In many of the Jira Align advisory service engagements, we get a question similar to the one mentioned in the headline of this article. The short answer has two parts and is:
"It depends, from a technical solution point of view. You should, from a ways of working point of view."
Before I dive deeper into the 2 parts of the answer, I would like to explore what I am talking about when I talk about normalizing estimation.
Jira Align asks for some prerequisites concerning team level estimation to make financial calculations and capacity planning work which boil down to “Stories need to have story points.” Dive deeper into the details in the Jira Align knowledge base.
All Scrum teams estimating with (story) points do not need to normalize on estimation - from a technical point of view. Jira Align can handle different point estimation patterns. The team spend per point is normalized and averaged on the program level. The following graphic shows this nicely - for an example with different spend per point on the individual team levels which could be caused by different estimation patterns. This applies to all other estimation scenarios described below.
Picture: How is the program spend per point calculated? - From the Jira Align knowledge base
For all Scrum teams estimating with T-shirt sizes or similar other estimation concepts, the t-shirt sizes need to be converted into story points in Jira so that the story points can be synchronized with Jira Align. Technically, this solution could be realized manually or for example with a scripted workflow transition post function (a capability which is added to Jira by Apps in the Atlassian Marketplace, Atlassian solutions partners could help with the implementation). From my perspective, this solution and other solutions which come to mind would become very hard to support if the conversation would be different for individual teams, so this aspect might create the need for some normalized estimation across teams.
All Scrum teams which do not estimate (deliberately) and all Kanban teams - which do not estimate by nature, need to normalize the story size of the stories they work on and a standard story point value needs to be populated. This means that those teams do not necessarily have to normalize estimation across teams as well.
No matter if you decide on story point estimation or t-shirt-sizing of stories with roughly aligning on what individual estimation values mean or normalization of stories with no further estimation, this effort will entail benefits for the respective organization.
Note that stable teams - by many thought leader in the agile community called "the foundation of agility @ scale" - support normalizing estimation efforts substantially. Normalizing estimation on a team level successfully requires a team to train the estimation muscle together over several iterations. If a team is constantly busy with integrating new members and adjourning leaving members it is very hard to work on this capability sustainably.
Got any thoughts on normalization of estimation? Let's discuss!