If everyone agrees that time is money, why do we act as if corporate time was unlimited?
“Time is money” is a concept everyone understands and we all get annoyed when someone else is wasting it. Just think back to the last time you were stuck in traffic or had to endure this:
Why is it then that, in business, we are not always mindful about each other’s time? Meetings creep onto the calendar with no clear reason, priority or agenda. Suddenly it seems that everything demands your attention. Andy Grove, legendary Chairman and CEO of Intel, wrote:
Just as you would not permit a fellow employee to steal a piece of office equipment worth $2,000, you shouldn’t let anyone walk away with the time of his fellow managers.
Such time thievery happens every day, often unintentionally. Today entry level managers spend more than 50% of their working time in meetings (>24h a week). Yet research from Bain and Company shows that two out of three meetings run out of time before participants can make important decisions. We seem to forget quite often that our time, and the time of our colleagues, is limited.
So why do we go nuts when queuing in the supermarket for 5 minutes but routinely sit through 24+ hours of meetings every week?
The cost of your weekly team meeting
The unlimited time paradox gets even more fascinating when we apply a business case logic to it. While organizations have detailed procedures in place to approve a EUR 100 airplane ticket for employees, hardly anyone thinks about the real financial cost of a meeting. We act as if time is an unlimited resource. Let’s take a typical weekly team meeting with a Product Lead, Engineering Lead, three Project Managers and six team members. Assuming a two hours meeting every week, here’s what you could have gotten as well:
|Time unit||Meeting costs [EUR]||Equivalents|
|Second||0.3||Calling your customer|
|Hour||1,190||10 flights Berlin to Munich|
|1 Meeting||2,381||Monthly salary of assistant|
|Month||9,524||Monthly leasing of 10 Tesla Model S|
|Year||114,286||1 additional team member|
Assumptions: Salaries are for illustrative purposes only. Total hours worked per year (for Germany): 1.680 hours, 52 weeks per year. Salaries assumption (Fully loaded costs for employer): Lead = EUR 320.000, PM = EUR 160.000, Team members = EUR 120.000
While you need to go through a rigorous process to get your EUR 100 airplane ticket approved – how diligently did you approve the EUR 114,285 spend for your weekly team meeting?
Please note that these numbers are still on the conservative side as we do not consider opportunity costs. Given that two out of three meetings end without important decisions being taken, what is the value meeting participants could have created for the company instead of sitting through all these meetings?
Applied to our example from above, not only do we burn EUR 2,381 a week mostly without taking any decisions, but we create additional costs for follow-up meetings. Most importantly, we delay decisions. As more and more meetings clog up your calendar, cycle times for decisions inevitably rise. When was your last meeting that ended like this:
“Unfortunately we couldn’t reach a decision today, but we’ll continue the discussion in the next available slot in two weeks from now…”
Two weeks? Wait, Google decided to buy YouTube in 10 days!
Learning from the best: How Google decided to buy YouTube in 10 days
In a recent interview, Alphabet’s Executive Chairman Eric Schmidt revealed Google’s focus on efficiency when it comes to decision making:
I cannot tell you how many people have told me that at Google decisions are made quickly in almost every case, even at our current scale (…). Most large corporations have too many lawyers, too many decision-makers, unclear owners, and things congeal, they occur very slowly.
Schmidt noted that even when Google chose to acquire YouTube in a EUR 1.4 billion deal back in 2006, the decision process took only about 10 days. Schmidt explained:
At Google, it’s clear whose responsibilities are what, and decisions don’t get caught in bureaucratic limbo.
In our next blogs, we will talk about measures to improve and speed up organizational decision-making to reach Google-like speed. If you find that interesting, please sign up to get notified when new content is available:
We would love to hear if you encounter similar problems with decision-making in your organization: over-analyzing, involving too many stakeholders and unclear responsibilities, decision drift.
Thanks for reading!