Tag Archives: added value

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How To Measure Spiritual Value Added

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spiritual valueAs owners or leaders in Christian businesses, we should be looking at our businesses from an eternal perspective. Profitability is a must and team development is critical to our success, but the impact we have on eternity (spiritual value) should be our primary concern. Quite simply, nothing else will last.

Spiritual Value Added

When all is said and done and we stand in judgment, nothing material from this world will count. Only what we have done that survives the fire will matter. While there are no metrics that fully capture this eternal impact we desire, I believe we must do the best we can to track our efforts in this area. Let’s look at Spiritual Value Added (SVA) from C12’s Tri-Value model.

As the final component of the Tri-Value Model from the C12 Group, SVA consists of three elements (a.k.a. “The Three S’s”)”

    1. Salvation – those coming to know Jesus for the first time
    2. Sanctification – helping believers to grow or be strengthened in their faith
    3. Service – giving money or service to those in need, especially the “least among us”

Each of these elements requires different actions from us. Each has different results that we can expect. If we are serious about evaluating our performance from an eternal perspective, then we need to measure both our actions and the results they produce. We need to do this for each of The Three S’s!

Salvation

Let’s first look at Salvation. The first thing we must realize about this element is that we cannot make it happen! Nothing we can do will save anyone…that is the job of the Holy Spirit. At the same time, we certainly can make sure that we are spreading the Word – teaching people about the gospel message. Here are a couple of examples of when this could happen:

    1. Chaplain is given permission by employee to share the reason for his faith
    2. Gospel-centered devotion is shared with all employees
    3. Gospel is shared at company-sponsored Boy’s & Girls Club Christmas party
    4. New Testament given as gift after a transaction with a customer

Rate you and your team are doing in this area on a 1-10 scale compared to your potential. You will also want to have a system to gather the results – those who actually turned their lives over to Jesus. This is probably the most difficult to track because you may never find out about some decisions. Other times you may have just planted the seed and someone else will be there to see it harvested. Regardless, start counting those you are aware of and see what happens.

Sanctification

The next “S” is Sanctification. The activities in this area can range from Bible studies or classes offered to employees, customers, or anyone you choose. Any work done to teach, strengthen, or support believers in their walk with Christ should be counted here. Some examples include:

    1. Lunch-and-Learn video series offered to employees, customers, vendors
    2. Small group studies held at lunch or before/after work
    3. Classes offered to employees and their families on financial or marriage issues

Again, rate you and your team on a 1-10 scale compared to your potential. For the results in this area, you want to count how many people participated.

Service

The final “S” is Service. There are many ways you and your team can give to those in need. Get creative and include as many employees as possible. While it may be easier to just write a check at the end of the year and be done with it, you will miss incredible blessings if you do. here are some examples:

    1. Sponsor a Thanksgiving meal at a local shelter & enlist employees to volunteer
    2. Sponsor a team of employees in a local event like the March of Dimes walk-a-thon
    3. Sponsor a kids organization with Christmas toys & let employees do the shopping!

Rate yourselves on a 1-10 scale the same as before, comparing your actions with your potential. The results here are fairly easy to track. Whether you count the money given in dollars or percent of net profit, either works. I would also count the number of man-hours your employees log.

So there it is – Spiritual Value Added – the final component of the Tri-Value model series. Get started evaluating your performance and let me know how you are doing. If you are at all disappointed at your current performance, remember this is not a sprint! Just decide to make a change for the better and get on your horse and ride!

Looking back over all three assessments (TVA, EVA, SVA), where are you the weakest?

What will it take for you to see improvement when you do this assessment again next year?

What is your first step?

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How To Measure Economic Performance With Added Value

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With all of the metrics available to a business owner or leader today, how are you supposed to know which ones are the most important? Which are the best indicators of your economic performance as the leader of your business? I do not believe you can completely boil all possibilities down to one measurement that tells the whole story. At the same time, by measuring the economic added value to your business from year to year, I think you can get most of the picture.

added value

Added Value

This is the third post in a series on the C12 Group‘s Tri-Value model for measuring the performance of the leadership in a business. In the first post, I did an overview of the Tri-Value model and its purpose. In the second post, we looked at Team Value Added component of the model. Here, in the third post, we will focus on Economic Value Added (EVA) component.

Simply put, EVA measures whether the business’ value is being sufficiently increased or spent by the leadership responsible. Let’s start by taking a look at the formula itself:

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Operating Profit – Taxes – Cost of Capital Employed = EVA

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Breaking It Down

Operating Profit is easy to define: Gross Sales – (Cost of Goods Sold + Selling, General & Administrative Costs). Taxes are also easy to understand and quantify. It is the true Cost of Capital that causes a little more confusion.

The first response is usually to consider the cost of capital as what is paid to borrow it. This is not necessarily incorrect, but it only tells a small part of the story. We really need to dig a little deeper to get the rest of the story.

This description from the C12 material says it better than I can:

The total of all the invested capital tied up in the business (i.e. real estate, equipment, inventory, working capital, assets of all kinds) should be producing a return equal to or greater than the same amount if used to purchase another investment of equal risk.

While it is not critical that we go into too much detail about the risk, it is generally agreed that a conservative risk return is 10% for most businesses. I would argue that it should be higher, but you really need to settle on a number that is comfortable for you.

The Risk

Quite simply, if you sold the business and everything you have invested in it, how much cash would you have? If you invested that cash, over a long period of time in a similar-risk investment, what return would you expect to receive? Go with that number here. Why would you accept less? (There are arguments here, but we will save those for later!)

Taking that number (we will use 10%), along with the total market value of your business, you should be able to finish the equation. To make it easier to follow, I will use sample numbers assuming the following:

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(Market Value = $500,000) X (Return = 10%) = Cost of Capital $50,000

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Now, in this example, the leadership produced $20,000 in added value. If Operating Profit had been less than $80,000 for the year, then they would have actually spent value, rather than adding it.

Of course, this is not the ultimate measurement. C12 still recommends benchmarking the performance of your business against comparable businesses in your industry. You also need to know your own critical metrics for your business – those numbers that drive the health and performance of the company.

How did your business do in this exercise?

Are you showing added value or spent value?

If you are spending value, what needs to change?

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How To Measure Team Performance with Added Value

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In my last post, I gave you a brief overview of the C12 Group’s model for measuring the performance of a company’s leadership. As business owners and leaders, we need to make sure we are building added value in our organization. As Christian business owners and leaders, we need to make sure we are doing this from an eternal perspective. Used as a part of our own annual assessment of our performance, the C12 Tri-Value model helps us to do this.

team performance

The Tri-Value component we will tackle in this post is Team Value Added (TVA). TVA is concerned with our team performance as a whole as well as how each individual member of our team operates within our business. Now, how you define “team” here is up to you. For me, with 100 employees, 18 managers, and 4 members of my Leadership Team (Inner Circle), I choose to evaluate the Leadership Team.

For you, the “team” may be your entire company. It may just be your management team or the department you supervise. Regardless, I would try not to pick a group that is too big. While there is not a recommended number in the C12 material, I would suggest you stick with a max of seven or eight. If you go any larger than that, the individual evaluations become difficult.

Team Dimension

To start, let’s look at the team dimension of TVA. In looking at our team as a whole, we want to look at the synergy of the team. Below are some questions we want to answer from year to year (or a frequency of your choice) on a scale from 1-10, watching the trends to see if the team value is increasing or decreasing….

    1. Is your team positive, supportive, and complimentary to each other?
    2. Are they setting and meeting ‘stretch’ targets that require teamwork?
    3. Are they innovating and pushing the envelope?
    4. Are they developing their replacements?
    5. Are they participating in the ministry dimension more fully?
    6. Are they thankful or becoming complacent?
    7. How is their attendance and work ethic?
    8. Is loyalty high and turnover low?

Individual Dimension

Next, we want to look at our team as individuals. Consider your individual team members and answer the following question for each of them, also on a scale from 1-10. If more valuable, note what they did to achieve that, using the choices listed below.

    Is this person more or less valuable to the business this year?
    A. Taking training
    B. Skill development
    C. Extra work or effort to ministry goals
    D. New innovations
    E. More dependable or loyal
    F. More input
    G. Attitude improvement
    H. Other

Now that you have evaluated their added value, now it is time to rate your role in that added value. Answer the following “How” question for each individual on your team, on a scale of 1-10. Then answer the “What” portion of the question with the choices listed below.

    How and what have I done to facilitate their added value this year?
    A. Personal encouragement
    B. Modeling / mentoring
    C. Recognition
    D. Rewards
    E. Training
    F. Other

Finally, we will take a look at how your individual team members are doing at developing their own team members or direct reports. Using the same scale from 1-10, score each individual member of your team on the following question. Again, note the “How” using the choices below.

    Is my staff adding value by developing their direct reports?
    A. Personal encouragement
    B. Modeling / mentoring
    C. Recognition
    D. Rewards
    E. Training
    F. Other

That is all there is to the actual evaluation of your Team Value Added. Obviously, the next step in this process is to take your scores and look for the opportunities to improve. Congratulate yourself and your team on your areas of strength and continue to work hard there. At the same time, take the steps necessary to bring your lower scores up over the next year. With intentional planning, you should be able to see significant progress!

[box]Email me HERE for a sample TVA Assessment document.[/box]

How did you and your team do?

What were your strengths? Your weaknesses?

What is the next step you need to take to improve?

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Added Value: A Good Measure Of Your Performance?

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As the owner or leader in your business, one of your main functions is to create added value in the organization. How do you measure your performance in this area?

If you are in corporate America, there are a number of metrics that analysts use to gauge your performance. If you are in a small business or non-profit organization, these metrics are likely different. Being a Christian business owner or leader adds a twist to this issue.

added value

Perspective

Adding value to your business can be defined differently, depending on your perspective. We are going to look at this method from the perspective of a Christian business owner or leader.

The C12 Group has a model for measuring this added value in the Christian business. However, the main difference between the C12 model and almost all other models is the perspective. While most businesses measure success or performance on a monthly, quarterly, or annual basis, the C12 model is very different.

Tri-Value Model

In stark contrast to most other business added value models, C12’s Tri-Value model considers the eternal perspective. Rather than judging a business’ leadership based on short-term performance only, this model takes a more balanced approach. The Tri-Value model is certainly not the final word on measuring performance. Instead, it is designed as a tool to keep us focused on the truly important areas of our jobs as well as to facilitate accountability in those areas.

In this post, I will give you a brief overview of this model. In the following three posts, we will look at each of the three components in more detail.

added value

Overview

The first component of the Tri-Value model is Team Value Added (TVA). This measurement deals with how well we are creating added value within the team of people that work in our company. There are two main categories in TVA. The first looks at how well the team is operating as a whole. The second category considers the development of the individuals on the team.

The second component is Economic Value Added (EVA). EVA measures whether the business is worth more in solid equity from year to year. It is a simple formula that helps us determine if we are adding to our company’s value or spending it.

Finally, the third component of the Tri-Value model is Spiritual Value Added (SVA). If we are truly looking at our company from an eternal perspective, and I cannot think of a single good reason why we would not, then this is our most important measurement. SVA attempts to measure the eternal fruit our company is producing.

Disclaimer

Please do not think that I am saying that all performance can be measured with numbers. Nor can we quantify all spiritual aspects of ministry in business. That is simply not possible. There are some aspects of business success that are impossible to put into a formula. Certainly, the Holy Spirit works in ways we cannot even understand, much less measure!

Instead, this type of model is intended to be a tool to elicit discussion and create conversation around our performance as it compares to our vision. The Tri-Value model should be used as a part of an ongoing planning and assessment process in your leadership of the business. If so, it can provide clear accountability for your leadership while helping you to remain true to your eternal vision.

Make sure to follow along all week as we break this model down into its components and look at how to use it!

What tools are you currently using to measure your performance in your business?

Do you feel these tools are effective at gauging your performance from the eternal perspective?

What benefits do you see in the Tri-Value model?