Communicating value seems difficult because it is invisible. If the terms for value at each layer become visible, then understanding the code for value suddenly becomes easier to do. A financial value chain is defined as a cascading, linked set of measures where the left-most measure is a broad, financially based measure of a Senior executive and the right-most measure is a specific, performance-based measure of an Individual contributor.

Senior management is concerned about the organization’s contribution profit margin (CPM). The contribution profit margin represents the difference between how much money comes in and how much money it costs to create and deliver products or services, before one worries about things like being able to spend money on new research and development (R&D), pay fixed expenses, make loan payments, pay taxes, or announce dividends.

Most organizations operate on much slimmer margins than many people realize. If production costs creep up faster than revenue comes in, the contribution profit margin slips. The business is headed for trouble. Eventually, there may not be enough money to invest in crucial R&D, make payroll, or take advantage of new market opportunities. As stewards of their organizations, Senior managers know what it means not to be able to keep ahead of their competitors or not make payroll, loans, or taxes. It means layoffs, restructurings, and other unpleasant situations to have to deal with. You can bet that the contribution profit margin keeps many Senior managers awake at night.

Senior managers share their sleeplessness with others. They assign each of their Mid managers a portion of the organization’s costs to control or revenue to generate. Mid manufacturing management is concerned about the growing cost of goods sold (COGS) and how that affects the contribution profit margin. The cost of goods sold is defined as the total of the material costs, labor costs, and overhead costs required to make or buy the products that an organization sells. Organizational insomnia gets worse as Mid managers tighten their focus on COGS. With all this lack of sleep, is it any wonder that your audiences have such short attention spans when you are trying to communicate your value?

Now, Mid managers will not go it alone either. COGS is made up of material costs, labor costs, and overhead costs. In this case, the focus is on material costs. Since people will manage to their measures, 1st/Ops-level managers are completely focused on getting material costs under control. The rework rate is defined as the percentage of goods or actions that are defective or of such low quality that they must have additional material or labor added to them before they can be sold or accepted.

Important Most WLP professionals focus on the Individual layer. The language of this profession is the language of performance objectives. WLP professionals must ask themselves questions such as: “How can we best train our manufacturing workers to minimize the rework rate in plant seven?” At the Senior level, though, the language is the language of finance. Senior managers ask themselves questions such as: “How can we improve our contribution profit margin?”

How to Translate Value

Each level of manager in each separate department, division, or unit has more or less responsibility and, therefore, smaller or broader measures depending on his or her level. This is one part of going back to the basics.

Another part of the basics that many of WLP professionals miss is that each level of your audience will not make the translation for you of what, say, a change in rework rates means to material costs, COGS, or contribution profit margin. Because many WLP professionals are not comfortable with the language of financial measures or skilled in mapping financial value chains, it is easy to fall into the trap of hoping it will be obvious how valuable they are if they speak the language of performance.

In the Information Age, people have no time. They are completely focused on value in the terms that they know it by. They simply will not translate for you what you are trying to say. Your Senior managers want you to act like a salesperson. A key reason is that salespeople know it is their job to make that translation because no one will give five minutes of their time to translate for them.

A personal story may help illustrate this point. I once worked for a high-level sales manager who had a short attention span and a blunt communication style. I interviewed him as part of a research study on how executives viewed the value of human performance technology (HPT). During that interview, I asked this manager what he believed the value of HPT to be. His response was that it was not his job to tell me what the value of HPT was. It was my job to tell him. He had people approaching him every day telling him exactly why and how they could help him accomplish his goals. If I could not tell him why HPT was valuable to him, then I was wasting my time and his.

Important Translating value is your job. If you force others to make a translation for you, they will either assume there is no value, or they will draw their own conclusion. Just as in the game of “Rumor,” their conclusions may not bear any resemblance to what you wanted them to hear. That can be disastrous to making a sale. It is also disastrous in communicating value. If you are being looked at as though you didn’t get the ROI codeword, the first thing to determine is whether you stated your value in terms that matched their level in their measures.

ROI should not always be taken literally. It is frequently used as a codeword. The term ROI is often used when a person would like you to tell them the value of your interventions in terms that matter to him or her.

What is valued within in an organization is always defined at the top of the organization. The terms that the value is referred to transform themselves as measures are taken from a broad to a narrowly defined state. This linkage of measures can be described in a financial value chain.

The broad, high-level measures of the Senior level are described using financial terms or in the language of finance. The narrow, specific measures of the Individual level are described in performance terms or in the language of performance. By demonstrating a direct causal link from broad to narrow measures, the WLP professional can translate value into any point along the financial value chain.

It is critical to make the translations for your audience so that you draw them to the conclusions that you would like them to reach. If you leave the translation for your audience to do, the audience either will not do it or will draw an incomplete or incorrect conclusion.

Understanding the timeframe in which each level of your audience needs to hear about results is as important as being able to describe results in terms the audience recognizes. If results are not available in the appropriate timeframe, your audience will not see the value of your interventions.

Connecting your value communication to the highest priorities of the Senior level will gain you more time and respect.

No matter where you decide to start, there is one more fundamental that should not be overlooked: You must be certain that the financial value chain you are communicating about is connected to the top priorities of the Senior-level managers.