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Admin costs us tons in lost work productivity

Last updated on
September 24, 2021

Time, talent and energy; the supposed holy triad which dictates your business’ productive potential more than any other factors, according to world leading executives. But what does that actually boil down to in practice?

In terms of time – a subject we’re pretty enamoured with – it translates to the time you have disposable for actual productive work. While we all have a hunch that certain admin hold employees back, the degree to which tasks like accounting, expensing and time tracking limit productivity is staggering.

The productive cost of admin

Take a look at this table; it’s from a Sage study investigating how much productive time is lost to routine admin:

Sage report - potential lost productivity to admin

Pretty gruesome, to say the least. Across all the small- and medium-sized businesses involved, an average 120 working days were spent on administrative tasks each year – totalling around 5% in lost productive time.

But others have estimated this “organizational drag” to be even higher. Harvard Business Review analysis found that US companies lose more than 25% of productive power from the excessive bureaucratic processes that take employees away from their main work. And the cumulative cost for the US economy is even bleaker – $3 trillion in lost productive output each year (17% of GDP).

Why organizational drag happens

But why is this happening? Why are employees spending so much time and effort each day on low-value admin?

For smaller companies, the employee admin burden largely comes down to not having sufficient processes in place; in larger ones, it’s that processes are quickly hashed together to replace judgement as the company began to scale. It’s a powerful mixture of inefficient processes, lack of leadership and investment in cumbersome tools.

Leadership consultant Michael Mankins feels trust also dictates our admin culture. He believes the auditing and expense management in particular are a response to the idea that employees will “rip off the company” unless you put a policing mechanism in place. Unfortunately the processes that are introduced “consume human capital, waste time, and zap energy” – a pretty hefty price tag for executive peace of mind.

How to increase work productivity

Clearly, reducing employee admin will immediately improve your company’s productive potential. So, what’s the easiest and most effective way to do that?

In a word, technology. More companies are beginning to realize investing in software can lead to lower admin costs. The agency world in particular has become wise to the fact – 86% of all UK agencies now use project management or time tracking software; a sharp increase from 53% back in 2013.

But choose carefully. While the right technology can completely relieve your workforce of arduous admin, many tools are just as manually intensive as your existing processes. Unless you do your research properly, you may not see a huge improvement at all. Here are a few we suggest you check out:

  • Accounting: Xero – a slightly lighter alternative to QuickBooks that simplifies your main accounting needs into one place. Think invoicing, payroll, multi-currency payments, VAT tracking and reporting accessible from every device.
  • Expensing: Expensify – A mobile-friendly solution to fast-track expensing. You can upload pictures of your receipts on-the-go and the app can scan the image to fill out expenses for you. Extra bonus – it has a sweet Xero integration for easy reporting.
  • Time tracking: Timely – The only truly automatic time tracking app out there. It tracks everything employees work on and creates timesheets for them. Essential for seeing whether your company is actually reducing its admin time, and respectful of trust – all data is 100% private until employees share it.
  • Task management: Asana – simple, clean and easy to navigate. Your whole team can organize, prioritize and coordinate work from one dashboard without getting lost in a web of information.

Looking to go fully automatic? We’ve also reviewed some of the best AI productivity apps currently available for businesses.

How much will it cost?

But before you dive in, you need to be sure that your fancy new technology will actually deliver a return on its monthly subscription cost. From a revenue per head perspective, tool affordability is easy to work out.

Using the UK agency example, the annual average revenue per head falls between £40,000 and £83,000 (depending on agency size). So a £16 monthly Timely subscription represents about 0.5% of the revenue each employee brings in. Add in the average agency profit margin of 15%, and you see that agency employees bring in enough profit to cover that monthly subscription cost between 33 and 66 times. But if you’re still unsure, there’s even a handy calculator to help work out how much it will make your business.

Just make sure you actually trial new tools with your team before you pay for them – part of understanding the cost to your company is seeing how efficient the tool actually is. Make sure it fits easily into your existing workflows, there’s little (or no) learning curve and people actually enjoy using it.

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