All organizations operating in complex environments are impacted by external and internal forces. Externally, your organization needs to raise capital in order to invest in its growth and generate revenue to cover its operating expenses with vendors and employees. In order for your organization to obtain capital or generate revenue, it needs to create value for investors and customers.
In the Raise Your Visibility & Value model, “Value is when the outcome of a situation exceeds the cost incurred by a satisfactory margin.”
In our last two posts, we addressed the meaning of the terms “outcome of a situation” and “cost.” Today, we’ll discuss “satisfactory margin.”
Organizations today are not like a family, regardless of what your well-intentioned CEO tells you. In functional families, “blood is thicker than water” and family always comes first. Whether you a mother, step-father, sister, brother-in-law, aunt, uncle, beloved or estranged, you are and will always be historically, legally or genetically a family member.
Conversely, in organizations, the organization always comes first. While business is on the upswing, your relationship with your employer will flourish. Moods are positive and opportunities are abundant. Hope springs eternal! Yet, it is the belief that good times are forever, or that relationships will supersede a tough decision that leaves most business professionals surprised, shocked, and hurt. When red ink starts to rise as financials tighten or competition heats up, reorganizations, restructurings, and reductions rule the day. Good performers are suddenly reminded that they are liabilities on a balance sheet and liabilities must be reduced in order to stabilize financials. “Family members” are suddenly and unceremoniously asked to pack-up their belongings and exit the building, escorted to the door by Harold from Security. In organizations, blood is not thicker than water – red ink is.
Allyn Gardner, the long-time career coach at Harvard Business School’s career program for MBA students has observed this phenomenon first hand. “They call people human capital for a reason,” Allyn mused. “Capital is an asset that you review periodically to determine how well it is performing to meet your objectives. Businesses tend to focus more on the capital-side and less on the human-side.”
There are many types of value on which you can raise your impact at your organization. Every organization uses different financial metrics to convey their success (or lack of success!) to Wall Street, their Board of Directors, or their Executive Committee. In this video, Ed shares with you the three types of value areas that exist within most organizations.