Most companies manage capital budgets very carefully, but few apply the same rigor to organizational time. In a study of time budgeting at 17 large corporations, Bain & Company discovered that huge amounts of time – and money - were being squandered. Take meetings: Executives in the Bain study spent, on average, two full days every week attending meetings, and almost 80% of them were with members of their own department. That's time people weren't using to collaborate across functions and businesses or to build relationships with customers.
Communications overload also sucks up enormous amounts of organizational time, and the problem is only getting worse as new technologies emerge. As this chart shows, executives in the 1970s had about 1,000 external communications a year to deal with - mostly phone calls and telexs from people outside the company. With the rise of voicemail, communications quadrupled. With e-mail and virtual collaboration, the number jumped to about 30,000 communications a year - per person.
Endless e-mail chains, needless conference calls, countless unproductive meetings- the waste is staggering, and it takes a heavy toll. Organizations become slow and bureaucratic, employees feel frustrated or burned out, and performance suffers. But there's a solution. By managing time with the same discipline that you apply to budgeting and investing money, you'll save lots of both. Data suggests that most large companies have an opportunity to free up at least 20% of their collective hours.
Of course, managing your organization's scarcest resource is easier said than done. So let's look at eight practical ways that companies can attack the problem. First, set a clear and selective organizational agenda. Great leaders know which activities are essential for success, and they make sure everyone in the organization understands them as well. The same should go for time. Be crystal clear about how employees can use their time most productively- and about what practices, projects, or communications can be safely ignored or postponed.
Perhaps no other executive did this as effectively as Steve Jobs. Every year, he gathered Apple's 100 senior executives at an off-site retreat and pushed them to identify top priorities for the coming year. They competed intensely to get their ideas on the list. Then Jobs would take a marker and cross out most of them, announcing “We can only do a few.” That made clear to everyone what the company would- and would not- take on, and enabled Apple's leaders and employees to invest their time strategically.
The second way to manage time is to use zero-based budgeting- the financial tool that calls for developing operating capital budgets from scratch each year rather than taking the previous year's numbers as a starting point. Most companies understand the value of this approach in managing investments. The same practice can help you allocate organizational time. The goal is to treat time as fixed. New meetings should be funded by withdrawals from a “Meeting Bank.”
CEO Alan Mulally used this approach at Ford in 2006 when he realized that the company's senior executives were spending a lot of time in meetings. The top 35 executives, for example, assembled every month for “meetings week” -five days of discussions about programs and performance. Mulally asked his team to ruthlessly assess the efficiency and effectiveness of all regular meetings and became selective about requests for new ones. Treating time as a fixed resource freed up thousands of hours at Ford, lowering overhead costs at a time when rivals were seeking government bailouts.
The next practice- requiring business cases for projects -prevents “initiative creep.” Most large companies suffer from this: They keep adding projects, and few are formally terminated. Newmont Mining had this problem. When a new CEO took the helm in 2013, he found that 87 projects were under way, each demanding the time and attention of senior executives. So he required managers to develop a business case -and name an executive sponsor -for each one.
Those requirements had the desired effect. Many projects were discontinued simply because no one bothered to make a business case for them; others were rejected on their merits. After three months, Newmont had slashed the number of projects by one-third, allowing the organization to refocus its collective time on mine safety and efficiency. The next practice is to simplify the organization. We all know that adding layers between the CEO and frontline workers slows communication and decision making.
What's not generally recognized is that every additional supervisor adds costs well beyond that person's salary. Leaders should understand the true cost of hiring a manager, factoring in the support work they generate for subordinates. What exactly do extra layers add up to? Data show that hiring a junior manager means adding work equivalent to about a third of someone else's time. Most senior executives create work for more than four people including themselves.
Removing unnecessary layers in the hierarchy can free up an enormous amount of organizational time. The fifth practice tackles the problem of meetings head-on. Most companies have no restrictions on who can organize a meeting- and that can lead to a lot of waste. Leaders at one company discovered that a regularly scheduled meeting of midlevel managers was costing the organization $15 million a year. When asked who approved the meeting, the managers replied, “No one. Tom's assistant just sets it up.” In effect, a VP'S assistant was investing $15 million a year without supervision or authority.
That would never happen with the company's financial capital. Requiring approval naturally reduces meeting time. So does setting the default duration at 30 minutes instead of an hour and limiting the number of attendees. At one firm Bain studied, any meeting that went longer than 30 minutes or included more than seven people had to be approved by the boss of the organizer's boss -two levels up.
Those rules cut the company's time budget dramatically- by the equivalent of 200 full-time employees over a six-month period. The next practice addresses the problem of murky decision rights. Countless hours are wasted at most large companies coordinating across functions or navigating roadblocks. Leaders should clarify exactly who has the D for what types of issues. By streamlining the way decisions are made, they can greatly improve efficiency and rescue time for other purposes.
Companies also need to make sure they're getting the most out of the time they invest, especially in meetings. At most companies, hour-long meetings routinely start five minutes late. No CEO would tolerate 8% waste in any other area of the business. The solution? Start on time. Make sure that everyone comes prepared, and adjust cultural norms to strongly discourage late arrivals.
Other simple rules can make meetings more productive, too. Ford, for example, requires that materials be distributed in advance. At Intel, all meetings must have a clearly stated purpose to keep people focused. It's just as important to end unproductive sessions early. Steve Jobs used to call a halt to meetings when people were unprepared or decisions were elusive. The last principal builds on the well-known management axiom “You can't manage what you don't measure." It can be tricky to monitor employees' time, though -it's important to protect people's privacy.
But you can accumulate collective data about how many meetings are occurring across the company each week, month, or year, and about how many people are attending, by level and function. You can also give executives feedback on the load they put on other people in terms of e-mails, instant messages, meetings, and so forth. Both Seagate and Boeing are trying this. They provide reports that compare individuals' numbers against the average, which has encouraged many managers to modify their behavior.
We've just discussed an array of strategies for managing time with the rigor routinely applied to capital budgets. So why don't executives use them? The irony is that they usually feel they are “too busy” to take on one more initiative. Time management problems are often deeply entrenched in cultural norms and hard to tackle without commitment from the top. So to galvanize support, it's helpful to quantify the drain on the organization.
Let's look at one company in the Bain study. If these numbers don't wake people up, nothing will. The firm's leadership team met each week to review performance, directly consuming 7,000 person-hours per year. Before those meetings, each executive committee member met with his or her unit, which ate up another 20,000 hours. The team spent 63,000 more hours generating and checking critical information. Additional prep meetings consumed 210,000 hours. This brought the total time spent on weekly excom meetings to 300,000 hours a year.
We said earlier that companies stand to recoup, on average, 20% of their organizational time if they manage it wisely. In the case of the weekly excom meeting, that means freeing up a whopping 60,000 hours a year! No amount of money can buy a 25-hour day. But if you manage time as carefully as you manage money, you can get a lot more value from your scarcest resource.