Your time costs more than you think

It took me years to believe this one.

I started as an engineering graduate on a salary of £18k, which is roughly £10 per hour.  If something took me four hours, that must cost the company £40, right?  So why was the company wasting £200 buying something which I could make in four hours?  Idiots.

However, for those four hours, the company didn’t just have to pay my salary.  They had to lease a building for me to work in.  They had to heat it and light it.  They had to provide me with a desk and a computer and a network.  And (in this case) some robots to control.

Then there were all the people.  They had to employ security guards on the gate, accountants in the finance department and technicians in the IT department.  Lawyers and web designers and salesmen and HR drones.  They had to employ several layers of management above me, and project managers too.  None of these people generated revenue themselves – this was an engineering company, so they were all paid for by selling what the engineers made in those four hours.  And the company had to provide buildings and light and heating and security and pensions for all those people too.  Oh, and the shareholders wanted some profit as well.

Instead of your salary, you need to look at the opportunity cost for the company.  If you waste four hours making something which the company could have bought for £200, the company misses out on the revenue which should have been brought in by four hours of your engineering work.