertheless these measures are powerful and do focus the mind of those working in programmes. Non-financial benefits, though, can be very useful, provided they are properly thought out. Staff time released is a benefit (phrased in a number of different ways) which is commonly used. A reduction in the time taken to do some activity, to achieve some target performance or to complete some business process may be a useful benefit, but only if the time saved is proactively used to some beneficial effect in the organisation. If it means the staff simply have to wait less time before gaining access to a computer system, for example, then unless that time is used efficiently to do more work, it is not a benefit (unless the benefit is the reduction of stress for the staff!).
  5. The improvement or change in a measure must be defined and not left as a vague better, improved, faster or cheaper. A clear measurable improvement – a 10 per cent saving in the current cost of production of a widget (where the cost of production of a widget is defined), an increase of 15 per cent on the number of orders processed in a working day as a result of the new system (where the number of orders processed today is defined) and so on.
  6. Targets and benefits are not the same thing and often can be seen to be acting in opposition or at least not assisting in improving the organisation. Targets can change behaviours and not always for the best. A target of reducing waiting times for customers to no more than three minutes at the checkout in a shop could be a benefit (by improving the customers’ perception of service, leading to a measurable increase in use of the shop). But if it is achieved by taking staff from the counters serving the customers their fresh produce and delicatessen items, the overall gain in one area to meet a target could be counterproductive in another. This particular example could also lead to checkout staff not wanting to ‘waste time’ being nice to customers in order to meet the target, thereby again producing a contrary result.

Dis-benefits

Almost all benefits will also have a negative impact on some of the stakeholders in the organisation. These negative effects of a beneficial change are commonly referred to as dis-benefits. An example might be that of providing a community with cable television. The additional facilities, channels available, broadband and telephone deals will be an advantage to the community (or at least to the majority of them!). However, the disruption that will be caused by having to dig up the road to lay the necessary cabling will be a dis-benefit to many as well – not avoidable in general, but inevitable.

These dis-benefits should not be confused with risks: risk are things that may happen; dis-benefits will happen as a direct or indirect consequence of some work that will also produce a benefit. Dis-benefits must also be defined, measured and managed in exactly the same way as benefits, except that here, the intention is to reduce them to the minimum.