Soft Average Savings Measurements

Richard,
It sounds like you have 2 numbers to deal with, you have a $60000 hard savings.  How the owner chooses to spend that additional hour will determine what other claims you can make.  I would provide him with alternatives.  Such as, an ower of this kind of business is often involved in sales.  How many hours does he spend making a sale?  What is the value of his average sale?  How many more sales could he make per year and what would be the lift in revenue with the added time you can provide him?

We all realize that soft savings really does provide a benefit, but the Executive Team does not want us to include it as “real” savings.
This isn’t uncommon, and it might not be such a bad stance, depending on the company, its history, and the availability of hard savings to go after.
A lot of companies have a long history of “improvement” projects that sounded good at the time, but may have produced questionable results.  While soft savings may, in fact, be real, they are soft basically because you can’t measure them. And if you can’t measure them, then perhaps it isn’t such a bad plan to avoid spending Black Belts on them.
If a company has opportunities for hard savings that have a measureable effect on the bottom line, then surely that is a better place to spend the company’s valuable resources.
–McD

I agree that none of the stated values here are “hard”….yet. Given it is the owner’s time (owners rarely pay themselves hourly), it is unlikely to ever become a hard figure. However it is very likely that the owner’s time is strategic to other prevention and improvement efforts.
Using Cost fo Quality you can transform soft items such as this into hard savings if it contributes to the a reduction in one of the COQ categories. In COQ, it pays to do projects that free up time, so more quality time can be spent “preventing.” There actually are 3 kinds of costs you can use: hard (documented), soft (undocumented), and soft-strategic (with strong potential to become hard). It is frequently a very good idea to improve soft-strategic issues.  

My weasel words were carefully chosen.
All other things being equal, generally one would prefer to deploy Black Belts on hard savings projects.  Thousands of hours have been wasted on projects that sounded good at the time.  SS is all about measuring, and if you can’t measure the results, then why do it.
That being said, SS also needs to be aligned with the business strategy.  There may be initiatives that need to be undertaken to execute the business strategy whose savings are hard to pin down.  If they need to be done, and SS is the right tool, then it is silly to stand by some rule.  Do what makes sense.
In some cases there may be few hard savings projects available, or soft savings projects need to be executed in order to facilitate later hard savings projects.  Of course do them.
At the end of the day, you should do what makes sense.  But without some other compelling driver, you want to sped your valuable resources where they will do the most good, and bottom-line impact is usually better than “feel good”.
–McD