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The High Cost of Meetings

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In our zeal to think beyond traditional parameters and maximize our bottom line, one often overlooked activity is the meeting. In large and small organizations, the meeting is typically considered inefficient at best. Organizers often don’t know how to plan and conduct such an interface. And attendees often place meetings at low priority and thus arrive late, step out for “quick” telephone calls, or leave early. These internal meetings are frustrating and costly in that they affect the overhead in your company. And your outside meetings with customers (or potential customers) can have a major direct bearing on the profit made on each job.

Learning the Hard Way

I remember a series of meetings that I had with a prospective customer early in my business life. A printer asked me to interface with her to help a prospective customer understand the printing and publishing process. The “customer” was planning to publish a series of articles that had been written by a well-known columnist for the local newspaper.

I was led to believe (by both the printer and the prospective customer) that my company would be doing all of the book design and layout. I was told that we would be providing camera ready art to the printer who would manufacture the book.

I participated in three meetings over a two-week period. Each meeting lasted one to three hours, and required over an hour of travel time on my part. Throughout the experience, the prospective customer expressed his intent to work with both the printer and my company to complete the project. The printer and I solidly educated the man on the process and options.

On the last day, the prospect’s closing remarks were that he would send us an invitation to bid lowest cost on the job. We looked at each other in disbelief. We had treated the prospective customer as a team member. We had shared much with him. After six hours of consulting and three hours of travel time, I was faced with bidding for the job without the opportunity to incorporate the time I had already invested in meeting with and educating this person. The printer faced a similar fate. We were snookered by a cutthroat, lowest-cost buyer who had led us down a path of deception. Since the printer and I needed to cover our costs, our bids were above the bottom line price that the prospect was dredging for. Ethics aside, neither of us got the job. But we did learn. We learned indeed.

Meeting Wisely

When you agree to meet with a prospective customer, remember that you, too, may be facing an intelligence gatherer who has no intent of giving you the job unless you can meet or come under any and all competitor quotes. Cheap, unethical, or uneducated sharks infest the business waters about you.

The point that I’m making is that every action related to winning a job has an associated cost. And meetings are often the hidden profit cruncher that make some jobs just not worth doing. Little wonder that some successful shops have two prices: one for the experienced, knowledgeable buyer, and a second, higher price for the complete novice. Time is truly money (into or out of your pocket). You must budget to cover all your costs. Then price to cover your budget and up to what the market will bear.

Agree to meet prospects with your eyes open. If you can, find the least expensive way to meet. Do a cost-benefit analysis. Do you know what the actual costs are for each meeting that you attend? And do you have an idea of the costs for each form of meeting that you can have — their site, your site, teleconference, videoconference, etc.? Are your meetings adding to the profitability of your business? Or are they merely another cost drain?

Calculating Your Costs

Here’s a step-by-step approach to estimate the costs of meeting. This analysis can be kept in a spreadsheet file and used to plan for and track the cost of any meeting that you’re considering.

As shown in the table, the information that you need includes salaries of each person attending, fringe benefits, planning overhead costs, meeting overhead costs, and the desired profit and return on investment — for even a single meeting. In a minute, you’ll see why even a single meeting is important to track.

First, estimate the costs of each person in your company who will attend the meeting. A $10-an-hour computer operator who sits in on a one-hour meeting costs the company $10 in labor. By listing all the attendees and their corresponding pay or salaries, you can have the program calculate the total pay/salary cost per hour. If one makes $10 an hour, another $25 an hour, and a third $30 an hour, your total salary cost per hour is $65.

Now add in the cost of fringe benefits — vacation pay, sick leave, dental and vision care, group health plans, retirement/pension plans, and other added benefits that your company provides. Some costs such as payroll taxes, FICA, and SDI are not choices that you can make. They nevertheless must be included in your calculation. One rule of thumb is to assume that your business has required deductions and fringe benefits that add about 38% to each person’s hourly rate to form the total cost per employee. Thus an employee earning $10 an hour actually costs your company $13.80 for each hour paid.

Program the spreadsheet to multiply the Salary Costs Per Hour by the percentage increase allocated to required deductions and benefits (in our case 38%). This results in a total pay and benefits cost of $89.70 for each hour of this meeting.

Next address the overhead costs associated with planning the meeting. How much time and materials does it take to get ready? This includes time spent discussing strategy, writing and designing the presentation, support by others, creating visuals, adjusting work schedules, and “invisible” expenses incurred by those who attend (e.g., interruptions away from another project).

Two hours of prep time for a one-hour meeting yields a planning overhead of 200%. If every person attending the meeting takes two hours to prepare, multiply the Hourly Pay & Benefits figure by two to get $179.40 as the preparation cost. If only one person must prepare, a major percentage is allocated to this person, and a minor percent (say 5%) can be allocated to each other attending staff member. For our example, we’ll assume that all three people must prepare equally (hence $179.40). This moves us to the overhead issues related directly to meeting.

The meeting overhead costs can be defined as those expenses that everyone “sees” — transportation, equipment used, food and beverage, paper, transparencies, and other materials used at the meeting. One vehicle driven 30 miles, one hour of travel, five cups of coffee, 25 sheets of laser printer paper, and six overhead transparencies add to your meeting costs.

In the example, a one-hour meeting with a prospective customer can cost over $400 (see table). This means that you must do all you can to make each meeting worthwhile. You can change the meeting length, use a different form of interface (e.g., teleconference), make planning less time-consuming, and have fewer people prepare for and attend the meeting. These affect your meeting costs.

Assessing the Benefits of Meetings

It’s sometimes tough to estimate the financial benefit of a meeting. What opportunity did you gain or lose by planning for and attending? Did the meeting actually produce a profit? Did the prospective customer come back to you months later and ask you to do a job that he felt you were best suited for because of what they learned at an earlier meeting? Was time saved because a face-to-face meeting clarified a misunderstanding by one or both parties? Did you obtain good market intelligence that helped you develop a successful strategy for penetrating a new area? Did the customer refer you to others who also benefited from your services?

To estimate the financial benefit, assign a value to each goal that you hope to achieve. If the meeting is to promote sales, did you indeed realize increased sales? By how much must you increase sales to make the meeting worthwhile? A sale of $325 after a meeting that costs $424.08 is hardly worth the effort — unless you also got follow-on sales that let you amortize the meeting costs over more sales events.

If you meet to market your products and services, did you get their business? Since results from marketing can take weeks or months to materialize, you need a meeting model that will help you track the final outcome of each event. When you integrate intelligence snippets and referrals into your meeting tracker, your model can get complicated. And given the chaotic business lives that most of us face, your meeting model can be difficult to maintain. It’s usually easier to take a macro view of the meeting process. Look at the big picture. Do you get the financial return from the time and effort spent? The analysis alone will show you how costly these events can be. If you can relate sales to a particular meeting or series of meetings, good.

Several years ago, Bernard DeKoven, director of the Institute for Better Meetings in Palo Alto, developed a Meeting Meter Program to display dynamically how much a meeting costs. The software is activated when the meeting begins and tallies up costs as the meeting progresses. It shows the destructive effects of arriving late and easily getting sidetracked during a meeting. Whether customer or colleague, metering your meetings can show the cost of interruptions, delays, and rambling.

And money is just one part of the cost. A discouraging meeting, where frustration boils over into angry outbursts, takes a toll on the attitudes and morale of those attending. Poor, useless meetings punish the participants. They bore and discourage people, and make them so frustrated that it can take an hour or more to again become productive and focused.

Plan meetings better, make them effective, and you can significantly improve morale, mutual respect, and overall productivity.

Tips for Better Meetings

There’s much that you can do to conduct effective meetings. Here are a few ideas to consider.

If your customer is willing, start your meeting on time. Each meeting minute has an associated cost to both companies.

After the meeting, critique it with your team. Discuss what you did right and where you can improve. Evaluate the success potential from the experience. Did you achieve your goals and objectives? Do both you and the customer feel good about the meeting?

On the day after the meeting, call the customer and thank them for their time. Discuss follow-up actions that you collectively should take. Go after their business while the opportunity is hot. Follow-up a week later may be too late to lock in the job.

It’s Worth the Effort

So get on your computer and input information into your spreadsheet. A cost-benefit analysis can be enlightening. If you can rank your meetings in terms of financial payoff, you can link your meeting time and effort directly to the bottom line. Perhaps then you’ll consider videoconferencing by Internet.

PMA member, Robert Brenner, is the President of the Brenner Information Group. He is the author of 20 books including Pricing Guide for Web Services and over 200 articles. He can be reached at PO Box 721000, San Diego, CA 92172-1000, phone 619/538-0093, fax 619/484-2599, and e-mail Binfog@aol.com.


Costs Associated With a One-hour Meeting at a Customer’s Site

Computer Operator 10.00
Designer 25.00
Project Manager 30.00
TOTAL $65.00
FRINGE BENEFITS (@38%) 24.70

Two hours prep for each person (200%)

Travel (30 miles @ 31¢/mile) = $9.30
Travel time (1 hour) = $65.00
Coffee (5 @ 90¢ ea) = $4.50
Laser printer paper (25 @ 10¢ ea) = $2.50
Overheads (6 @ 50¢ ea) = $3.00
PROFIT (planned at 10%) $35.34
EXPECTED ROI (10%) $35.34

This article is from thePMA Newsletterfor June, 1997, and is reprinted with permission of Publishers Marketing Association.

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