Building and Using a Financial Imperatives Scorecard
Constantly Thinking About the Numbers
You, as a workplace learning and performance professional, must use a continuous value management mindset. You have to work to keep the balance of the perceptions within your organization weighted to the conscious or surprise levels. This transition requires a shift away from a one-time mentality of using an ROI study as a quick fix for the perception of your value or of finding some other way to once again prove your worth, so that you can go back to just focusing on the mechanics of your job. With a continuous value management approach, you must constantly think about the numbers. After all, the numbers are the principal focus of all levels above the Individual performer.
To ensure that the perception of your value remains high throughout the organization, you should
Create a financial imperatives scorecard.
Invest in appropriate evaluation and feedback for your programs. You can make all of the financial value claims that you want, but you must eventually back up your claims with data from different types of evaluations. If you don’t have such evidence of your value, you risk losing your creditability.
Create a quarterly communication plan. Value must be communicated regularly to counteract value slide. Even so, value is not heard if it is not connected to the urgent and important activities that occur during each quarter of the year.
If Marcella had taken a continuous value management approach, she would have reset the baseline for her contributions each time they changed, and she would have had documented evidence of performance improvement over the last three years to review with Kathleen. That way, she could have avoided an unpleasant discussion based on invisible value and different opinions.
In addition, Marcella would have performed different types of evaluation over time so that she could have verifiable financial data and numbers that matched the type of information that each level of her audience needed to hear.
Finally, if Marcella had a communication plan, it would have helped her to manage her value and to negotiate for what she needed to perform even better rather than reacting to what seemed to be an unreasonable demand from her management team.
Building and Using a Financial Imperatives Scorecard
Rule #1: Track Benefits. Workplace learning and performance professionals who have some experience in measuring or estimating benefits know that trying to figure out a realistic amount of benefit takes time and sometimes a great deal of effort to track down the right numbers. If figuring out benefits were easy, many more WLP professionals would already be doing it regularly.
Rule #1 of financial imperative scorecards is to never present costs without drawing a connection to the benefits that those costs have brought to the organization. Here’s why working out the benefits to the organization is absolutely critical to your success. Many WLP professionals know that they are expected to be more financially savvy, so they talk about the only numbers they have easy access to: the numbers that describe the costs of their WLP programs. Your costs or the costs of your department are already known to influential members of your audience. If they already know your costs and cannot figure out what benefit they are receiving from them, they will draw their own conclusions.
Just as in the children’s game of Rumor, your audience’s conclusion may be nothing like what you expect them to conclude. That can be disastrous. Highlighting your costs without pointing out offsetting benefits only makes your situation worse. Presenting costs without expected or actual benefits simply reinforces a subconscious belief that the costs must be out of line or unnecessary. If the perceptions of your value have fallen into a given state, your audience’s conclusions about your value will be especially harsh.
Your audience will not tell you the value of what you have done. That’s your job. You can only draw your audience’s attention to financial benefits if you have worked them out for yourself first. The discipline of creating a financial imperatives scorecard allows you to present a more balanced picture between benefits and costs. It is critical that you do the work of naming your benefits and then quantifying them.
Rule #2: Quantify the Value Add. Now it’s time to move across the scorecard and fill in the numbers that tell how much financial value your interventions have created for the organization.
These changes are referred to as value adds. Value adds are calculated by first estimating or assigning a numerical value to each of the performance measures of the Individual contributor. The first baseline in column II is noted as the original baseline. This means that the value of each of the performance measures for the Individual was measured as it existed before the intervention was introduced. Each of the other baselines was estimated or measured again after each change in the intervention.
In order for Marcella to know how much value she did (or did not) add, she first needed to measure how much renewal revenue the new hires were bringing in per month and how much cost was being spent on lost work time and errors per month before the improvements in the new hire training were introduced. These numbers are reflected under Baseline #1. Marcella documented her measurements in May 2001 and noted that these measurements were taken before her first change to the program.
Marcella measured how well the new hires were doing nine months later and documented the changes in column III. In column IV, Marcella multiplied the amounts of additional revenue and cost savings by the amount of her intervention basis (nine new hires) and amount of her time basis (nine months) to get the total impact of her changes on the organization.
Marcella’s second change to the new hire program was to update the mentorship and add an additional week of mentorship for each new hire. Marcella used the numbers in column III as her baseline of how new hires performed before the second set of changes took effect. Marcella measured again nine months later and documented the additional revenue and cost savings in column V and her totals in column VI.
Marcella’s third change involved cutting a few costs from the new hire training budget without really modifying the format of the intervention in any way. When she made her third change, she documented the effect of her changes in column VII and the total impact to the organization in column VIII.
Rule #3: Be Disciplined About Your Value Adds. Tracking benefits for long periods, sometimes for years, requires foresight and discipline, but it is important to your ability to continuously communicate value. Rule #2 of financial imperative scorecards is to keep your scorecard up-to-date because, once you have communicated the value from your scorecard, it becomes a given expectation. Salespeople know that once they have communicated their story, they must have something new to say or they wear out their welcome for more conversations with their customer. Without regular updates on your financial contributions, you won’t be welcome for long either.
The third rule is a corollary to the second: Capture the data right away, as it is happening. Data and memories fade astonishingly fast. It is almost impossible to recreate data when your intervention has dropped into a given state, you’ve adopted a defensive position, some of the people originally involved are no longer around, and you can’t remember critical details about what happened. It is far easier to document something while or immediately after it has occurred. It is also much more credible. It is easier for your audience to agree with you or to correct your numbers when the situation that produced them is fresh and recognizable. Without such numbers, it is difficult to ask for more support later or to reactively defend your value to the organization.