The Importance of Demonstrating The Value Of Your Contribution

The support functions in your operations are critical to the success of business yet it is often tougher to measure their contribution than those in production or sales.  Too often we look at support functions, from HR to project management, as a cost center only incidentally connected to our focus on increased profit margins and improved efficiency.  We treat them as necessary functions which we justify from the neck up, but starve budgetarily because it’s hard to draw a straight line from what they do to the P&L statement.

Just yesterday we received this e-mail from a frustrated senior executive:

“(The president of our company) has been on an absolute rampage about expenses lately & specifically complained last week that “education” on our P&L is up considerably this year.  Coaching & counseling is largely seen as a negative. I’d like to turn it somehow to a positive.”

Making The Business Case For The Resources You Need
The ability to measure the contribution of support functions is essential for many reasons.  High on the list is the ability to know when to celebrate the best efforts and direct resources to these critical components that ultimately grow the people and improve the processes that drive our operation.  Making the business case to justify resources or additional resources can be more difficult if the outcomes of your effort are distant.   This can be the case if you’re responsible for long project cycles, when the outcomes are changes in human behavior or skill development, or in the case of health care, for instance, we are talking about the emotional and qualitative well-being of a patient.

Balance Scorecards – Only The Beginning
The Balanced Scorecard methodology initially attempted to capture metrics to measure the effectiveness of those that support the operations.  The original four sections were a first attempt at broadening traditional financial metrics by adding Customer, Learning and Growth, and Internal Business Process as categories.  The second wave of Balanced Scorecard methodology focused on the linkage of the strategic parts.  This cause and effect approach gave both context and connectivity to the overall strategic plan. In addition, the more altruistic, or ‘soft’ components were added as well.

If You Can’t Measure It You Can’t Demonstrate Your Value Added
Yet the most common response to creating metrics for quality, hard to count results or long cycle R&D projects remains “You can’t measure what I do”,  “I can see how that would work in the manufacturing side but it won’t work around here”.  ‘We tried that last year, didn’t work”.

Demonstrating The Quantitative Value Of Quality
A few simple steps can guide the process of discovering quantitative metrics for quality improvement efforts.  If we consider and take ownership in the outcomes of our qualitative effort we go a long way to capturing a measure of our effectiveness.  For instance, if we develop the skills of our leaders, and they impact the motivation and skills of our rank-and-file, what will change?   The connection between people development and the resulting performance improvement can be clouded by many factors but, overtime, we must prove our efforts.  Just a few examples of comparisons include:

1. Close rate of those that completed a sales training module vs. those that did not.
2. Average annual performance review scores of those leaving the company vs. those that stay.   Obviously those staying are more likely our winners.  But taken over time, as an average, what is the trend?  Is it getting better or worse?  Why?
3. Enrollment in company benefit programs as a measure of engagement, commitment and loyalty
4. Break down retention rate by department, supervisor, job description, tenure

Demonstrating the outcomes of your effort is obvious when your outcomes are quantitative in nature.    Failing to own and communicate the results when the outcomes are more qualitative or long term is failing to make the business case for the critical contribution of your efforts.