As margins slim in our industry, which they will, would you rather have management understand the true costs of things or would you rather have over-hiring followed by mass firing?
I already fill out hourly timesheets as I work in legal services and we bill clients by the half hour, albeit just for external purposes.
This isn’t just Taylorism. I’m also describing Activity-Based Costing, a key component in managerial accounting for high complexity services and products with lots of fixed costs.
Most non-VC backed companies engage in such practices.
This if course needs to:
1.) come from the top down. The CEO should be doing the same thing, and
2.) have an incentive structure tied directly to profits and “public” reporting.
Buy-in from the entire organization is required and everyone must be motivated to keep costs under control.
Look at the efficiency of software developers for Formula 1 teams. Any additional costs in that division impacts time spent in the wind chamber, etc, because there is a cap if $190 million per team.
They are motivated to win and their costs are constrained by the format.
Motivation for organizational cost analysis must be shared amongst all employees.