Measuring ‘intangibles’

Written by Martin-Christian Kent on 28 January 2014

Reading time: 2m 30s

An intangible measure is simply one that you purposefully don't give a financial figure for because doing so would be meaningless and greatly reduce the credibility of your results. When doing an ROI, it's always best to report any intangible benefits alongside an ROI calculation. 

While it might be tempting to ignore intangible benefits, it's a mistake to do so because they can often be just as important and illustrative as tangible benefits. For example, a reduction in staff stress levels can make a big difference to your business over time. While intangible benefits won't appear on your balance sheet like the tangible benefits do, they can still lead to a competitive advantage. For example, low employee stress levels can give your company a good reputation, which can make a huge difference when recruiting the best person for a role.

Intangible benefits can often be uncovered during a needs assessment or by talking to stakeholders at the beginning of the evaluation process. However, they can often simply be uncovered at the end of the process as an unexpected benefit. It's likely that all training programmes will show some intangible benefits.

Examples of common intangible benefits from training programmes include:

· Increased employee satisfaction

· Increased organisational commitment

· Improved teamwork

· Improved customer service and reduced complaints

· Reduced conflicts

· Reduced stress

Some people might worry that key stakeholders will ignore intangible benefits when the results are presented and therefore they try to give every measure a financial value. While this means that they can be included in the ROI calculation, it's not always the best approach. Phillips (2003) offers a four step process to decide whether to a convert a value to a monetary figure.

 1. Does an acceptable, standard monetary value exist for the measure? If yes, use it; if not, go to the next step.

2. Is there a method to convert the measure to money? If not, list it as an intangible; if yes, go to the next step.

3. Can the conversion be accomplished with minimum resources? If not, list it as intangible; if yes, go to the next step.

4. Can the conversion process be described to an executive audience and get their buy-in in two minutes? If yes, use it in the ROI calculation; if not, list it as an intangible.

Some measures can considered be tangible or intangible depending on the organisation, for example, employee retention. Some organisations have figures readily available that show the cost of recruitment new staff members (e.g. advertising fees, HR time, induction training, etc.) and therefore any increase in employee retention measured over a long period of time can be converted into a financial figure and an ROI calculation can be made. However, smaller organisations may not have this information available and therefore any increases in employee retention would be better reported alongside an ROI figure that has been calculated using other measures.

Martin-Christian Kent is research and policy director at People 1st. He can be contacted via http://www.people1st.co.uk/default.asp?sID=1

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