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The Hidden Costs of Meetings

Work-life balance is in the top three must-haves job seekers ask us for in their next company. Professionals whose life is out of balance are “living to work” vs. “working to live” and it is a big driver in employee turnover. Even the most engaged employees will leave a company if it is too far out of alignment with their expectations.

The work-life imbalance is seen as a lack of time to meet the workload and still produce quality work. In most cases, the root cause is not a shortage of time, but a shortage of productive time…and one of the biggest time-sucks in a work week is unproductive meetings. Many job seekers have told us they suffer through 40+ hours of meetings (or their diabolical cousin, the conference call) each week. The time to do their actual job comes out of their personal time – mornings, evenings and weekends. The casualties are personal health, fitness, relationships, morale and productivity.

Effective & productive meetings have many positive benefits, from collective problem-solving, mission alignment, situational awareness, & team cohesion. However, most meetings are not run efficiently. They start with little to no agenda or goals, lack discipline, stray into sidebar conversations, involve too many or the wrong people, and can quickly drag down an organization. The problem compounds if a meeting gets embedded as a recurring meeting (aka meeting for the sake of meeting).

We’ve all been there. Perhaps it’s that weekly meeting that always devolves into gets side-issues and takes an hour longer than necessary. Maybe it’s the monthly conference call that NEVER starts on time where the entire team stands by for an hour and a half while they “run through the numbers.” Maybe it’s the “pre-meetings” – the meeting to discuss what is going to be discussed at the next meeting. Maybe it’s plowing through a meeting despite key decision makers not attending – resulting in no actionable results.

So how did we come to have so many meetings? Meetings are a result of managers trying to keep tabs on employees, customers, and projects, and communicate to their employees. After all, communication is key to the success of an organization – and meetings can bring situational awareness that is critical to the operation of a business.

By how did they get to be so unproductive? Most managers receive very little training on running an effective meeting. Most managers quite simply never do the math.

The Direct Costs

To know this, managers need to do a cost-benefit analysis of the direct and indirect costs of having a meeting vs. the perceived or actual benefit. Knowing that the meter is running will encourage managers to run meetings more efficiently and effectively.

Here is a way to calculate the direct costs:

Start with an employee’s hourly rate:

Annual compensation (base + average bonus + any long-term incentives) and divide by 2080 (40 hours a week for 52 weeks, assuming your company has paid time off).

Then multiply:

Hourly rate of each employee participating X employees X length of meeting

Let’s do a hypothetical exercise with an engineering team. To simplify, we will factor in only the direct cost and not any indirect or opportunity costs of what they could be doing with their time. We’ll address that later.

The Exercise:

The Director of Engineering holds a daily meeting where each project her team is working on is reviewed and updated. They gather in the company conference room, and anyone absent dials in to a speaker phone. It normally takes an hour and a half and often a specific project or two gets discussed in depth as to any issues or next steps. Her goal is to have situational awareness of everything everybody is doing. She leaves that meeting to head into the company leadership team meeting immediately following his team meeting. She has two managers who have a total of nine engineers (two senior, four engineers, three junior engineers) as well as two coordinators and an admin. Most days they rehash the same projects. There is incremental progress from the day before.

Let’s do the math:

Director of Engineering, $160,000 annually, $77/hour

Engineering Managers, $120,000 annually, $58/hour

Sr. Engineers, $110,000 annually, $53/hour

Engineers, $92,000 annually, $44/hour

Junior Engineers, $73,000 annually, $35/hour

Admin/Coordinators, $52,000, $25/hour

The hourly rate for the whole team:

$77 + (2 x 58) + (2 x 53) + (3 x 44) + (3 x 35) + (3 x 25) = $495

The daily rate is $742.50

The weekly rate is $3712.50.

The annual cost of that meeting is $186,625 (assuming they take two weeks off somewhere in the calendar).

This is just one meeting for one team in the company. Multiplied across the enterprise, meetings could be costing millions in direct costs. If the meetings are productive and save millions in mistakes or inefficiency, then it is a worthwhile investment. Most likely, that is not the case.

The other cost of unproductive meetings to consider is the opportunity cost (what else your employees could be doing with their time). This could mean millions of dollars more in lost revenue and costs.

Here is an example of opportunity costs:

A company has a sales force of 200 outside sales reps and managers. Collectively, they are on the hook for $150M in revenue for their company. That's an average of $750,000 in revenue per person. For the sake of the exercise, we’ll use the average, knowing that some sales reps will sell more than others. From a revenue-generating perspective, the hourly rate is $361 per person. Therefore, the hourly rate of the team is $72,115.

Every month, the SVP of sales hosts a national webinar for an hour that is part infomercial, part motivational speech, and lottery drawing (this month’s winner of an iPad!). They run through every region’s numbers, highlight the top sales reps, discuss any promotions or changes. To accommodate the West Coast the WebEx is usually scheduled mid-day on the East Coast. Most of the sales teams will take the call from a conference room (to make sure they pay attention, theoretically). It's maybe four minutes of meaningful content beyond what could not be covered in an email spread over an hour during prime selling hours.

Annual cost of the monthly webinar, in terms of lost revenue: $856,380.

The opportunity costs from too many unproductive meetings can come in several forms – employees working longer hours (and costing overtime if paid hourly) to get their work done will eventually see their productivity, morale, and engagement fall. Another likely result is the work just does not get done. Maybe the sales team makes less sales calls, or that customer service problem doesn’t get addressed. Maybe that coaching session with a new employee doesn’t happen.

Meetings that are executed well and with discipline are critical to having a team perform optimally. They can increase teamwork, situational awareness, and free up bandwidth to get more work done or tackle more complex problems. They can also boost morale and engagement.

Some non-routine forms of meetings are also value-added and worth the investment in time. For example: training, safety stand-downs, or strategy meetings can all pay dividends.

If you are a manager, it’s important to approach meetings holistically with their team – your hour-long team meeting might not seem like a lot in the span of a 40-hour workweek, but that might be one of dozens of meetings on their calendar that week. Most high-performers are guilty of “just dealing with it” – they find out ways to get the work done, at the expense of all else. An effective manager will husband their time just as much as their own.

For yourself, do not be afraid to take charge of your calendar – block out time to be productive, and don’t vary from it if you can help it. We’ll explore more on this topic in a future blog post.

So how do you execute meetings well? That’s a whole other topic, and there are shelves of books on the subject but one of my favorites is the aptly named “Death by Meeting” by Patrick Lencioni. In parable form, Mr. Lencioni lays out the optimal way to have meetings in the workplace. It would be a good gift to any manager or even for your boss (if done in a tactful way).

Another tool you can try is a Meeting Cost Estimator app from Harvard Business Review. You can find on IOS here and Android here. If a manager is sensitive to the meter running during a meeting, they’ll be more likely to pursue brevity.

Another best practice, some companies have instituted a “meeting-free Friday” policy to allow people to get stuff done before heading into the weekend.

As soon as leaders realize that time is a finite and very precious resource the better a company will perform.

Thanks for reading! If you enjoyed this post, consider sharing with your network and subscribing to our content. If you have strategies to keep your meetings on point, or disasters of your own you’d like to share, we’d like to hear from you!

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