Are you missing a key data point needed to show your value?
Most people don't have access to the cost of their teams
Happy Monday Value Crusaders,
Let’s dive into something that causes the Sunday scaries,
We’re asked to deliver ROI, to focus on value, to show how we contribute. Yet we’re often missing a key piece of the puzzle.
The cost of the team or department you’re working with.
Grab one of the remaining seats for tomorrows class for
$464 | £347 | €397
How to use the cost of a team or department
With this cost? You’re able to calculate your impact using the before and after data relative to your role.
I did a quick LinkedIn poll to find out what percentage of people had this data.
The result? Almost 50%, with 6% not even knowing what a ‘Burn rate’ was.
My first job out of uni was on a Project Management graduate scheme
I also studied an MSc in Project Management at uni
↳ So the stuff below was pretty bread & butter for me
"TEAM COST = BLENDED RATE OF TEAM MEMBERS (PER DAY) X DURATION"
It's a simple formula you can use to understand the cost of a team over a chosen timeframe. With this calculated, you can identify the ROI a company is making from you. It's a valuable piece of the storytelling equation [And great for performance appraisals]
Here's how to get started:
Step 1: Find the rates
You'll need the blended rates of the people on your team
Ask HR for this - Blended rates don't reveal sensitive data like salary
Step 2: Calculate cost per person
Multiply the blended rate of a person by your chosen timeframe
E.g. Product Owner = $600 per day X 10 days (2 week sprint)
Don't forget to factor in capacity allocation
Step 3: Calculate cost per team
Sum the total of your costs per person to get your team cost
This is the investment the company is making
Let's explore some examples of how you can use it using the before vs after of when joined a team or department in an Agile Coach/Scrum Master/Delivery Manager role,
1. Throughput
⏮️ Before you joined = 7 items per 2 week sprint
Cost per item = $3,714
⏭️After you joined = 13 items per 2-week sprint
Cost per item = $2,000
ROI = 46% decrease in cost per item
2. # Releases per month
⏮️ Before you joined = 1 release per month
Cost per release = $52,000
⏭️After you joined = 3 releases per month
Cost per release = $17,333
ROI = 66% decrease in cost per release
3. Revenue generated per team member
⏮️ Before you joined = $5,721
⏭️After you joined = $7,189
ROI = 25% increase in revenue generated per team member
Warning - Don't use this to compare team members ;)
Finally, with this data you can calculate your impact relative to your own salary.
Paid $100,000 per year but delivered $340,000 in cost savings or revenue improvements?
You’ve delivered a 3.4x your salary as ROI. That’s a story leaders want to hear.
Here are some direct quotes from Agile & Project Delivery practitioners about what they are facing at the moment and why this is so relevant.
An Agile Coach asked by leadership to "Define what value he thinks his role will be delivering in the coming months"
A Scrum Master saying "I have no idea what value means to my line manager"
Another Scrum Master "We do a lot of things, but we don't log them, it makes finding and proving it when needed difficult"
And my personal favourite "This is undoubtedly a problem that we need help with!"
If we can’t define our Value In simple, monetary terms plus evidence our invidual impact. Then we are leaving how our ROI is calculated to subjectivity and chance. We run the risk of missing opportunities for promotions, pay rises and job offers to the whims or mood at appraisal time.
The only universal currency of Value is money.
It doesn’t matter if you’re a not-for-profit, a fortune 500 or a government department, they all have to exist inside the boundaries of business accounting. The profit and loss, the dollars and pounds in the bank account.
So the better we are able to link our work back to that universal currency?
The easier it is for budget holders and leaders to see the ROI gained in return for your salary.
I’m encouraging everyone, not just agile practitioners, to focus more on this data point at the moment. It’s crucial in a difficult economy where AI is threatening so many roles.
Ever wanted to learn with me?
We dive into more on how people can calculate their contribution in financial terms in my training courses.
Grab one of the remaining seats for tomorrows class for
$464 | £347 | €397
[This is an introductory price for the first class only]
Continuous Improvement Practitioner - Next start - Oct 7th
https://maven.com/chris-stone/letsimprove
[Forgive the shameless plug - If I don’t actively back my value - Who will?
Plus as I’m self-funding the early stages of building my SaaS startup Undeniable which is much more challenging than I thought!
I’ve gotta keep the bills paid to afford me the ability to keep building the system that will allow you to show your ROI with tease,
I appreciate you
Chris
Founder | Undeniable