What Do Your Meetings Truly Cost?
Designing a methodology to assess the true cost of your meetings and the savings you can derive by eliminating irrelevant meetings
Why is it important?
Employees spend a good portion of their working lives in meetings.
I have read and heard it all: pointless meetings, endless meetings, death by PowerPoint - you name it, meetings are the chronic illness of the century.
But it could be different, it could be better:
Research on meeting productivity from Otter.ai suggests that employee productivity increases when they have the freedom to skip unnecessary meetings. Additionally, 70% of respondents stated their job satisfaction would improve if they attended fewer meetings. (1)
Building an ad-hoc yet simple methodology
After embarking on a quest to solve the mystery behind the true cost of a meeting, I unveiled a methodological barrier: how to approach it, given the wide distribution in the number of meetings, the number of people meeting, the gross salaries of participants, the time they're meeting for, the cost of office space used for meeting rooms, the size of meeting rooms, and finally the share of time deemed a waste.
My quest started to look very much like that of a researcher embroiled into something bigger than he had thought.
I had already collected tons of statistics, as varied as possible.
But I wanted to design an ad-hoc, yet simple methodology that would help any organization, its leaders, its human resources department, finance department , or even corporate real estate department understand the true cost of their people meeting.
Fortunately, in the present information age, it is not that hard to find a relevant piece of data, as long as you know what you are looking for, its accuracy and the limits to data interpretations.
The starting points
Every quest has a starting point. Mine was focused on determining if the last variable could be obtained: the time wasted in meetings.
I did not find such a specific indicator that would break down the share of wasted time in a meeting that was deemed necessary.
Since I wanted to remain simple in my assumptions, I kept another metric instead: Irrelevant meetings. 51% of professionals attribute meeting unproductivity to irrelevant meetings. (2)
Getting the second before last variable was critical too: the time spent in meetings by employees based on their hierarchical level within their organization. For simplicity purposes, I decided to retain only 3 of those levels:
Working backwards to fill the gaps
The salaries
Now with 3 hierarchical levels, the set was staged: finding what their cost was, while adding to that the real estate cost of meeting rooms.
1. CEOs had an average $16.7 million salary last year, according to Reuters (4)
2. "Upper management" was too vague to get to somewhere. I selected VP as the category representing upper management. According to Indeed, VPs make an average salary of $176,572 per annum, including $20,000 of profit sharing. (5)
3. "Employees" was again too generic to be able to pin down a number. I selected "Junior associate" to represent that category. According to Indeed, they make an average salary of $76,663 per annum. (6)
Factoring-in the burden costs
Adopting the employer's point of view in this article, it was essential to get as close as possible to the real employer's cost. This can be done through a proxy called the "burden rate".
The burden rate represents the total indirect costs associated with employing a person, above and beyond their base salary. The average burden rate can vary greatly depending on industry, region, and the benefits offered by an employer. As a general rule of thumb, it often ranges from 1.25 to 1.4 times the employee’s salary. (7)
I selected 1.3 as our burden rate for the present study, i.e. 30% of the salaries are added to represent the extra employment costs.
Setting the size of an organization and the right distribution along the categories
I then had to determine what kind of organization we were aiming for, as a CEO with one VP and one junior associate would not provide the right outcome, overweighted by the CEO's cost.
I aimed for a 100,000-person company, allowing my readers to use a multiple or a fraction of that number to derive the cost for their own organization before they themselves embark on that quest.
Setting the ideal distribution was more of an arbitrary decision based on a rule of thumb: in a 100,000-person organization, there had to be only one CEO, 1% of VPs or one thousand of them, the rest being employees or 98,999 of them.
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From that exercise, I had determined that a 100,000-person organization with the distribution we set and the averages we retained, was costing in salaries and benefits the exact sum of $9,731,585,938 to the organization.
Cross-checking theory with practice
With every formula, equation or theory in general, you may get fantastic results, but they are meaningless if they are not confirmed by empirical sources.
So I decided to look for 100,000-person organizations and check if, in their annual reports, they were reporting figures close to what I had determined up to that point through theory alone.
I had to be careful not to take some of which were meeting the size requirement in terms of employee number, but had production, industrial, or traditional retail activities. The metrics would not be comparable.
Filtering down, I retained two companies: Publicis, the second largest communication group in the world and Toronto-Dominion Bank, a top 10 North American bank.
Publicis, with 98,000 people, had personnel costs of €8.2 billion or US$8.95 billion last year. (8)
Toronto-Dominion Bank, with around 95,000 people, had personnel costs of CAN$13.3 billion or US$9.8 billion last year.
If Publicis and TD Bank were exactly 100,000-person organizations, their personnel costs would be respectively $9,130,593,132 and $10,292,231,579.
These amounts represent completely acceptable variations of 6% less for Publicis and 6% more for TD Bank.
Adding the real estate cost of meeting rooms
Considering that, whether or not meetings are held remotely, large organizations do plan for the construction of meeting rooms based on ratios, there was a real estate cost dedicated to meeting rooms that I had to take into account.
According to iOffice, for each person on the payroll there should be between 25 to 30 square feet of meeting rooms. (8)
According to Offices[dot]net, in Q1 2023, the average price per square foot for US offices was just over $38. (9)
Combining the two, the real estate cost per person for meeting room is averaged at $1,140 per annum.
The Results
Answering the primary question of that article is necessary. So how much do meetings cost?
From that point, all you need to do is computing simple maths: multiplications.
For a 100,000-person organization, meetings cost around $3.5 billion per annum.
But there is a silver lining. The cost of irrelevant meetings. The ones you wish were not blocking your calendar, were not frustrating, pointless and overcrowded.
The financial consequences of "irrelevant meetings" are staggering: a whopping $1.8 billion is lost, every year, in a 100,000-person organization.
This is the true cost of wasted meetings.
Sources
MBA Keele University || Online Educator(IT) || Assistant Professor || IELTS instructor || Trainer
1 年Great methodology
Your insights are spot on. Keep up the amazing work!
Digital Marketing Specialist | Proficient in SEO, SEM, Social Media & Programmatic Advertising | Dedicated to Client Success & Innovation | Ex - Clodura.AI | Ex - RenB Digital
1 年Thank you for sharing your expertise. It's incredibly valuable.
AI/ML Enthusiast | 4TH Year Math/CS Student| SWE @ TD | Builder @ AWS | Prev @ RBC | 23x Hackathon Winner | 2x Case Competition Winner | IBMZ, XRPL, Zilliz, Fuel Labs, Intersystems
1 年Your ideas are truly innovative. Can't wait to see what you come up with next.