This article is part 2 of our 5-part "Pitch Perfect" series on the psychology of getting executive buy in for your EH&S projects. You can read part 1 here.
From our recent analysis of how EH&S professionsals get projects accepted, we've noticed that successful proposals all have a few elements in common...
It's strange, but it seems that just making sure to include three elements in your proposal can make or break your project before it even begins.
That’s why we are giving you a scientific look at the psychology behind why using just three simple core tactics can be so effective in getting your environmental project approved.
Right now, we’re going to show you how to make any of your EH&S proposals more influential and effective by applying what we call the Pitch Perfect Technique – a straightforward 3-step system for boosting the influence of your EH&S pitch.
Capture Your Boss' Attention by Changing Their Preconceptions
When it comes to getting your project the thumbs up, you need to understand that 80% of the work is done before you even step into the room with your boss.
The first step in the Pitch Perfect technique is by far the most important because it lays the groundwork for the rest of your proposal. It's designed to overcome the biggest psychological obstacle your pitch faces…
If not handled carefully, this obstacle could put the brakes on your dream project right out of the starting gate.
Executives have been mentally trained to see EH&S departments as places where money is lost rather than generated.
In fact, a recent business research study by David Galt titled “How to Promote the Business Value of EHS” [pdf] found that most executives perceive EH&S activities as a “cost” rather than an “investment”.
Because they associate your department’s activities with potential regulatory fines, limits on production capability, and piles of paperwork for the government.
It’s very difficult to get a decision maker to sign off for a project which they’ve been psychologically pigeonholed into perceiving negatively.
It’s crucial that you “hack” your organization’s perception to see value in the work you do and to switch up the boss’s thinking when it comes to EH&S and wealth-generation.
You might know that there’s a potential goldmine of time and cost savings waiting to be unearthed from your EH&S department, but until your boss sees this you won’t be getting them to say yes. It’s up to you to educate them about the value your idea and the EH&S department brings to the table.
This step is all about overcoming the built-in psychological block that most executives have and the best method is to emphasize the tangible benefits that the project will produce for the entire business.
That’s why we always recommend that EH&S managers focus on the Bottom Line.
Focusing on the Bottom Line means putting your project’s benefits into terms that matter to the C-Suite. Namely, quantifiable dollars and cents. Money is the best way to capture your boss’s attention.
How to Speak the Language of Your Executives
As environmental specialist Richard MacLean puts it in Governance Questions: Ten questions executive management may ask you, “business managers are generally not trained in EH&S, they do not have a frame of reference – a benchmark – against which they can determine if the company is truly getting their money’s worth.”
As the residential environmental expert, it’s your job to translate your idea into a financial frame of reference that executives are more comfortable using to make decisions.
Even though there are numerous benefits to any environmental project (for example, fewer air emissions, fewer sick days taken by floor staff, less time spent writing compliance reports) which might seem impossible to put a dollar price tag on, time and time again it gets proven by the number of failed EHS pitches that executives understand a Bottom Line approach better than any other.
You need to realize that even though a better environmental performance is a reward onto itself, using that argument won’t get past the psychological barriers that your C-Suite executives have put up.
The key to influencing your executives is to take all those benefits that seem intangible and boil them down to how they impact the business’ profitability. You may need to work with other departments, like Human Resources, to figure this out.
Here are a few of the most common examples that EH&S Managers have used to shift their pitch into Bottom-Line Mode:
- Instead of quantifying how much less waste your facility could produce, quantify how much money will get shaved off your waste shipping and treatment costs each year.
- Instead of qualifying how much faster you could get compliance tasks done, quantify the exact number of work hours you will save and multiply that by labor costs to determine how much money you could shave off your EH&S operating costs.
- Ask your Marketing/PR department to evaluate and put a price tag on the ability to advertise you’ve reduced your carbon footprint by 70%.
- By improving a manufacturing process or upgrading equipment, will you be able to get more out of your current materials and therefore be able to purchase less in your next order? How much can you reduce material costs by without reducing production?
- How much does your facility throw away in noncompliance/late reporting fines each year? What portion of those fines will get eliminated thanks to your project?
- How much do you pay consultants to do the tasks your new project will handle? You can expect to add that amount back into the company’s pocket, and most consultants can costs tens of thousands of dollars.
Why the Bottom Line Approach is So Influential
There’s another reason to focus on the Bottom Line: it taps into several of the principles of influence, making step one a powerful persuasion strategy.
First, the Bottom Line Approach creates a feeling of reciprocity between your executives and yourself. You aren’t simply asking for money to make your life easier, you are proposing a way to save them and the business money.
Your focus is on them.
It is as if you are offering them a list of cost savings and all they need to do is accept your gift. And because you clearly have their best interest in mind, they’ll be less hesitant to say yes.
Using the Bottom Line Approach also increases your likability factor. That’s because it shows you want to cooperate with the executive team to increase overall profitability. It also frames your goals as something they are more familiar and comfortable with. Speaking to the Bottom Line is a way of showing them you're on the same team, which makes you more relatable and likeable.
Whenever money is on the table there is also an element of scarcity and opportunity lost. Money is always in high demand and in short supply, so every hour that passes between your pitch and the final OK comes with a cost – the price of inaction.
We’ve worked with some EH&S Managers that clearly discussed the price of inaction in their pitch, while some others feel that the tone and timing of their pitch required a more subtle approach.
Keep in mind that the more scarcity you utilize, the more pressure it puts on your executives to make a decision. This could backfire on you if you haven’t made a strong enough business case that lays out the benefits to balance the urgency out.
How to Use Tomorrow’s Return on Investment for Results Today
While it’s vital to outline all the immediate benefits that your project will create, no Bottom Line analysis of a potential project is complete without a comprehensive Return on Investment (ROI) determination.
To calculate the ROI of your project, compare the difference between the savings your project will produce against the cost of implementation. For example, you might find for every dollar you invest this year, you will save three dollars. This would be an ROI of 300%.
In most cases the ROI of a project will be less than 100%, since the price of implementing a project or buying & installing a new piece of equipment can be expensive.
An ROI less than 100 is not a problem! The end goal isn’t to reach 100% ROI, but to demonstrate how long it will take for the project to pay for itself and start producing revenue.
For example, if you are upgrading your environmental management system from convoluted spreadsheets to a sophisticated software system, you may see an ROI closer to 90% for the year.
However, within the next year the EMS software will have paid for itself and began to increase overall profitability. After 3 years the ROI will be even better, and at 5 years the software may have paid for itself three times over.
One technique for getting project with longer timelines for reaching a good ROI approved is to “bundle” it with smaller projects with a faster turn-around time.
For example, if you’re project is aimed at reducing energy costs by installing some solar panels and replacing an energy-inefficient piece of equipment, you should consider bundling in a smaller project to replace office lights with efficient LEDs or staff break-room appliances with Energy Star rated ones. These will up your short-term ROI and make your pitch more appealing to executives looking only at the dollar returns.
Take the time to crunch your ROI figures before you even think about pitching your idea to the boss.
Including the long-term ROI in your pitch is important because it helps shift your boss’ way of thinking. Instead of seeing EH&S as a cost, as many do, you’ll open their eyes to the profitability of using EH&S as an investment. Executives want to see a clear path to making money, in as short of a turnaround time as possible.
Taking the time to calculate the ROI of your project is also a good way to utilize the reciprocity principle to emphasize that your project is ultimately focused on doing good for the entire organization. Plus, by showing you understand the executive mindset and business terminology, showing ROI makes you more likeable to the C-Suite.
Download this Essential Pitch Perfect Toolkit Item: The ROI Calculator
We know that calculating ROI isn’t always the easiest task. In fact, if you have no experience determining ROI, it can be intimidating… especially since it’s such a vital part of making your pitch as influential as possible.
That’s why we developed this free downloadable ROI Calculator that can be used to compare the way your current environmental management system works against potential improvements you’ll see by upgrading your environmental management system to something more sophisticated.
We’ve based it on our own extensive real-world case studies with international businesses and use it to help our own clients get a clear picture about where they stand to start generating money and save time.
Download the ROI Calculator now – it’s the first and one of the most important tools for your Making the Pitch toolkit.
We’ll continue to add materials to your toolkit with every part of this mini-series.
Just click the button below and fill out the fast and simple form. It’s the easiest way to calculate ROI and makes a great model that you can adapt to fit your other types of projects too.
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About the Author: Alex Chamberlain is a writer and blogger who regularly contributes to ERA Environmental Management Solutions' blog. You can find Alex on Google+, LinkedIn & ERA's Environmental Compliance Blog