Friday, September 2, 2011

Communicate Your ROI

Your thoughts and experiences will improve our conversation. Please share your comments.

ask for a raiseLast week we discussed meeting and exceeding expectations. Several of you commented on Facebook, LinkedIn, and Twitter that you had done so with no rewards. I admit that many workplaces became increasingly stingy and penurious. Increasing profit for the stockholders remains the number one goal of management. Employees, viewed as expenditures rather than assets, receive fewer and smaller raises. I commented on this in my blog “Salary Gap Widens”.

Recognizing this reality in the workplace, meeting and exceeding expectations alone will not gain the reward. You must communicate your return on investment (ROI) to management. You cannot expect them to notice it.

Todd’s Story

Todd (not his real name) attended our job search workshop because he was scheduled for layoff. He still worked for the company, but they had given him one week to take an outplacement workshop. During the workshop we discussed home run statements. Todd became increasingly agitated as we gave the participants time to write some statements.

Finally, he threw down his pen in disgust stating “They were stupid to let me go. Look what I have done for that company!” I asked him, “Did you tell them what you did?” His response reflects what many of you probably think, “No. It’s their job to notice what I do”. The group disagreed and convinced him that he remained responsible to communicate his successes to management. He did not return from lunch that day.

The next morning he told us that he returned to his office the day before. He told his supervisor “I believe you have made a mistake letting me go. Look what I have done for the company”. He then shared his home run statements. His supervisor asked a few questions and left the room. When he returned he told Todd “I had no idea all that you had done. I just talked to HR and they have taken you off the layoff list”.

Your Responsibility to Communicate Your ROI

In today’s workplace, every position must show a return on investment. No longer do companies maintain positions because of tradition. The pressure to generate profits pushes management to decrease costs—and human costs remain the single largest cost to most companies.

They expect every employee to either save the company, or make the company, more money than they pay the employee. Management recognizes the hidden costs associated with each position better than the employees do. Many pay records now include information about the employer’s payment to insurance, 401Ks, taxes, and other costs not recognized by employees. Companies need employees to generate more revenues than the cost—or the company goes out of business.

The amount of return on investment differs for each kind of position. Secretaries, for example, need to save or make at least twice what they cost. Production workers need to generate 5-6 times what they cost. Management should generate 7-9 times what they cost. Sales representatives need to generate 15-20 times what they make because nobody gets paid until the product is sold. Sales representatives carry all the overhead on their backs.

Many believe, as Todd did, that management should notice each employee’s ROI. While management measures productivity, computers track most metrics. In addition, the adoption of Theory Z management principles greatly enhanced a manager’s span of control. Prior to the 80’s the average manager supervised 5-7 people, all within the same facility. Today’s manager oversees 20 or more people scattered in facilities around the world. Consequently, face time with management barely exists.

As a result, you must assume the responsibility to communicate your successes, improvements and return on investment to management. I suggest you send them a home run statement at least once a month by email, once a quarter by phone or in-person, and in annual performance appraisals.

Home Run Statements Follow a Baseball Image

baseball diamondTodd used home run statements to change management’s mind about his layoff. You can easily build home run statements if you will imagine a baseball field in your mind. Picture 1st base, 2nd base, 3rd base, and home plate. That image structures your statement:

  • 1st base: you describe the situation management asked you to change, or an opportunity for improvement you observed on your own
  • 2nd base: you—briefly (no details)—outline what you did to change the situation
  • 3rd base: you highlight the results of your work using dollars ($ sign), percentages % sign), and numbers (123 not words)
  • Home plate: you verify this satisfies, or better exceeds, their expectations with a question

Great home run statements create the following response from management: “Wow!! How did you do that?” At which point you can add more details to what you outlined on 2nd base. Let me illustrate sample home run statements. These examples are real home runs hit by some of our clients.

“I felt that the tax commission was charging us too much (1st base). I researched the issue, prepared a proposal, and worked with the commission for 8 months (2nd base). As a result, they reevaluated our property taxes and reduced them by $500,000 dollars a year (3rd base). Is this what you wanted me to do? (home plate).”

“You asked our group to improve the assembly line (1st base). We moved 2 workstations and consolidated 3 into 2 (2nd base). As a result, we increased productivity by 15% which can increase profits by $140,000 a year (3rd base). Does that reflect the improvements you desired? (home plate).”

“I noticed a delay in processing accounts receivables (1st base). I rerouted our flow to eliminate the delay (2nd base). As a result, we can deposit an average $4,900 in payments in 2 days rather than 3. Allowing us to earn 9 days interest on approximately $24,000 a month (3rd base). Do improvements like this meet your approval? (home plate).”

In Conclusion, a Note of Recognition

Meeting and exceeding expectations does you little good, if you do not communicate your return on investment to management. You remain responsible to tell them what you do to improve their profits, increase productivity, or reduce costs. I do not encourage you to brag. I encourage you to share the facts with them and ask how they feel about those facts.

Proving your worth will place you in a better position to get the biggest raises. Demonstrating that you understand return on investment enhances your reputation for better assignments. Neglecting this, or doing it inappropriately, consigns you to frustration and few rewards.

Let me also recognize that many workplaces reflect stingy, non-visionary environments that perceive giving most employees 0-2% raises while executives receive 18% rewards as just. You need to decide if you want to work for such a company. Many companies still recognize and reward their employees. Start your research and find such a company. Then, use your home run statements to convince them you would be a great return on investment for their organization.

Learn more about this topic from my pod cast “Hit Home Runs with You Supervisor”. Also, register now for my weekly tip for more money, better living.

Until then, I’m Larry Stevenson wishing you more money, better living.

Your thoughts and experiences will improve our conversation. Please share them below.

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