Delivering financial value back to the enterprise by New Ideas

Your intranet can provide employees with a tool to capture and implement their ideas for:

· Creating additional revenue streams

· Identifying potential for cost savings

· Improving efficiency through process change

· Improving employee and customer satisfaction

· Reducing business risk

· Reducing your carbon footprint.

If you are making a business case to provide a New Ideas site you should be considering the scope of the site in terms of what benefits you want to deliver and how you will reward successful employees.

TANGIBLE BENEFITS

1. Revenue generated - This is cash generated for the organisation from employees ideas which is a direct result of the implementation of the New Ideas site.

· A new product or service is suggested which produces additional sales.

2. Cost savings - These are real cash savings that will be derived from employee's ideas.

· Savings in printed materials

· Savings through reduced staff costs

· Savings in property costs and asset based costs

· Consolidation and streamlining of processes across the organisation

· Savings achieved by replacing or reducing outsourced activities

3. Time savings - Employees may suggest many different ways that processes can be improved, consolidated or streamlined leading to significant time savings. However, many financial accountants are sceptical of time savings which can be translated into cash so any analysis of time savings should be linked to specific tasks which can be measured in terms of time both before and after the improvement.

INTANGIBLE BENEFITS

These are areas that will show benefits for the organisation but can't be directly translated into cash. Again, using any of these as a measurement requires that data is captured before and after the improvement.

1. Employee satisfaction and retention – you may be able to directly attribute increased satisfaction from the New Ideas site or increased satisfaction following implementation of a new idea. Giving employees an opportunity to make suggestions should improve morale and lead to a feeling of involvement with the future of the organisation. Their satisfaction will definitely improve if ideas which are subsequently implemented provide bonuses or profit share!

You may also be able to claim a share for the benefits of employee satisfaction such as employee retention and cost savings on recruiting and employing new staff.

2. Customer satisfaction and retention – employees should be encouraged to look at ways of improving the customer experience and in turn ensuring customer retention.

3. Reduced carbon footprint – you should encourage employees to come up with ideas that reduce your carbon footprint:

· Ideas that promote less travelling

· Ways to reduce electricity usage

4. Reduced business risk – employees will be able to suggest safer ways of doing tasks – both physical and financial – so that business risk may be reduced and health and safety improved.

Examples of companies who have implemented New Ideas programmes

· RLI Insurance - The 291 employees at this insurance company came up with 1,319 new ideas in one year. One employee came up with 49 new ideas. Another employee's new ideas saved the company $145,000.

· Ford - In one 3-week campaign in 1996, Ford workers and engineers in Chicago and Atlanta came up with new ideas that will save Ford Motor Co. more than $73-million a year.

· Blish-Mize -On the first day of a new idea campaign, the 200 employees at the wholesale hardware distributor came up with 100 new ideas. Within a week, the 200 employees had come up with over 400 new ideas.

· Toyota - Toyota employees in Japan average more than one new idea per week across the whole workforce. Every year since the 1970s, Toyota has received over a million ideas from its employees. Over 80% of those ideas have been implemented.

· DaimlerChrysler - processed 69,000 ideas which together saved the company 62 million Euro in 2001.

· Johnson Controls - The 230 employees in this auto-parts factory generated 631 new ideas in 1995. Each of the employees came up with 30 new ideas in one month, alone.

· Grace Performance Chemicals - implemented an idea from a truck driver that resulted in a multi-million dollar revenue stream, accounting over time for 5% of the company's revenue.

· IBM Software Europe - generated 150 ideas over four weeks. The top idea saved $300,000 through reduced IT costs.

· BT - saved £30million in 1999/00, £85million in 2000/01 and £36million in 2001/02 as a direct result of employees ideas. Their scheme continues to grow in scope and results.

In summary

Studies in the US show that new idea programmes have generated over $750 per employee a year as a national average. (Source: Employee Involvement Association Statistical Report).

The anticipated return on investment should be in excess of 10 x the cost to develop these programmes. There is plenty of evidence that these kind of initiatives really work but they should be planned and monitored carefully, and success should be broadcast across the organisation to generate further contributions.

Clearly this is one area of the intranet that can really demonstrate its value.

The Intranet Benchmarking Forum has developed a Financial Value benchmarking methodology which can be purchased by non-members. It means you can finally put a monetary figure on the value of your intranet assets and services:

"This was a significant and ground-breaking piece of work. It was very comprehensive and will help us prioritise future development.” Mark Morrell, Intranet Manager at BT

Financial Value Benchamarking from the Intranet Benchmarking Forum