The financial benefits of hiring full-time Scrum Masters
A Scrum Master has a manager-level position’s accountability, scope, and responsibilities. Here is a rundown:
- Removes impediments, minimizes distractions, enhances emergent planning and feedback loops, upholds quality standards, eliminates barriers to efficiency and effectiveness, and does whatever else is required to keep the team’s concentration on getting their work done.
- Facilitates effective events, choices, and actions that maintain the team’s focus on daily obligations and committed objectives like Sprint and Product Goals.
- Coaches and trains team members and stakeholders in the Scrum principles and practices, assisting individuals and teams in avoiding mistakes and maximizing the value of their past experiences.
- Increases psychological safety in teams by creating team agreements, using conflict resolution methods, and frequent coaching sessions to improve psychological safety in teams, fostering innovation by reducing the fear of failure.
If you haven’t read the official accountabilities of how the Scrum Master is expected to serve the Scrum Team, you should. ScrumGuides.org
For our estimates below, we used the average US salary of a Scrum Master at $120K, an average Developer salary of $100K, and a Scrum Team size of 10.
The price of inadequate facilitation. The multiple Scrum events, such as Sprint Planning, should be shorter. Planning two weeks of work requires six to eight hours rather than the maximum four hours that is advised. This is just one example — consider the real possibility of multiple Scrum events happening without the clarity of purpose a Scrum Master brings. It would not be easy to quantify the actual value of solid facilitation. Without it, what issues could be exposed sooner, and what opportunities to adapt are missed?
- Since a team often consists of a variety of responsibilities, let’s use a blended cost of $100 per hour for a US team. It costs about $1,000 per hour to hold ineffective meetings as opposed to purposeful planning events.
- A conservative estimate would be that a Scrum Master saves 4 hours monthly by facilitating efficient, purposeful events.
- The cost of poor facilitation over a year: $4,000 * 12 months = $48,000
The price of delayed decisions. The Developers must choose how to carry out the task, but they first require guidance on how to proceed. There may be a variety of causes. The Product Owner has not sufficiently polished the work to be “ready” for planning. The group hasn’t had an opportunity to discuss design and solution alternatives. The squad is reliant on an unavailable expert.
- Decision latency is the time it takes someone to make a decision in response to a change or query. When decision-makers are absent from the room, this really affects the bottom line. Decision Latency costs the typical initiative tracked by the Standish Group over six figures. Each average decision lag costs the initiative $200.(https://www.standishgroup.com/news/37)
- We feel we can safely assume the Scrum Master helps the team make, at minimum, one timely decision each day to continue working.
- $200 * 20 decisions * 12 months = $48,000
The cost of burnout or unsustainable pace. The Product Owner cannot confidently make release projections, which results in missed deadlines or requests that teams put in extra time to fulfill a committed deadline. The Product Owner must be taught how to forecast likely release dates based on empirical evidence (data) by the Scrum Master. The ‘cost’ of missed deadlines brought on by a Product Owner’s incapacity to foresee could have difficult-to-quantify financial effects. Missed deadlines can incur payouts or costs. Another negative economic effect is opportunity cost.
- Mandatory overtime to meet deadlines will frequently surface as a negative in retrospectives and Exit Interviews, illuminating how imposing teams into untenable situations can increase attrition. Let’s utilize attrition as one method to think about the cost of a Scrum Master.
- For technical roles, the average cost of attrition is 150% of the wage (https://builtin.com/recruiting/cost-of-turnover). Using a developer’s average pay of $100,000, that could mean $150,000.
- It makes sense to think that having someone in a position to raise morale and who is passionate about doing so would reduce attrition. We feel a skilled Scrum Master might influence a person’s decision to stay versus resigning by 25%, or $37,500.
Here are a few additional things to think about:
The Money-Saving Advantages of Quality Improvement: “Teams that completely implement Scrum and, as a result, estimate the workload for their jobs produce work of a 250% higher caliber than teams who do not. They are able to dramatically lower their flaw density, which explains this. Teams without estimates, for instance, typically commit more than 20 errors, whereas Scrum teams commit less than 10. (The Impact of Agile: Quantified, available at https://docs.broadcom.com/doc/the-impact-of-agile-quantified).
- Assume that rework or support linked to defects might take up 15% of a team’s time.
- Assume that higher quality will result in a 10% reduction in rework costs.
- 10% of 15% of $100,000 x 10 team members equates to $15,000
Efficiency has Financial Benefits: According to industry statistics, a Scrum Master may increase a Scrum Team’s productivity by 15% to 20%.
- Let’s estimate a 15% rise to be conservative.
- 15% of $100,000 x 10 translates to an annual productivity gain of $150,000.
The Financial Benefits of Risk Management: Even if the Scrum Master can only avoid 5% of the costs, the savings would still be significant.
- If a release costs $500,000 to develop, that equates to $25,000
The Money-Saving Advantages of Customer Satisfaction: Though it can be challenging to measure, let’s assume that our Scrum Master’s dedication to ensuring quality standards are upheld results in better products, which results in a 1% rise in sales. On a base of $10,000,000, that’s an increase of $100,000.In summary: We calculate the annual compensation of a Scrum Master in the US to be roughly $120,000 on average. These are, of course, estimates. (More studies should be devoted to the impact of Scrum Masters based on empirical data.) According to these projections, the potential annual financial benefit of the Scrum Master far exceeds their pay. Your estimates and outcomes may differ, so you can choose the scenarios that are meaningful to you. But the results are clear, hiring a Professional Scrum Master is good business.
Can a Scrum Master serve several teams at once?
If your team is experienced, a person with a second job can try managing a Scrum Master’s daily tasks. If you wish to try it as an experiment, make it evident that it will only be temporary because only some people are successful in this capacity. People who have performed this dual function have reported feeling burned out in such circumstances.
Can a Scrum Master serve in a dual capacity (such as a developer) on the team?
If your team is experienced, a person with a second job can try managing a Scrum Master’s daily tasks. If you wish to try it as an experiment, be sure to make it evident that it will only be temporary because very few people are successful in this capacity. People who have performed this dual function have personally reported feeling burned out in such circumstances.Being a dual-role Scrum Master is challenging since the individual will feel conflicted about doing both of their “jobs.” Do they finish the work they were specifically engaged to perform, or do they forego it in favor of coaching that obstinate stakeholder, securing approvals for an upgrade, or helping the team plan for events? The team suffers from the inefficiency of context switching or sitting idle when they run across roadblocks instead of having a readily available Scrum Master resolve issues that could be dealt with at the moment. As a Scrum Master working for the Scrum Team, their priority is to foster an atmosphere that will support the team’s success by promoting efficient problem-solving and group decision-making. This may be in opposition to a developer’s intention, who actively chooses how to proceed. Additionally, the team may become very confused as a result.In this scenario, an Agile coach could assist teams that have a dual-role Scrum Master and provide support to help the team mature their agility. If you don’t have a mature team, they will need an Agile-Lean expert to coach them. In short, putting someone in a dual role could create multiple problems and make it difficult for a person to thrive in either.
Can a person fill both the Scrum Master and the Product Owner roles?
If any two roles on the team directly conflict with each other, it is the Scrum Master and the Product Owner. What would happen if the coach and the referee were the same person, to use a sports analogy? There would be mayhem! Scrum is designed to be full of dynamic tension. The Scrum Master wants quick feedback loops and highly motivated team members. The product owner wants to satisfy their customer. Consider what it costs your team in getting things done, the primary objective of Scrum, if there isn’t that “friendly” tension between the various responsibilities.
How can a Scrum Master’s performance be evaluated?
If a Scrum Master is doing their job successfully, the benefits mentioned above (better facilitation, quicker decisions, reduced burnout, higher quality, increase in productivity, etc.) should be evident in the teams they are supporting. High-performing teams become more autonomous, agile, and effective, measured by observing teamwork, self-management, and initiative, gauging invention, and keeping track of psychological safety. Project Aristotle
Agile coaching and Scrum Mastering are relatively new careers. Many Scrum Masters are in the interesting situation of fulfilling a role that didn’t exist when they were born. A few business associations that have invested in coaching initiatives have created an annual survey and report to gauge the effectiveness of coaching and shed light on the advantages agile coaches can offer businesses. “What is the value of an agile coach?” is one of the main issues this study aims to address. They discovered that 98% of respondents said that coaching had a discernible effect on the company. Among the splits are 32% Culture Impact, 12% Delivery Improvements, and 9% Process Improvements. State of Agile Coaching Report
Going back to the original question, consider reframing it. Perhaps it’s not about justifying a Scrum Master. Scrum is merely one framework. The more significant argument is whether or not you should hire a committed individual who is enthusiastic about mentoring agility processes, methodologies, and continuous improvement in the context of your business. A person who drives delivery and is committed to improving the team’s morale and effectiveness. Who in your business should be responsible for these changes in the absence of Scrum Masters? What are the possibilities that these improvements will occur if no one is specifically responsible for them?