Take wins above replacement (WAR) for example. Let’s say my number is 8.4 as a shortstop for the St. Louis Cardinals. That number means I’m responsible for about 8-plus wins over a replacement player who could be acquired at a minimal cost with minimal effort at my position.
Wouldn’t it be great if every person in LinkedIn had a replacement value that could be quantified next to all of his/her titles throughout the years? I know, it’s preposterous, but it’s fun to think about.
Other Names for WAR in Small Business
Let’s pick a few positions in business and come up with a similar metric.
Sales Rep | Sales Above Replacement – This number would have to be industry specific. Let’s say a rep works in the retail car industry. A Sales Above Replacement (SAR) of 8.2 would mean that rep sells on average 8-plus more cars per month than a replacement that could be acquired at minimal cost or effort.
Marketing VP | Market Share Above Replacement – Great marketing teams attract new buyers to the organization. One of the goals of marketing should be increased market share. Accordingly a Market Share Above Replacement (MSAR) of 9% means this VP can obtain an extra 9 percentage points of market share over his/her replacement acquired at a minimal cost and effort.
Get the idea? Let’s do one more.
Merchandising Manager | Really Good Deals Above Replacement – I admit, I’m pushing the envelope a bit, but let’s say a particular eCommerce company has a way of measuring a great buy yielding a better-than-average margin that will turn quickly. That’s a great deal. A Really Good Deal(s) Above Replacement (RGDAR) of 33 means this person will generate 33 great deals annually over a replacement who could be acquired at minimal cost and effort.
Go down each position in your company, and I bet you can come up with your own key measures like the WAR metric in baseball. All you need to determine is the following:
- Name the position.
- List what the greatest requirement, objective, or desired result is.
- Note what the minimal output is for someone that is average.
- Then track the number and be transparent with the number.
Imagine if Every Senior Team Member Had a WAR-Like Measure
The COO. The CMO. The CFO. Even the CEO himself.
Better yet, what if the team had a WAR-like measure?
Here are some ideas, and some of these have already been mentioned:
- Sales above replacement (of a leadership/management team that could be obtained at minimal cost and effort)
- Customer satisfaction above replacement
- Market share above replacement
- Profit above replacement
- Return on assets and equity above replacement
- Return on overall business value above replacement
Do You Work for the CEO? You Need to Ask These Questions Regularly
The more I think about this topic, the less crazy it seems. And if I’m an employee of the company, either as a staffer or a senior management team member, here are 3 questions I want you to address regularly:
- Am I making a difference? How have I contributed to increase sales, profits, market share, customer satisfaction, and return on assets this past year?
- Would I truly be missed if I left the organization? Would my replacement be more or less productive? By how much?
- When I’m at the office, do I spend more time thinking about myself or the organization?
Shut the door, pull out a pad of paper, flip on Bach’s Air on G String, and start writing. Be honest too.
Want to up your game? Share your results with your peers and decide right now how you are going to improve.
Are You the Owner? I Have a Few Questions for You Too
Now I’m convinced this is a great idea.
The key is making sure you have quantifiable requirements for each role as well as each team in the organization.
- Name just three numbers each team member reporting to you should hit at a minimum.
- Repeat the process for the team that works for/with you.
- For each person and the team, what incremental increase would you require in a replacement or for a brand new position?
Sorry, I have a few more, but I’m saving those bullets for clients of G3CFO. But the three above are enough for now.
Why did I have to step through this process for both individuals and the team? The key word is synergy.
The average Clydesdale can pull 7,000 to 8,000 pounds. You would think two would pull twice that amount. Try again. Two can pull about three times the amount of just one Clydesdale. And that’s called synergy.
Your VP of Sales should have a sales above replacement of $10 million, maybe more. But your team as a whole should have sales above replacement of perhaps 2x or 3x, right?
Theoretical? Maybe, but so is Wins Above Replacement too, as not all baseball purists trust the number.
But you have to admit the concept is intriguing. If nothing else, don’t take incremental improvements lightly or accept the status quo each year. You need to expect more from each individual along with the team. But don’t worry. Your best team members will be agreeing with you.