Chapter 24

Ten Great Ways to Manage Benefits

In This Chapter

Linking benefits and stakeholders

Ensuring benefits ownership

Measuring the right aspects

Benefits management is my favourite part of programme management for the following reasons:

• It's the only new idea I've come across in change delivery for a very long time.
• It helps me stay engaged with my stakeholders.
• It allows me to demonstrate to my sponsors how I've helped the business.

That's enough good reasons to be going on with I think.

Beware, however, of benefits management being hijacked by:

• Specialists who want to turn it into an arcane art form and build an empire.
• Finance people who want all benefits to be converted into monetary values to allow them to compare like with like.

But enough of the negatives; in this chapter I give you ten positive ways to manage your programme benefits effectively.

Doing it in Public

The fact is that you do some things in public and other in private (steady!). Modelling benefits is something to do in public (phew!).

Understand who your stakeholders are before you send out the agenda for your benefits workshop. Do everything you can to empower and engage representatives of your main stakeholder groups at the workshop. Don't be frightened of stakeholder groups you may think have a different agenda to yours. You often find that by including them you can identify points of common interest. In those areas without a common interest, you can often agree to differ.

Finding an Owner

Benefits belong to business as usual. If they're going to be used as a tool for optimising the outcome, they need to be owned in business as usual. To encourage ownership, you need to get potential owners involved early on.

As soon as somebody identifies a benefit, look round for the right owner and get that person or department involved in defining the benefit in detail. You want the benefit owner to feel that they've helped define the benefit so that they're committed to realizing the benefit.

Keeping Benefits Real

Measuring the measurable is tempting, but it can lead to some appallingly bad measures that create perverse incentives. As you refine any benefits measure, you may get involved with experts on the subject who're already measuring something around that outcome.

The classic example in the UK is waiting times in hospital Accident and Emergency (A&E) departments (the ER in the US). You can measure the amount of time a person spends in a room called A&E, but also talk to the stakeholder groups that are really impacted by the outcome: in this example, patients. Patients are more interested in how long it takes to be made better, not how long they sit in the department called A&E. If you create a benefit called ‘shorter waits in A&E’, the danger is that a room next door is simply given a different name. The time in A&E may go down, but patients still feel as if they're spending a long time being made better.

Tuning Out the Noise

As you start to work out the details of a particular benefits measure, and probably even as you do your initial trial measurements, you find that the numbers vary for no apparent reason, probably because factors other than your outcome are affecting the measure.

You need to play mathematical tricks to remove those extraneous factors. Scientists call this controlling for a variable and mathematicians call it parameterising. Put simply, you're getting rid of the distracting ‘noise’ so that you get a good measure of your outcome. Just divide by the variable you want to remove.

Here's a simple example. If you want to look at the cost of staff, you need to work with the number of employees. So divide the total staff costs by the number of employees to control for employees numbers. This gives you the average cost per employee.

Comparing Apples and Pears

Some benefits are financial, some can be reduced to a monetary value and others are just plain different. Don't force all your benefits to be reduced to a monetary value.

Although dependent on the culture, you need to recognise which stakeholders are content to reduce benefits to a monetary value and which ones want some benefits measured in another way. This means comparing apples (monetary measures) with pears (non-monetary measures). It's not a matter of a mathematical conversion; it's a judgement call – precisely the type of judgement senior people bring to your programme.

Getting People Hooked onto a Programme

Engaging stakeholders is like fishing: you jab a large hook in their throat and hang on for dear life (not really, they'll probably sue!). The best way to maintain engagement with benefits management and the whole programme is to hook people by delivering early benefits, for example: if the marketing people want better communication with customers and you need a year to develop a fancy new system to help with that, build in a controlled pilot using a Facebook page and start to count the benefits immediately.

You can deliver benefits before any capabilities exist, as long as you're sure that those capabilities will arrive pretty soon afterwards. If you know you're going to get a new piece of equipment, you can stop servicing the old one a few months before the new piece arrives to reduce costs. Or you can simply restate something that you're doing in business as usual as part of your preparation for transition in terms of a benefits measure. For example, if you're training staff, the benefit is better trained staff. Then start reporting on the benefits measure as soon as you begin your training.

Remembering that Benefits are Big Business

When I first brief people interested in programme management about benefits they tend to identify, say, six to twelve benefits. But the reality is that a reasonably sized programme brings lots of benefits – lots and lots and lots.

You can optimise benefits effectively only when you break them down into a manageable scale. If a big boss commits to delivering £10 million benefits, he or she is unlikely to personally grind out all of those financial savings. They're more likely to delegate the savings down through their divisions and departments. It's pretty ambitious to save more than 10 per cent of the budget, so at the bottom of this hierarchy are lots of quite junior managers with budgets of £100,000 who are each given the task of saving £10,000. These are the people we want to identify as the owners of those little benefits. Overall in that £10 million programme, you have 1,000 of those little £10,000 benefits, which means that you need 1,000 benefit owners.

If you don't break benefits down enough, they don't get managed they just happen. A journey of 1,000 miles begins with a single step, and £10 million of benefits is built up from lots of £10,000 benefits.

Dealing with Bad News

Most programmes involve winners and losers, with the losers perceiving some of the benefits as dis-benefits (which I discuss more in Chapter 15). Think of a dis-benefit as the measure of an outcome perceived as a disadvantage by a stakeholder

Don't try and hide the dis-benefits, or ignore them, or treat them as risks. Face up to them and manage them as carefully ‒ no, more carefully ‒ than you manage the benefits.

Personally, I like to go further. I insist that a programme show some dis-benefits as well as some benefits. If you manage those dis-benefits you minimise their impact; but if you ignore them, they upset the whole programme. The analogy is that if some of your pears are rotten, you need to remove them before they spoil the whole basket of fruit ‒ although you don't want to push that analogy too far.

Identifying Measures not Targets

If you want people to reduce costs, define a measure called reduced costs (logical really!). Don't start talking about reducing costs by 5 per cent (because 5 per cent is a target not a measure). Always talk in terms of the broader measure – reduced costs. If someone asks ‘How much do you want to reduce costs by?’ answer ‘As much as possible!’

Declaring targets just encourages people to game the system. By this I mean, if you're going to reward me for completing each task in five minutes, I'm going to aim to take 4 minutes 59 seconds to do each task. If I can do some tasks more quickly, I may not tell you in case you change the target. That's known as gaming the system.

People are innovative and simply find ways to adjust their behaviour in order to hit that target. Also, having achieved the target, they sit back and don't try to reduce costs further. If you then set another target, they eventually become disillusioned with the targets being moved every time they achieve them.

So make the message clear: we just want to keep on reducing our costs.

Working Yourself Out of a Job

As the benefits start to flow, those looking at them in the Programme Office can be tempted to get heavily involved. Of course, benefits flowing is good news and everybody likes to be involved in good news, but if benefits are being reported via the Programme Office they aren't being reported through business as usual. The aim is to have benefits being owned, and that means reported, via the normal business-as-usual reporting structures. Therefore, the benefits people in the Programme Office need to have the goal of benefits management being independent of them.

Their aim is to build up the skills of benefits owners so that they don't need any help from the Programme Office. In other words, they have to work themselves out of a job.