Do You Know What You Cost?

One of the most interesting kinds of discussions I have with customers often veins with a discussion on third-party management tools. Companies are obviously loathe to spend unnecessary money – I get that. So when an admin comes along asking for a tool – whether it’s a simple $300 tool or a $20/seat “solution” – there’s obviously a lot of scrutiny. A lot of organizations often rely on administrators to build their own tools – something technologies like PowerShell are making easier to do.
Most organizations often come down on the side of “do it yourself.” I can understand why: you’re already paying the person’s salary, so that’s a sunk cost, so why not get more work out of them? A tool will cost more money. Many tools have annual maintenance costs – it’s like hiring a new person!
The problem is that very few employees or employers spend much time actually costing our their employees. “Time is money,” for sure, but nobody appears to own a calculate capable of figuring out how much time equals how much money.
For example, let’s suppose you make $75,000 a year. In most parts of the US, that means your total labor cost is about $85,500, including benefits and employer’s share of your payroll taxes. The average US employee works 46-48 weeks per year (less traditional holidays, paid vacation, and sick time), and nominally can expect to work around 45 hours a week. That’s about 2,025 hours a year, meaning you’d cost the company about $42 an hour.
Figuring out your overhead cost is easy. Assigning that to actual production effort, not so much. Almost every organization I go into has a help desk ticket tracking system; almost nobody uses it effectively. In theory, I should be able to look at a task like “reset user password,” see that it takes you 10 minutes per incident, and see that you do it an average of 40 times a week. At $0.70 per minute, that’s $329 a week spent on password resets, or about $17,108 a year. If you have two people doing about that workload, it’s close to $35,000 a year. If a self-service password reset solution costs less than that on an annual basis, you buy the solution. It’s cheaper.
Lacking a properly used help desk ticket system (and why do we buy these things if we’re not going to use them correctly?), it’s really tough to assign hard hours to tasks. That means you, the employee, need to do some time tracking on your own. If you ever expect the boss to say “yes” to a tool or solution to make your job easier, you need to be able to show a compelling financial picture. You also need to be able to show that you could put your time to better use – which means you need to know where the “holes” are in your environment, like what projects aren’t getting worked due to lack of manpower.
In other words, if you tell the boss, “hey, I could save us 6.67 hours per week, or 347 hours a year, if we bought this tool,” the boss only cares about it if there’s something else for you to be doing with that now-free time. So you need to have some awareness about where that time would go, so that you can immediately follow up with, “and we know we’re going to need about 500 hours to get that such-and-such done, so this would be a big hunk of that.” You become a solution.
Now… ok, this is going to sound a bit mean, but I want to present the perspective that some bosses have of their employees, in some organizations. Just to be fair – and understand that this isn’t some kind of broad accusation. But you and I both know that not everyone in every organization is delivering their full 2,000 hours of manpower every year. Extra smoke breaks. Longer lunches. Coming in a few minutes late, leaving a few minutes early. In some organizations, it’s perfectly acceptable – but for some managers, it’s a bit tough for them to buy off on an argument that would free up some of your time when, in their eyes, you’ve already got some free time to burn.
How an employee handles that depends very much on the employee, the employer, and the culture that’s grown up between them. My point, for this article, is more about whether or not you know how to accurately cost yourself, and whether or not – if needed – you could come up with costs for the work you perform. It’s a key business analyst function: looking for areas of expense and trying to reduce them. You can be an important part of that, and not incidentally help make your job a lot easier, if you know the right way to go about it.

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