Basic Mathematics, 1+1 = 2?

Challenge: We want to empower our staff. We want to let them make own decision them self including ability to assign team member to do work, purchase some products, sourcing for supplier and etc. But I realize that some of our staff mathematics is needf further fine tune when come to cost calculation. This is not good as it increase the cost of our expenses unnecessary. On the other hand some of us misunderstanding saving cost = everything also cut cost. This is not the what we want to achieve.

How? Allow me try to share with everyone how I calculate cost. I hope to write it down here so eventually everyone will know the secret sauce behind, and slowly spread to their peers and staff.

Lets start:

Everyone in this company, have a price tag = salary. In general, the higher band you are, the more expensive the price tag. So if divide to hourly, we will get cost per hour.

Example: Yaku salary = $4,000

Yaku daily rate = $ 181 (Salary divide by 22 working days)

Yaku hourly rate = $ 22 (Daily rate divide by 8 working hours)

Example: Nazo salary = $500

Nazo daily rate = $ 22 (Salary divide by 22 working days)

Nazo hourly rate = $ 2.75 (Daily rate divide by 8 working hours)

Scenario 1: Ah Peng want to distribute flyer to people at KLCC. She need 1 person help her. Should she call Yaku his best friend to do? Or should she call Nazo to do? You think

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Scenario 2: Luki just done a nice design for for MauKerja t-shirt. He care about the shirt, so he and Rubi go visit the print factory, to see the shirt quality they going to print for them. It only take 3 hours travel time go and back.

Question: Should Luki and Rubi visit the factory to view the shirt quality? Please pause and think.

My answer is NO! First, you are paying money to factory, means you are customer. You should ask the factory send the sample shirt to you, instead of wasted 6 hours to travel there.

Let’s calculate the total loss of company. Assume per hour rate for Luki and Rubi = RM20.

A: You wasted RM 6 x 20 = RM120.

B: You wasted petrol, tol = RM30.

In general rules of thumb, every employee should do work that bring 10x their salary to the company. This means Luki and Rubi suppose to produce work value RM1,200 below in 6 hours, but they are not.

C: RM20 x 6 hours x 10 the value = RM1,200

Total loss for company due to this bad decision= A: RM120 + B: RM30 + C: RM1,200 = RM1350.

This is unnecessary wastage and it can be solve, by asking your supplier come to see you, or courier to you.

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Scenario 3: Lala is the Finance executive. She know that her boss dont like to waste paper printing unnecessary items. Lala boss, Mr T have habit of record all key contact information on his diary. One day Mr T plan to hand over all key contacts to Lala, so she can manage it. Mr T pass the diary to Lala.

Question: Should Lala photocopy it using new paper, or should Lala hand written it on her own note-book knowing Mr T do not like to waste paper?

Please don’t tell me you choose hand written! Lala may save 3 copy of new paper. But the time Lala spent on hand written could be 15–30 minutes, which could be translated to $20 salary. Printing paper for non important thing like super long phone bill != photocopy important information. Do not misunderstand the message and end up wasting more money on man hour.

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Scenario 4: Fifi have work for company for 3 years. Her laptop is super slow and she wish she can upgrade to faster one. However she feel inferior to request for new laptop as her position is only junior executive compare to engineer or designer that using high end computer.

Question: Should Fifi request for new laptop?

Regardless you are junior executive or senior executive, you have important role to play in the company. Else the company won’t hire you. Looking from boss perspective, I would calculate how much more contribution you can make by upgrade the laptop.Let take example:

Let’s assume per task = $10.

• With current laptop, you able to complete 20 task per day. You created $200 worth of task a day
• With new laptop, you able to complete 30 task per day. You created $300 worth of task a day (Extra $100 per day)

With New Laptop, in 1 year time, you created 12 months x 22 working days x Extra $100 per day = $26,400 !!!

Should Fifi upgrade the computer? Yes she should! In fact she should upgraded last year!

Key lesson: We are service base company. People = asset. Every hour of their time, is money. We always need to use the best way, shortest way, to solve problem. This, is fundamental mathematics our leader need to understand.

Just as i wont ask my Finance Manager, spend 1 hour, to check which mouse is cheaper online. Because by saving RM5 from mouse, I lost hundred by wasting my Finance Manager 1 hour.