Intangible Benefits Method: Definition & Challenges

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  • 0:00 What's an Intangible Benefit?
  • 0:47 Ignoring Intangible Benefits
  • 1:44 Using Intangible Benefits
  • 2:27 Pricing Intangible Benefits
  • 3:39 Lesson Summary
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Lesson Transcript
Instructor: Kevin Newton

Kevin has edited encyclopedias, taught middle and high school history, and has a master's degree in Islamic law.

Many factors of a business' success are hard to quantify. From brand recognition to employee loyalty, intangible benefits can have a very real impact on a company's bottom line.

What's an Intangible Benefit?

How do you measure happiness? Or better yet, how do you price happiness? After all, they say money can't buy happiness, right? Don't worry, this hasn't just become a philosophy lesson. Instead, this lesson is about the difficulties businesses face when trying to put a monetary value on an intangible benefit. An intangible benefit is a more subjective benefit that you can't actually touch, and is difficult to measure in dollar terms. This is in contrast to tangible benefits, which are those assets that can be measured, like a cost break on new office computers. Customer satisfaction, the value of a name brand, and even the morale of your employees are all intangible benefits. Savvy businesses can benefit from this knowledge.

Ignoring Intangible Benefits

Woe be it to the business that ignores intangible benefits. If you've ever worked for a company that doesn't have their employees' best interests at heart, then you've got a pretty good idea of what happens. The staff start to resent the managers, the managers resent the staff, customers are eventually lost, and suddenly the business collapses.

Okay, that was a bit of an extreme example. However, companies that completely ignore intangible benefits in their decision-making stand to lose big. For example, let's say that a company gives their employees a random day off during the year. Although this is generous, they would much rather have a day before or after a holiday off. But the company won't allow it. On the surface, there's no change in cost. However, employees are likely to drag their feet and generally be unproductive if forced to work a day that they would rather have off. This would have been an opportunity for the company to increase the intangible benefit of boosting employee morale.

Using Intangible Benefits

Companies that want to find ways to make use of intangible benefits require an approach that isn't always numbers-driven. Smart companies will listen to their employees and customers, seeking ways to please both. Happy workers are more productive workers, while happy customers are more profitable customers.

Here are some ways that companies increase their intangible benefits:

  • Change the focus of advertising from value to quality. Higher quality goods may improve brand awareness, thus increasing customer and employee loyalty. It may also attract new customers.
  • Allow employees to listen to music on their headphones. This may help reduce workplace stress.
  • Purchase new computers that are easier for employees to use, making their jobs easier and thereby boosting productivity.

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