Bottom-line bonus is the order of the day

first_imgBottom-line bonus is the order of the dayOn 2 May 2000 in Personnel Today Previous Article Next Article When it comes to selling in flexibility to the board, warm soft benefits donot figure – directors want bottom-line bonus. In order to establish whetherflexible working is right for your business we have created a simple model thatreflects the traditional profit and loss account. The difference is in theaddition 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 theadditional resource, positive corporate PR and the revenue which will accruefrom meeting the demands of 24-hour culture. The measurement for increasedproductivity from existing staff should be measured pre and post flexiblepolicy, or with control groups in a pilot study. This measurement can comprisefive or 10 indicators for each individual’s performance, which can then bemeasured against their dealings with colleagues, customers, suppliers andmanagement. 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 employeeas a target.The increased output from a new resource – such as that achieved by jobsharing – 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 needto adjust it to £12,000 per month for each job share. With positive PR, you will need to borrow the methods of the communicationsindustry and estimate the number of opportunities to see that any publicitygenerates, and therefore the conversion to likely revenue. And, for 24-hourservice (if this is relevant to your organisation), opportunities for sales atvarious times should be researched and tested.OverheadThere 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, settingup a new system, training it in and internal communication. There may also beextra head count with attendant tax and National Insurance, and possibly extrastaff benefits including car, pensions and childcare allowance. The final itemin the overhead column should be operational logistics, the investment inremote access technology. When calculating the overhead remember that the Chancellor’s latest budgetgives business incentives to invest in research and development, so whether yougo it alone or bring in consultancy support, grants may be available.Cost savingWhen it comes to cost saving, there is more good news. Reduction in costs ofrecruitment and training through better staff retention, cost-effective officespace (will you need such big premises in the future, can you locate in a lessexpensive area, will your staff be able to hot desk?) and tax relief forimplementing a flexible policy.What all these P&L measurements should show is a realistic picture ofhow flexibility can drive your business through bottom line contribution.EasyJet can certainly show that it has driven its business: by creating abusiness environment which reflects its business strategy, it experienced a 60per cent increase in revenue and a 30 per cent reduction in costs – atraditional model would give it an increased bottom line of 200 per cent. By Carol Savage, Managing director, The Resource Connection Comments are closed. Related posts:No related photos.last_img

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