A Few Recommendations


As you develop comfort , confidence, and skill in communicating your value, financial value statements will become easier and easier for you to use. Here are a few recommendations for you to keep in mind. First, remember to match the appropriate level of evaluation data to your audience as best as possible. For a review of these concepts, please see chapter 10. If your audience needs multiple types of evaluation data, the higher the level of evaluation data you can use, the better.

Amounts that reflect net dollars are better than gross dollars that have not been formally isolated or had costs removed. In general, however, it is a good idea to give the audience an idea of the size of the contribution by using some type of dollar figure. A percentage of adoption for the performance value can also be used, but it ‚ s best if this metric is compared to a dollar figure for the broader financial measure. Remember that your audience needs to hear the size of your contribution, not just the benefit-to-cost ratio (BCR) or return-on-investment (ROI), as discussed in chapter 9. Many people in your audience know that large ROIs or BCRs can be generated from very small numbers , so it is important to know the actual size of your contribution in monetary figures.

Important ‚  

Always use numbers you can substantiate and will be happy to discuss. If you are successful in catching people ‚ s attention ‚ the goal of working through this entire book ‚ you will be asked how you arrived at your conclusions. Be prepared with a solid answer to cement your creditability.

The key to communicating your value is preparation, which includes preparing a draft of your value statements as much as a year in advance. The first, second, third, and fourth quarters happen every year. Studies have shown that people who write down their goals are much more likely to achieve them. By preparing your statements in advance you will not only know exactly what you are aiming for, but you will be able to give yourself much needed practice in helping these statements roll off your tongue. You ‚ ll also be in a better position to share your value statements with others, so that they can help communicate your value for you.

Let ‚ s return once again to Marcella to see how she has laid out a series of financial value statements for one of the changes she introduced to ABC ‚ s contract renewal new hire training. In chapter 12, you saw that Marcella could create three different value themes from her financial value chains.

Great negotiators will tell you that you win more if you pick a focus and stick to it when communicating value. One way for Marcella to prioritize her themes and statements is the order by which they added the most financial gain. This order could change each time Marcella updates her financial imperatives scorecard with new value adds from incremental changes to her interventions. Another way that Marcella could prioritize her themes and value statements is by the type of Mid-level measure they address. If Marcella ‚ s Senior management issues a dictate that every sales department will cut other sales-driven expenses, Marcella will be able to show how she has helped the team with these expenses.

Marcella chose to create a series of value statements that highlight the additional revenue gained from her first improvement in her contract renewal new hire training intervention. Let ‚ s take a look at how Marcella ‚ s financial value statements were the same and how they were different for each level of her audience. Marcella ‚ s examples for the first changes she made to the contract renewal new hire program are shown in figure 13-3.


Figure 13-3: Marcella ‚ s sample value statements.

For Marcella, the examples in figure 13-3 are split into the four segments of the financial value statement. Notice that none of Marcella ‚ s value statements used input metrics or such metrics as the number of people who attended a particular training program. Business managers do not want to know how many people you had sitting through classes, they want to know what they got out of having them there! Marcella ‚ s value statements also did not rely on level 1 (reaction) or level 2 (learning) evaluation data. Marcella could have used this information at the Individual level, but because she was working with salespeople she chose to translate her numbers into percentages or monetary numbers that her audience would want to pay attention to.

The first four lines (lines 2-5) of Marcella ‚ s financial value statements are the same for each audience. Notice that these four lines plus her financial measures (line 9) give Marcella her value themes. Marcella can use the format in figure 13-3 for documenting both value themes and value statements in one place.

Marcella is using benefits from the top half of her financial imperatives scorecard to help her create her financial value statements plus some other information she has collected about ABC MediCompany. The benefits section of Marcella ‚ s financial imperatives scorecard has been reproduced and enhanced in figure 13-4 to help you correlate the two figures.


Figure 13-4: Marcella ‚ s completed financial imperatives scorecard.

The financial value statements that Marcella is creating are using

  • financial value chains summarized by combining rows 1 and 2 from column I of the scorecard

  • value add #1 information from columns III and IV, rows 1 and 2 of the scorecard

  • projected numbers from value add #2 in columns V and VI, rows 1 and 2 of the scorecard

  • the size of ABC MediCompany ‚ s contribution profit margin documented in chapter 4

  • a little extra information that Marcella knew about the number of teams in the contract renewal department

  • her knowledge of how the fiscal, product, and seasonal lifecycles worked for ABC MediCompany.

You ‚ ll see how Marcella made each of her calculations as you review her financial value statements in figure 13-4. To create financial value statements, Marcella could have used the benefits from any of her financial value chains that are reproduced in the benefit rows, or, as time went on, she could have used any benefits from each of her calculated value adds. Alternatively, Marcella could have used a summary of all of the benefits she had created in any value add by using figures at the bottom of her columns from her completed financial imperatives scorecard shown in chapter 9. Marcella could also have used a summary of all of the benefits she had created for any financial value chain by adding the time periods and figures across any of her rows. By tracking her value over time in her financial imperatives scorecard, Marcella has a very versatile tool to use when communicating her value.

Marcella has created four related value statements in figure 13-3, one for each of her Senior, Mid, 1st/Ops, and Individual audiences. Marcella has named her intervention (the contract renewal new hire training) at the top of her financial value statements. The date for these value statements is February 2002 ‚ the same date that Marcella documented for her baseline #2 in row 1, column III of her scorecard in figure 13-4.

For the performance value segment of her value statements, Marcella ‚ s period of time in row 2 reads, ‚“in the last 9 months. ‚½ Marcella transferred that period of time from the same column and row in her scorecard where she found her date of February 2002. In row 3 (figure 13-3), Marcella has again named her intervention and used a direction verb of increased in row 4. Because all three of her potential performance measures for each of her audiences use a form of renewal revenue in their name , Marcella used a general form of her Individual measure (revenue) as her performance measure in row 5.

Marcella calculated the amount of change in row 6 to be the appropriate size for each of her audiences. For the Senior level, Marcella simply took the nine months of renewal revenue $64,800 directly from row 2, column IV of her financial imperatives scorecard.

For her Mid audience, Marcella needed to supply the amount of performance at the 1st/Ops level. To convert her number to a 1st/Ops measure of monthly team renewals, Marcella had to know that there were four contract renewal teams. If the total improvement was $64,800 for nine months, shared by four teams, then the average improvement per team every month was $1,800:

To get the performance measure of the Individual to use for 1st/Ops and again for the Individual, Marcella used the notation she had made of $800 per consultant per new hire per month on row 2, column III of her scorecard.

In her financial value segment, Marcella repeated her use of the direction increasing in row 8, for each of her three audiences. Remember that the Individual level has only its own performance to refer to, so there is no financial value segment for that audience. Marcella selected her financial measures from the chains noted in her scorecard. Her Senior measure of contribution profit margin (CPM) is from row 1, column I of her scorecard. The Mid and 1st/Ops measures can be read from row 2, column 1 of her scorecard.

To calculate the percentage improvement to the CPM for her Senior audience, Marcella took her amount of revenue change ($64,800), divided it by the size of ABC ‚ s latest CPM ($2,500,000) as was shown in chapter 4, and multiplied the result by 100 to get a percentage.

For her Mid-level audience members , Marcella pointed out the financial value to them in terms of their measure of six-month revenue and in terms of the total amount of revenue over the nine-month period. To convert the Mid-level financial measure to get the six-month number, Marcella took the additional $800 per new hire noted in row 2, column III of her scorecard, multiplied it by nine new hires (scorecard row 1, column IV), and then multiplied again by six months:

Marcella simply reused the calculation she performed to get the 1st/Ops performance value previously for the 1st/Ops financial measure on row 10, column IV of her value statements.

Marcella has tied her financial value statements to the relevant context of managing cash flow during the implementation of an initiative to switch customers to a new type of contract (lines 12-13). Marcella ‚ s quarterly context plan (see figure 11-3) shows that the first quarter of ABC ‚ s fiscal year is January through March.

This means that February ‚ when Marcella is making her value claims ‚ is the middle of the first quarter, the implementation quarter. The new initiative has two downsides in terms of cash flow. Although the new initiative is expected to increase revenues in the long-term, in the short- term it reduces cash flow for ABC MediCompany. In addition, the initiative is being kicked off during ABC ‚ s seasonal low in sales, putting even more strain on available cash. By tying the value of her changes to the new hire contract renewal program to the immediate urgent and important task of carrying out this initiative while minimizing the impacts on cash flow, Marcella has captured attention at each level of her audience. You can see in row 13 of figure 13-3 how Marcella customized her relevant benefit or impact for each level.

Marcella ‚ s goals can be seen in the last segment of her financial value statements (lines 15-18). On line 15, you can see that from Senior managers, Marcella is looking for additional funding. From Mid and 1st/Ops managers, Marcella wants reinforcement and communication. From the Individual contributors, Marcella seeks commitment and dedication to applying what they have learned from their training.

On line 16 Marcella has used a forecast or estimate of what she would achieve during the next nine months. Marcella originally made this estimate using figures that she tracked in row 2, columns V and VI, for value add #2 on an earlier version of her scorecard, not shown in this book. The numbers you see on the current scorecard are not exactly the same as Marcella ‚ s estimates because the scorecard example in figure 13-4 uses the actual numbers that Marcella created over a period of nearly three years . But, you can see that Marcella ‚ s original estimates in her value statements were not far off from what actually occurred. Marcella used $40,000 in row 16 for her Senior and Mid value statements, which roughly corresponds to the figure of $47,025 in row 2, column VI of her scorecard (see figure 13-4). Marcella used a similar calculation as she did previously to come up with the average team improvement number for 1st/Ops. For the individual number, she used a notation of $400 from a forecast that is roughly similar to the notation you can see in row 2, column V of Marcella ‚ s scorecard.

Marcella used the same period of time ‚ the next nine months ‚ for all of her audiences. Marcella then chose the next step that she would like each audience to take. For the Senior-level manager, Marcella would like a meeting to discuss a proposal for the funding with him. For the Mid-level manager, Marcella would like to present her strategy to the manager and his staff. From the staff, Marcella would like to get support to gather data for her next improvement. From Individuals, Marcella would like their support to give her the data she needs.

 



Quick Show Me Your Value
Quick! Show Me Your Value
ISBN: 1562863657
EAN: 2147483647
Year: 2004
Pages: 157

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