Saturday, September 20, 2014

Do Your Employees Understand the Value of Time?

The other day, I was discussing a project with someone and making recommendations on how it
could be executed more efficiently to save time and money. Following my recommendations, the other party replied “We’re salaried. We are getting paid to be here [at work]. So, it doesn't matter how we get to the end result because the [salary] costs are the same either way.” I just stared that the person in disbelief for what seemed like forever and all that could come out of my mouth was “are you serious?”

Over the years, I have seen so many examples of inefficiency, disorganization, and lack of communication resulting in wasted time and duplicated effort. But, before this I never understood why it happened. This was the first time anyone has so blatantly explained their view of how business costs apply to the individual contributor’s time and effort. So, I thought it may be valuable to explain my views on the value of time.  

First, just about everything in business should be seen as a project. That may not seem obvious. You may think that a project should have a defined start and end date and many business operations seem perpetual. For example, sales operations are perpetual, right? You keep selling – there is no start or end date, right? Wrong. For the individual sales rep, the start date begins when you engage the prospect and ends when you close the deal. A new project (customer retention and or up-selling) begins when that prospect becomes a customer and ends when the customer stops using your product/service. The same project thinking holds true for the overall company sales operations in that each month or quarter or year (depending on your goals) is a project. Now, your turn. Think about any operation in your organization and find where the project begins and ends. Everything is a project.

The beauty of project-ifying (I think I made that word up) operations is that you can now begin to think in terms of project management and I love project management methodology. In project management tasks are associated with defined times, budget, and goals. For example, task A is expected to require 8 hours of an employee’s time and produce X result. 8 hours times the employee’s hourly rate (for salaried employees: annual salary times 20% for employment costs and benefits - divided by 52 weeks in a year - divided by 40 hours in a week) is the cost of the task.  So, for an employee making $25 per hour, an 8 hour task costs $200. What if that task could be completed in 2.5 hours if it was done more efficiently? That would save you $137.50. What if the task could be outsourced for half the cost without losing quality? Or, what if the task could be eliminated entirely?

Beyond the costs, project-ifying operations forces goals and results measurement. In the text above, 8 hours of work was expected to result in X. Did it achieve the desired result? What is the return on investment of the task when one compares the result to the cost?

Now, understand that I am not proposing that you create detailed project plans for every minute detail of operations. This is just a good way to think about operations, efficiency, and how costs apply to individual contributor’s efforts. Still, you may not be sold. The employee is still a full time employee and thereby still going to be paid regardless. Same costs, right? Wrong!

Now, think about opportunity cost. When an employee is working on task or project A – they are not dedicating time to task or project B thereby the employee may be wasting the company’s money if either task/project is not efficient, necessary, or has a poor ROI.  

I think that every employee needs to understand this concept. It is not acceptable for an individual contributor to be ignorant of the fact that their time directly impacts the bottom line. The best thing a manager can do to teach employees this lesson and improve productivity is to provide formal project management training as the relationship between tasks and budget is a main focus of project management.

In addition to understanding the relationship between tasks and budget, project management also helps employees to think, plan, and work more efficiently as they are forced to break larger projects down to the task level rather than jumping in head first. Once a project is broken down into tasks, the employee can see the steps required to accomplish the project more clearly and it becomes possible to reorganize disparate tasks in a more logical or efficient order, identify duplicated efforts, and eliminate unnecessary steps. 


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