Return on Meeting Expense (Part 1): Measuring a Meeting’s Expense
by CFOEd
Meetings are a fact of life for all businesses. Yet, people in companies of all sizes say they have too many meetings, and often question their value. Think of meetings as an expense. They consume one of your most valuable resources – time. Time is a finite resource. And time is money.
Business owners and managers, especially those in high-growth enterprises, lack the time to do all the things they need to do more of:
- Making sales calls and following up on leads.
- Developing better and newer products and services.
- Developing people.
- Building the brand.
Not to mention having more personal time - and maybe even sleep!
In this Bizdom, we measure a meeting’s expense. In the Bizdom, Return on Meeting Expense (Part 2): Measuring the Return, we explore how to conduct breakeven analysis that provides powerful insights into the benefits a meeting must provide to justify its expense.
So what is Return on Meeting Expense (ROME)? It is simply the expense in a meeting relative to the benefits from a holding the meeting.
ROME = Meeting Benefits / Meeting Expense
Now don’t get me wrong. I am not suggesting that for every meeting you need to estimate and measure ROME. That is impractical. Also, some meetings, like those regarding safety and compliance, are simply a cost of doing business. But ROME does apply to the vast majority of meetings. ROME helps creates a mindset that:
- Results in fewer and shorter meetings – freeing up time to spend on more productive activities.
- Improves quality of meetings.
To measure ROME, we must first measure the Meeting Expense. The expense primarily is the total time invested in the meeting and the value of this time. We should probably also include the cost of the coffee and donuts, but let’s not get too carried away. Suppose that in an internal meeting:
- There are 5 people,
- with an average salary cost per hour of $35, and
- the meeting is for 1 hour.
The meeting expense is shown in Table 1.
Table 1 - Meeting Expense*
a.
|
Number of People Attending Meeting
|
5
|
b.
|
x Length of Meeting (in Hours)
|
1.0
|
c.
|
= Total Meeting Expense in Hours
|
5.0
|
d.
|
x Average Hourly Cost Per Person Attending Meeting
|
$35
|
e.
|
= Meeting Expense in Dollars
|
$175
|
* Use the SmartSamantha Return on Meeting Expense Business Tool to measure your meeting expense.
In this example, a total of 5 hours (line c.) is invested in the meeting with a $175 (line e.) dollar expense.
At this point you may be thinking, “Big deal! It’s only 5 hours and $175!” True, it isn’t a big deal if you held a meeting only on occasion. But ask yourself the question: How many meetings like this does your company hold each week, month and year? For smaller companies, the answer may be once or twice a week. For larger companies, the answer is likely…well, let’s not answer this; it may be too painful. And how many meetings produce results that justify the expense?
Suppose that you hold a meeting like that in Table 1, once a week. Annually, this is an expense of 260 hours (52 weeks x 5 hours) or $9,100 (52 weeks x $175). Is the $9,100 a real expense? Does your company really incur $9,100 more in expenses because of these meetings? The answer is probably no. But the meeting expense in dollars provides insight into the opportunity cost, which – at 260 hours – is very real. We explore this in more detail in the Bizdom, Return on Meeting Expense (Part 2): Measuring the Return.
Now, suppose that instead of holding the meeting every week, you determine it really only needs to hold it every other week. Both the meeting total hours and dollar expense are cut in half, to130 hours and $4,550. Does that mean you will have $4,550 more profits? Not necessarily. But it does mean you have 130 more hours (or the equivalent to approximately 3 people weeks) to invest in your business. How would you use these 130 hours? Make more sales calls, spend more time on customer services, send out invoices more quickly? The possibilities are endless.
In the Bizdom, Return on Meeting Expense (Part 2): Measuring the Return, we explore how to conduct breakeven analysis on your meeting expense. In the meantime, you can better manage your meeting expense by using the SmartSamantha Return on Meeting Expense Business Tool and the answering these questions:
- What has been our total meeting expense over the last month? What is the projection for next month? What is the annualized expense?
- Why are we really holding these meetings? Or put another way, what is the expected outcome of these meetings? To help grow the top-line and/or improve the bottom line?
- Do we consistently have a meeting agenda?
- Why does a meeting have to be an hour or whatever time has been set? If it was ½ or ¾ of the time would anything less be accomplished?
- If I had to pay an outside consultant an amount equal the meeting expense in dollars, would I still hold the meeting?
Interestingly, the answer to question #5 is often, “Absolutely not!”
If that’s the answer for many of your meetings, why are so many still being held?
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