PUTTING A COST ON YOUR TIME
One way of deciding whether or not you should be doing a particular task is to calculate it’s monetary cost. You can do this by completing the calculation below:
Annual salary = £
Regular bonus or commissions received = £
Add 20% of net salary to cover contributions = £
Add 100% of basic salary to cover overheads (office space, light, heat, phone, travel, secretarial, administrative assistance, etc. = £
Total annual cost to company = £
Now divide that total by 230 (the average number of days worked per year) = £
Finally divide the result by the average number of hours you work each day.
The result shows the hourly cost to your company of each activity you undertake.
Total hourly cost = £
Actually, this is almost certainly an underestimate since nobody can be fully productive for every minute of every working day. Putting numbers to the calculation enables you to decide whether any task is economically viable (there may of course be other reasons for wanting or needing to spend time on certain activities).
Another way of looking at the equation, which applies in many service industries, is to take not what you are paid but what clients will be billed for your services. This can make a startling difference to the equation!
Knowing what your time is worth – and most managers underestimate this cost – puts a price tag on activities, such as attending meetings, driving across town to solve a client’s problems, socialising over the phone, chatting with colleagues around the coffee machine, answering letters and so on. Such knowledge enables you to be more time efficient by becoming more cost efficient. For example through discovering new ways of completing a task more rapidly.