MME #03: How to Measure Your Value So You Can Drive Up Your Income
Monday Morning Manager
Read time: < 4 minutes
Today, I want to focus on critical actions missed by too many managers, their absence causing excessive hours and under pay.
These are the 5 overlooked actions to create the rewards you deserve:
1, Get Clear About Your Crucial Numbers
What is the total amount of money coming into the part of the organisation you manage? The total, income, budget, or allocation from all sources?
What are all the activities you are expected to deliver in exchange for this income?
How many of each activity are you expected to deliver?
Can the volume or quality of any part of what you do increase or decrease the amount of money coming in? Which activities? How much?
What is the total expenditure necessary for you to do the above (including wages and overheads)?
Does anything you do, in any one of your activities, increase or decrease the expenditure per line of activity? Which one? How much?
If you can't get these numbers formally from your organisation then build a reasonable estimate for yourself. Validate it with someone in Accounts if you can. Keep the position up to date with local knowledge - e.g. any big one-off expenditures you make during the year.
2. Discover How To Predict, Track and Report 6 Levels of Value
For every action, innovation, project or improvement you can learn to report:
Expected value - in Advance of an achievement
Actual Value - on Delivery of an achievement
Future Value - As a follow on Result from an achievement
The 6 levels of Return on Investment (RoI) below open up a whole new view of the levels of value you create when you intervene:
Wider Contribution RoI - What improves in the bigger picture: clients, organisation, staff, community, world, stakeholders?
Business Impact RoI - What activities have been started, stopped, improved. increased or reduced, how much & when?
Financial Value RoI - What is the monetary value of the improvement in return on investment, income, or savings?
Job Impact RoI - What are people doing differently and better, individually and together, in their jobs? (Human Capital).
Personal Impact RoI - What changes have taken place in capability, ideas and intentions of individuals and teams? (Indvidual Value).
Sustainability RoI - How much do you and others enjoy working in this new way and will you continue? (Future Capital & Goodwill).
3. Adjust the Balance Of The Tme You and Your People Spend Doing Activities That Do and Don't Create Best Value.
At least once each year, rapidly list, and appreciatively audit, all of the activities in the part of the organisation you manage.
Launch an organisation wide hunt for improvement in the way activities are done and their value is created. Praise and recognise individual contributors who have add gains and new ideas for value improvements.
Work with your accounts team to check for real bottom line return on invesment before you finally institute the new ideas
4. Commence Reporting Up Systematically
Find a way to regularly report up your cumulative results to date and your expected results to come.
Ideally under promise and over deliver in the future.
A monthly, updated, 1 page summary, as part of your reporting up works really well.
When you become practiced at this, the exercise provides the perfect platform for discussion about advancing you career and increasing your salary. (More on this in later MMM Newsletters)
5. Run A Control Sheet - Be Properly In-charge Of The Year Ahead
This is the simplest of tools which can have the biggest impact.
Simply create a 1 page monthly summary with an anticipated year-end total at the end of each row. Populate it with actuals to date, and forecasts for the rest of the year
It'll contain the following sections:
A list of each of your value/income creating (or budget justifying) activities
Place the expected number of each activity planned for delivery in each month
Use the same list of activities above in the left hand column with the rate of income/allocation for each activity. Then use your spreadsheets to add in the total income that will be earned if you complete the number of activities listed in each month (in section 1).
2(i) List Total income from all activities at the bottom of each month
2(ii) Two lines later add another row labelled '+/_' I'll explain this lower down.
2(iii) Two lines later again add another new row labelled 'Moving Income/Loss Position' (before expenses)
NB: If the allocation/income stays fixed regardless of activity level you may be on some kind of block contract with your organisation or customer. Sometimes when this type of arrangement is underdelivered there can be contract penalties or an organisation may start disinvesting or replacing the function in some way
If the expenditures are tracked in line with the list of income generating activities, once again start with the activity list down the left column. Add the rate of expenditure expected or allocated to each single unit of activity. Add in any overheads or other expenditures. Total each column
If expenditure is not recorded under each activity, just put all expenditure in under its own categories and headings
Add in a new row created by subtracting total expenditure from total income each month.
Once you have this figure, copy it to the +/- box in the next month
If your figures are being rolled over year to year, your first +/- box will be populated with the outturn from the end of the previous year. Many organisations reset each new year to a cold start zero base.
5. Cumulative Cash at 'Bank' (Cumulative Income/Loss or Virtual Cash At Bank)
Add in another row created by subtracting your total monthly expenditure from your monthly moving income or loss position. This will give you your cumulative income or loss for the year to date
Add some checksums on the end of each row to make sure your figures are in order. There you have it: Your Control Page.
Populate your control page with Actuals to Date and the Forecasts or Budgets for the rest of the year. Then you'll be able to start managing the outturns at the end of the year in months 1 and 2.
The reason a control page is important is it shows you clearly the impact on outturn if things begin to go astray earlier in the year. You can then adjust your activity or expenditure to correct the situation if needed.
Even more important, if you spot an opportunity or an unexpected circumstance emerging you can now notice it. Where it is possible to create much more income or a much more beneficial outturn for the organisation you can flag it for peoples' attention and revise the plan. Opportunities too often overlooked by managers and organisations
In Summary
Are you in touch with your crucial numbers?
Do you have an overarching framework for predicting, tracking and reporting value?
Can you adjust the time you and your people spend doing activities in a way that doesn't create as much value as it could?
Do you have a systemic way of reporting value that advances your career and influences increases in your salary?
Do you run a control sheet to allow you to be in charge of the year ahead?
The bottom line is -
If you are aware of how much value you can and will create, you can respectfully draw this to other people's attention where it serves you and them. If you (and they) are not aware of your value then you will be prone to their ungrounded and often much diminished view of your worth with all the unintended consequence that may encourage.
If you can unapologetically and factually state the value and contribution you create, and feed this into perfectly reasonable discussions these actions are a real winner to advance your career and your income. Why not!
That's it for this week.
Have a great day.
See you again next week.
Whenever you're ready, there are 3 ways I can help you:
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