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A Message to Production Agency Executives

by Mike Ricotta - September 27, 2016

It costs more for you to over-manage operations than incentivize talent.

  • Installation, licensing, and training for Time Tracking and Project Timeline Management tools, check!
  • Human and technical resources for monitoring employees clocking in, PTO, and daily break times, check!
  • Salaries for COO/Operations Directors and internal team, check!
  • Dozens of hours spent in reviewing and revising reporting tools, check!
  • Directors meetings to discuss quotas and analyze efficiency metrics, check!
  • We get it, you’re concerned with your salaried investments and you want to make sure you’re getting a positive return. Unfortunately, the way you’re going about validating your mistrust for your employees is costly in so many ways that it begs the question why you’re even running a business. You’re probably spending probably 1/5 of your salary budget on internal resources and management in order to support the 4/5 production staff. Factoring in the (lowball 10%) internal efforts that production is spending to assist in implementing your new and changing systems, training time (minimum 10%-20%), and the unavoidable overhead (let’s call it another 10%) in having to work within these systems through every step of the way, you’ve successfully managed to pay 1/5 of your staff to find a way to reduce your productivity by 30-40%, in an effort to be certain that they’re actually “doing stuff” other than youtube and reddit. Averaging that out, your management tactics are now costing you 48% on actions that do not produce anything of value. That’s just the salary and sweat value, so let’s round that off to 50% after considering the costs of your licenses and support.

    Great, so now you’ve spent 1/2 of your budget trying to make sure that 4/5 of your people are doing at least a 65% production work, for a full 100% effort work day. Over-management is a wonderful way of straining morale and losing employees and turnover is extremely costly, you can pretty much say goodbye to your production value. Let’s assume that you live in some vacuum where you run a company of emotionless robots whose only interest is wasting your time, who have no concern for their own well being, and who work through their lunch breaks every day for an exact 100% efficient productivity rate. In this utopia, you’re still only producing value 50% of the time. Consider asking yourself something:

    • If you employed only the minimum required internal staff (bookkeeping, HR, etc), what would that cost you in comparison?
      We’ll give you the benefit of the doubt and say that you need half those people for the minimum required staff (HR Director, Bookkeeper, etc), for roughly 1/10 of your salaries. We’ll even make that 1/8, ’cause we know you’ve gotta pay yourself the big bucks! Even with this extraordinarily conservative estimate, you’ve got 3/8 of your salaries freed up. Well… now who’s going to make sure these people aren’t just watching Netflix all day!? Guess what, buddy, your previous tactics were only earning you a 50% production value, in a vacuum, whereas now you have a 62.5% production capacity, a difference of 12.5 points or, in comparison to your previous production value, a 25% increase in capacity… your people could literally watch a 2 hour movie every single day, during work hours, and you would end up with the same level of efficiency. That’s ~250 movies, or for film buffs… everything Disney has produced since January 2004!
    • What would it cost you to incentivize production workers to keep themselves productive?
      Production worker incentives!? What is this, socialism!? The cake is for the top-earners, they’re incentivized to bring in sales with their fat bonuses and commissions, duuuuh. Get off it for a second and thing about how little this would actually cost you. Even in this vacuum, where nobody quits or takes breaks, you can afford to offer your production workers 25% of their salaries in incentives. So consider this… do you think that someone would be happy to police their own timelines and productivity if they knew that there was a 10% bonus for them at the end of the road? That’s a pretty healthy slice of pie and guess what… it keeps morale up and costs you quite a bit less than paying for all the police, yourself

    So, what have we learned? If you don’t trust your workers to be concerned for your bottom line, trust that they’re concerned with their own, and play into that. Stop concerning yourself with policing your production workers with overreach and quotas and give them a reason to want to do it, themselves. You’ll save everyone a ton of time, you’ll save yourself a ton of money, and you can go on that vacation that you had always intended to… Isn’t that why you started this business in the first place? ;)