I know baseball season is over, but let’s keep the baseball analogies going for a bit. It’s easier to write an accounting blog if you can mix in something a bit more interesting to talk about (not to mention easier to read). This post will focus on WAR, or Wins Above Replacement.
Not the band, the statistic.
Yes, WAR the band is responsible for the song “Low Rider”, which is now stuck in your head. And maybe one day I will devote a post to them. But not today. Did you know they have been around for forty years? The can take some solace in that.
Back to business. Wins Above Replacement is a great statistic that sabermetricians use to figure out what kind of impact a player has on his team. Basically it measures how many wins a player contributed to a team by comparing him to a replacement-level player. Imagine the player in question was injured, and the team had to play someone from the bench or call a player up from the minor leagues to replace him. That’s a replacement level player. The more wins a player contributes to his team, the more valuable he is.
Let’s use a real life example. Justin Verlander is a pitcher for the Detroit Tigers. He’s pretty good. In fact, he won the Most Valuable Player award this year, the first time a starting pitcher has done that in 25 years. He led the league in wins, strikeouts and earned run average, traditional statistics that are used to judge a pitcher’s performance. So by all accounts he had a great year. But the award is the Most Valuable Player, not Most Best Player (I’m trademarking that award name, btw). So how do you judge his value to his team? That’s where WAR comes in.
According to Baseballreference.com, Justin Verlander tied for the league lead in WAR with 8.5. That means his performance contributed 8.5 more wins than a replacement player would have. Pretty good, right? Well now keep in mind he only plays every 5th game, or 32-33 games. So Justin Verlander is worth 25% more wins to a team over the course of a season than an average player. That’s an MVP!
Ok, enough about Justin Verlander and my love of all Detroit sports. What does this have to do with business? Well, just as smart baseball owners are using new method to measure how valuable their players are, smart business owners are using new methods to determine how valuable their employees are. One method of doing this is an employee scorecard.
In the past managers and owners would rely on qualitative analysis to determine who the best employees are (managing by your gut). As a business owner I’m sure if I asked who your star employees were you could tell me. But could you tell me why? And more importantly, could you tell me exactly how much more they contributed to your success than another employee in the same position? And even more importantly, could you tell me exactly where the rest of your staff needed to improve in order to reach to your star’s level and by exactly how much? That’s what an employee scorecard does.
An effective scorecard contains the key metrics that measure each employee’s contribution to your bottom line. This allows you to have quantifiable data in order to provide feedback to your employees on where they are excelling and where they can improve. While you may have a hunch who your top performers are, a scorecard can help you identify them easier and set goals to help your under-performers rise to new levels.
Let’s use a simple example, a salesperson. Most salespeople are measured by one simple metric: their sales. And that’s a good metric. But what could you be missing without looking at other information? How about gross margin? After all, sales are great, but profitable sales are better! How about revenue per lead? Or even better, profit per lead? Aren’t these great ways to measure how effective a sales person is and how much they contribute to your bottom line? An employee scorecard when properly constructed will give you a complete picture of that employee’s performance, particularly as it relates to your bottom line!
This is just the tip of the iceberg as it relates to scorecards. And if you think that there are some jobs that can’t be measured in numbers, you are absolutely wrong. Even receptionists and admin support staff can be measured. You just need to get creative!
If you want more information on how you can manage your team smarter using employee scorecards, contact us today to find out!