Knowledge Cost by the Hour?

A prospective client asked “what do you charge by the hour?”. My response…”I don’t”.  The prospect then asked “then how do you determine how much to charge me?”. My response “By the value you desire me to deliver using my knowledge”.

Knowledge needed to ring up sales at a cash register is different than knowledge needed to engage more customer that will ring the cash register or reduce lost productivity which improves business efficiency. Which has more value?

If your business is wasting time, effort and energy “producing things” and causing customers to waste time, effort and energy to interact with your business then you are wasting money. If someone had the knowledge required to help you reduce the waste and improve productivity how much would it be worth?

Let’s say you employ 50 people at an average payroll cost of $52,000 per year per employee.  Let’s consider the lost productivity of employees simply misplacing or not having relevant information (which precedes not having the right knowledge).

Calculate The Cost Of Lost Productivity The information you provide is not collected by our company in any way. To get started, simply fill in the values requested below (do not use dollar signs or commas). The results will show how many hours you’re losing per year– and how much those hours are costing you— due to the inefficiency of lost information. To calculate the cost of disorganization for your department or company, please indicate number of employees and provide an average figure in the other fields. Average salary $ 52000 Number of employees Number of non-working (vacation) weeks/year Number of hours worked/week What Lost Productivity Costs You or Your Company* Per Year $ 6760 Per Month $ 563 Per Week $ 130 *Calculations based on the average amount of time an employee wastes per day looking for misplaced items.

That would represent lost productivity valued at $6,760 per employee per year ($338,000) and this doesn’t include the cost of creating lost productivity for customers and prospects (which represents even higher cost per customer than employee.) How about revenue gains from giving customers more productivity?.  What is that worth?

Social Productivity Factors Driven By Knowledge Assets

Finding solutions that enable us individually and organizations collectively requires knowledge outside of an existing ecosystem. The ecosystem of any organization is largely influenced by the knowledge assets which rest with the human capital within an organization.  Human capital is considered the vital engine needed to support any organization. It is this “capital” where innovation and continuous improvement comes from, if you know how to tap and use it.

The challenge of any organization is learning new knowledge that maximizes human capital effectively and efficiently.  New knowledge typically comes from the outside but can be tapped inside with the right “social encouragement“. Social encouragement is not typical to corporate containers where power and fear steal “social, intellectual and creative capital” that rest within the human capital.

Social Business & Knowledge Assets

All this social stuff goes way beyond marketing and advertising which seems to be in vogue for the moment. The “social business” model is one where the ecosystem is learning how to tap all the knowledge assets resting in the human capital. Tapping this capital can be accomplished using social technology beyond marketing and advertising.  Consider the knowledge assets that can be tapped if your culture and organization adopted the social business model. The productivity gains rest in functional roles and departments such as:

1. Marketing, advertising and public relations
2. Customer service
3. Hiring and recruitment
4. Workplace Collaboration
5. Outsourcing
   
6. R&D
7. Operations
8. Communications
9. Finance
10. Management

Now to optimize productivity one must consider the implications on human capital. In order to make these considerations one much engage with the humans who hold the capital.  Doing so is something that requires knowledge assets not typically contained inside the corporate walls. If the knowledge assets where there well more and more organizations would be making significant strides in productivity and most aren’t.

The problem with most people claiming to be social media gurus is they are selling task oriented work, not knowledge assets to be transferred internally for everyone’s benefit. I don’t sell knowledge by the hour but not having the right knowledge cost you productivity by the hour. My cost is less.

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