The Cost of Doing Nothing
“Thanks but no thanks. We are going to wait on automating that process.” My heart sank. With those words, my client turned down a project which would make her job much easier and save her company thousands of dollars. You see, I wasn’t sad I’d lost a sale but that this client was going to continue down the unproductive road they were on, in a car filled with unhappy employees.
Let me set the stage for you. Fixating on short-term costs can cost you long-term savings (and let’s not forget dissatisfied employees). Some time ago, I was helping a client fix a spreadsheet that tracked advertising promotions effectiveness. Things were going well and during a break one of the managers approached me. She asked if I could talk with her about another issue that the company wanted addressed.
When I got to her office I could see she was busy. Papers all over the office; files piled high on the floors and any available ledge space. Clearing off a chair, she had me sit down to explain the issue. She showed me another spreadsheet, which was used to calculate commissions. As she walked me through the process, it was quickly apparent that this was a very complicated and time-consuming task, with most of the work done manually.
She Locked Herself Away for Three Days!
Part of the problem was that information had to be exported from QuickBooks and then changes had to be made to make it even usable. Additionally, the CFO then needed to lock herself away for three full days - each month - to make sure the information was imported correctly, any errors removed, and it was formatted for presentation.
Think about that, this CFO was spending three full days a month doing nothing but data entry. A textbook case of unprofitable and unproductive work, if ever there was one. Her company is spending three 8-hour workdays a month (288 hours a year) for one of their key members to do data input work. The CFO is responsible for managing the company's finances not doing data input.
288 Hours Lost to Unprofitable Work
Let’s work with the numbers a bit. How much is 288 hours of unproductive and unprofitable work costing the company!?!? Making some conservative assumptions we will try to calculate the cost to the company. Suppose the manager was making $70,000 a year. I suspect she made more than this but I want to be conservative. Assuming, $70,000 per year in salary, the lost time comes out to roughly $10,000 per year. Now times that over 5 years. 10 years. You get the picture. That amounts to real money lost!
Not only that it doesn’t even count the intangible costs of stress and frustration felt by the CFO over those three days per month, not to mention the employees whose pay is based on this spreadsheet where a mistake could mean a missed car or mortgage payment.
They Chose to Wait
Now, you can see why I was disappointed, all of this unproductive work could be done by a computer. Automating the commission process would save them time and money (as well as sanity). Unfortunately, even knowing this and that the project would pay for itself in the first year, they chose to wait.
Don’t Make This Mistake
The cost of letting ineffective and inefficient processes strain your company’s resources can be material. So take a look around with your team and identify those manual time and resource wasting processes. Better yet, call or email me to conduct an assessment. I can help you identify your unproductive and unprofitable work and turn it over to your computers, freeing your resources to grow your business.
*Here’s how I came up with that figure: $70,000 divided by 260 days (5 days x 52 weeks) equals $269 wages per day then times 36 days (3 days a month x 12 months).