Numbers—They Don't Always Add Up
September 17, 2010
A friend of mine has a boss who likes to put to use what he learned while pursuing his MBA. Somewhere along that path he was told that if more than a certain amount of an employee’s time was categorized as “administrative,” that represented a problem.
My friend’s “administrative” time went above whatever magical number he had defined, and he called her in.
As a part-timer, during their slow season, she didn’t rack up many billable hours. That was his take on it.
She pointed out the many hours of staff meetings she had to attend, two-hour meetings to relay and discuss 30 minutes of material. She suggested maybe she could just get up and leave after 30 minutes.
They’re never going to see eye to eye on this, but I use it as an example of the “numbers dilemma.”
KNOWING YOUR NUMBERS
Harold Geneen, most famously known as CEO of International Telephone and Telegraph Corp. (ITT) during the 1960s and most of the 1970s, wrote the book “Managing” following his retirement.
The book is packed with “Geneen-isms,” but one in particular came to mind as my friend was relating her story. It was Geneen’s answer to those who questioned how a company as diverse as ITT could be managed. ITT grew more than 20-fold during Geneen’s time at the tiller, and eventually included insurance companies and hotel chains in addition to its core telecommunications holdings.
His answer: “Telephones, hotels, insurance—it’s all the same. If you know the numbers inside out, you know the company inside out.”
Geneen also preferred to get his numbers from persons rather than from paper. And woe be unto the ITT exec who didn’t have those numbers at the ready.
Numbers can be funny things. Back in my early days in television, as a news photographer, we shot film that later had to be processed. Film for a news shooter came in 400-foot rolls (a little over 11 minutes running time) and 100-foot rolls (about 2.75 minutes).
As you got down to the end of a roll of film, you were taking the chance that when you really needed to shoot something, you’d run out. So if you didn’t quite finish a 400-foot or 100-foot roll of film when you were done with a particular story, you’d pull out what little was left and toss it.
Film was expensive. Our newsroom budget for film was over $1 million a year, and that was back when a million dollars was really a lot of money. That brought scrutiny.
As union shop steward, I was called to the station business manager’s office one day. He told me there was a problem: the amount of film we were having processed by the laboratory was less than the amount of film we were going through. I explained the end-of-the-roll situation, but he wasn’t satisfied.
So I went back to the photographers and had them save, rather than toss, all the short-ends during the day, and turn them in to me along with a slip of paper documenting how much film they’d shot. I’d go up to the business manager’s office and try to reconcile his numbers. It didn’t work.
He still showed that even with that adjustment, we were still processing 10 percent less film than we were purchasing. His conclusion was that somebody was filching film.
Two things didn’t make sense to me. The first was that all the cameramen knew they were under a magnifying glass, so you’d expect the filching to stop, if only temporarily. The numbers remained the same.
The second screwy thing was that each and every cameraman had the same gap between film reported used and film actually processed: about 10 percent.
To cut to the chase, we eventually discovered that Eastman Kodak had reduced the thickness of its film stock by 10 percent. The way the lab measured processed film was by measuring the diameter of the roll, rather than actually measuring its length. Though the business manager didn’t “get his man,” once the lab figured out what was going on, our film processing bill went up 10 percent a month.
COMMON SENSE NUMBERS
Overtime is a common “hot button” among the business manager set. And why not? You pay somebody 1.5-times their regular salary when they work overtime.
Another way to look at it, though, is that you don’t pay any more benefits for those hours in excess of 40 per week. You don’t have the expense of hiring and training the new employee to work those additional hours.
If the overtime hours are to cover a temporary need, you don’t go to the financial (not to mention human) expense of laying somebody off when that need disappears.
So the operative word in Geneen’s “If you know the numbers inside and out… ” is the word “know.”
All of this is to say that the numbers are probably telling you something, but they may not be telling you what you think they are.
Craig Johnston is a Seattle-based Internet and multimedia producer with an extensive background in broadcast. He can be reached at email@example.com.