In this fifth article and last article in connection with the International Co-operative Summit, I propose to you to reflect on a common difficulty for all organisations. How to measure the profitability of the intangible? Indeed, many things are so difficult to measure.
The Italian economist, Riccardo Petrella, recalled at a round table the main danger to the cooperatives. In my opinion, it applies to all organizations. This is the monetization of all form of life.
Indeed, in recent years, everyone calculates what any thing is, including the intangible. As I explained in my previous article, with the will to grow, increase turnover and market share, organizations must prove the profitability of their project in € or $. any improvement in the working conditions, satisfaction of customers will only be taken into account if it comes with a number.
Measuring non-performance
And yet… Everyone knows that education has a significant cost to society, but no one calls into question this little amount of contribution to our societies. In fact, if there was no education, how much would ignorance cost a country? While some countries measure the performance of the school system by student results, no one questions the profitability of education.
Thus, painfulness, lack of interest or accountability at work, are leading to illness, disorganization and lower productivity. They are partly measurable. On the other hand, the improvement will bring more efficiency, more retention. The latter will be difficult to quantify. However everyone knows how to measure with qualitative elements.
Some companies manage to monetize the intangible. Let’s take Facebook for example. Every friend, network of friends, or even interactions with these friends have a value. Facebook has been able to evaluate and slide into its business model.
Leisure companies sell you a week in the sun, with a refund of rainy days. This is how a Swiss insurer evaluates a rainy day during your holiday at 100 Swiss francs.
If to sell us services or the intangible, companies are able to put a price, why could we not evaluate the value of the intangible associated with our projects of operational excellence, since it is the only way forward?
Examples of intangible profitability measurements
Here are some ideas to help you materialize the costs of the intangible:
Happiness at work: impacts on the workforce
- Number of days of absence reduced sickness * Average wage of an employee * 1.3 (for time taken to treat absence by other persons)
- Productivity to 95% instead of 75%
- Training days saved * Cost of education (retention of employees)
- Abolished recruitment firm fees (retention and attraction of talents)
Employee mobilization: impacts on customer service
- Number of customers who are not going to leave us * average annual amount of purchases
- Number of clients who will be talking about us to friends * Average annual amount of purchases
- Amount invested in advertising reduced by 20%
- Cost of trials avoided by better resolution of customer complaints
It’s up to you to put your own figures according to the reality of your organization and imagine all the hidden costs and gains.
If in an ideal world, the intangible should remain a sanctuary protected from the merchant sector, let us be creative and add all the costs to measure the profitability of operational excellence.