Inhouse Employees Will Not Save You Money
Jan 05
I have worked on many projects with medium sized businesses where upper and middle managers baulked at paying several thousands dollars for me to do a project, such as develop a website or create a Flash presentation.
But before they called me to solve their problem, they made several attempts to develop the project in-house for days, weeks, and even months without a lot of success. Unfortunately, owners and operators of such organizations did not look at that as a cost to themselves. This was never in the “budget.”
Projects that are outsourced are budgeted, but not the manpower and/or labor of salaried employees that work on the project.
Not realizing this will actually cost more. Here’s why:
Say you already have an in-house designer (not an actual web designer but a graphics designer) that makes a about $35,000.00 per year and he is messing around with a project for total of twenty hours. What does that cost you in lost production time?
What happens when higher level employees (that earn mid-six figures) get involved with this seemingly “little” project. It really does happen.
Business owners and managers who have many employees on a yearly salary forget how much they are paying those employees on an hourly basis. These managers have the attitude of: “Well, I’m already paying Jane to do marketing, so I should just get her to build the website and save us a bunch of money.” That’s not a good perspective to have. It ends up wasting money in the long run.
Here is an example of what I mean. I met with a real company (but let’s call them Piney Pine Furniture Design) and they design and sell many types of furniture (chairs, beds, bureaus, etc.). They asked me to meet with them to discuss their six page website project (yes, that is right—I did say six. This will actually be somewhat amusing later on).
Before continuing, it should be noted that I had previously had an ongoing relationship with them doing other work (3D models and renderings of their furniture designs), so I figured this would be a quick meeting. They knew me, I knew them and all would be well. Not so as it turned out.
I met with three employees (two designers and the design director) in a conference room for over two hours. Each employee was a high five figure salaried employee, so for the math, I figured that 120 min. meeting cost the owner of the business: $276.00 in employee time to meet with me. (These employees are actually probably responsible for producing ten times that amount in actual company revenue.)
Not too bad, but they came to the meeting with notes and preliminary discussion points. I figured that the value of the time put into that outline was already $450.00. Over the course of two weeks, we had three such meetings because the employees (three of them) who were in charge of the project didn’t really understand website design, although they were designers (furniture designs). Three such meetings added up to: $522.00 in wasted time. I knew what to do in the first ten minutes of the first meeting; it was a six page website. I know website design.
Now, these dollars are just actually hour-to-hour dollars but not company dollars. If you figure that an employee who works in an organization is actually producing ten times his hourly rate in company revenue (or at least they should). In other words if an employee is making $35.00/hour, he/she is producing over $350.00 worth of goods or services for the company to sell. That is the model used here.
The people I met wanted to “understand” the process and be educated. They wanted to design the site for themselves. So really, I was just going to take their design and put it on the web. Even simpler; but since they didn’t know anything about website design, knew very little about actual graphic design and many hours of meetings were wasted to “understand” a problem that really didn’t exist.
Their problem was that they wanted to design the website. The problem didn’t exist because they could have hired a professional (me) to design the website for them. Problem eliminated.
I figured that over 80 hours were wasted by the company’s employees trying to “design” this website (in which they were very, very bad at it). All in an effort not to pay any freelance/consultant design fees. Interesting.
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