Some employees don’t make critical path contributions directly. Instead, they enable others to make better contributions than they would without this person’s influence. For example, they are such good motivators that the critical path people with whom they interact turn out even better work. According to them, their “intangible” inputs and throughputs improve other people’s outputs and outcomes.
A version of this example is often brought up in sports analogies. Some players are not the stars. Instead, they are such “utility” players that they raise the performance of everyone else on the team. Often you will hear sports commentators use the term “Win above Replacement” (or WAR) in baseball or, in basketball, “Win above Replacement Player” (or WARP). These metrics track the value calculated for a player by the number of additional wins the team has achieved above the number of expected team wins if a replacement-level player substituted for that player.
For example, Draymond Green of the Golden State Warriors is credited with playing such a role in their NBA championships in 2015 and 2017, while his absence in the Game 5 of the 2016 championship series contributed to the Warriors losing that championship to the Cleveland Cavaliers. When he’s on the court, the Warriors score more points and give up fewer points. Although Steph Curry and Kevin Durant are the recognized stars on the team and do most of the razzle-dazzle scoring, Green elevates their game. Green’s WARP places him in the top 10 of all NBA players.
If you fancy yourself the Draymond Green of your team, then you must show the links and causal flow that would convince your boss to continue paying you salary/benefits (or even raise your salary). If you see that your value is being a "good communicator,” a “good motivator,” or a "good problem-solver," the question is: how does that connect to the economics of the firm?
You must make clear the causal chain from you to the bottom line, such as:
Motivate employees → Higher Productivity→ Fewer FTE→ $ Saved
Motivate employees → Higher Productivity→ Greater Customer Value→ Increased $
Build morale → Less Turnover→ Less Replacement Costs→ $ Saved
To get a more accurate sense of your own WARP “value,” you need to discover the performance baseline before your arrival.
What was the critical path contribution of the previous people in your job, or jobs like yours? If possible, consider not only your immediate predecessor, but also internal competitors and/or external competitors in the same or similar jobs.
Over the last few years, what did their trend lines look like? Were they on growth or decline curves?
If possible, compare the above measures of your predecessors to company averages and industry averages.
The point of this analysis is to give you a better picture of what you need to do to add more critical path value than the person you are replacing. In other words, how does your WARP value compare to theirs?
The famous theoretical accountant Professor Yuji Ijiri made it clear why trendline analysis is more valuable than typical point-in-time accounting. He demonstrated the deficiency in static performance snapshots, which can be easily manipulated to make things seem better (or worse) than they really were. For example, a CEO will brag that he raised the company’s revenue by 10% and the company’s stock price by 15% since his arrival a year earlier. As Professor Ijiri would say, “Sounds impressive, right?” However, if the growth curve over the past 5 years for revenues was 12% and for the company stock was 18%, then the new CEO actually underperformed compared to his predecessor. Ijiri developed the concept of “momentum accounting” to capture the growth and decline curves over time. To add value as a “replacement,” you need to exceed what those before you provided.
Depending on where you sit in then organizational hierarchy, you can repeat this same type of analysis for your team, department, operational division, or entire company. In this way, you can truly claim that your management skills (inputs and throughputs) actually added value to the critical path above and beyond what happened before you.
However, your predecessors are not your only comparisons. As discussed in the previous lesson, you need to assess honestly whether the benefits of your intangible “enabling” of inputs and throughputs could be found in other ways.
Would a less expensive worker be able to add just as much value, if not more, to the critical path?
Would it make economic sense for the company to outsource your job to a firm that specializes in doing your function?
Could the company just eliminate your position altogether via technology?
Could your company eliminate your job because it adds such minimal value to the critical path?
Living off your intangibles is a risky strategy. For you to claim that your intangibles provide the spark for your team, you need to provide hard bottom-line data to support your claim. In addition, you need the people who benefit from your spark to agree with and support your claim. More than once, a subordinate has claimed that their manager took credit for their high performance, with the manager presenting him- or herself as a master motivator. The subordinates believed they could probably be more productive if they didn’t have that manager. They were capable of self-managing their contribution to the critical path.
Ken ran the venture investment side of a large pension fund. He considered himself not just the brains of the operation, giving the good ideas to his deal makers, but also the motivator who got them fired up to sniff out and close deals. He proudly pointed to the financial returns his group generated under his leadership.
His subordinates held a different view. They saw themselves as the generators of new deals, which they then brought to his attention. But the only reason they passed the ideas in front of him is because they were required by the pension fund’s policy to do so. They saw him as an obstacle in the way of their critical path productivity, not as a boost. Ken believed he was putting up Draymond Green–like numbers, when his subordinates saw his contributions as being little better than replacement-level.
Critical Path Action Items
What is your equivalent “WARP” value to your team and organization?
How can you connect it to the firm’s bottom line?
What is the momentum trendline of your predecessors and competitors?
How does your WARP value compare to your predecessors and competitors?