Opportunity cost is about comparing the value of one activity to another, when both could be done at the same time.
That sounds simple on paper, doesn’t it? Indeed, most business leaders understand the concept of ‘time is money’ but the hard part is figuring out which activities are valuable.
In episode #080 of the Meeting Leadership Podcast, we focus on the opportunity cost of meetings and how monitoring these costs can really cut costs.
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00:00 - Show Opening
Are you a professional who wants to become a more effective leader? Then get ready for daily tips from the coach, with the experience and inspiration to help you succeed in any leadership situation. You're listening to the Meeting Leadership Podcast with Gordon Sheppard.
00:28 - Start Here - Podcast content starts here!
Welcome to another episode of the Meeting Leadership Podcast. My name is Gordon Sheppard, and I just want to say thank you for being here. I just want to take a moment to let you know a little bit about the philosophy behind why I actually produce an episode a day to help leaders just like yourself. Now, here's the thing, I believe that great meetings are the building blocks of great organizations. Now, you can't have a great meeting without being a great meeting leader and you can't be a great meeting leader if you don't know how to run a great meeting. So for folks like you who are showing up here everyday or once in a while to get another tip to build your skills, another tip to become a better leader, I'm so glad you're doing it because that's the kind of thing that you can take into the workplace and make it actionable right away. Thank you so much for participation
01:14 - Definition of Opportunity Cost
If you are the type of leader who thinks that time and money are really important, well then you're going to get a lot out of today's episode because today we're going to talk about why all leaders should measure the opportunity cost of meetings. Now, if I had to give you my definition of opportunity cost, it would go something like this. While you're doing something, you could be doing something else. So while you're in a meeting, you could be actually doing work on a special project, you could be with your family. There's all kinds of other things that you could be doing and you have to actually understand the value of those activities. Is the meeting that you're in more valuable than those other things that you could be doing? It's a great, great question to ask for anybody in your meeting team.
01:57 - Why measuring opportunity cost is important for meetings
When leaders start to apply this type of thinking and approach when they are actually weighing a meeting, it really creates a great opportunity as in, should you cancel this meeting because you should be doing a higher value activity or should you actually be doing more of that meeting? Are the things that are happening in there really driving the services and the products or maybe even the volunteering that you're doing, whatever type of meeting it is, is that actually where the best stuff is getting done and should you do more of it? One of the best things that you can do when it comes to actually measuring the opportunity cost of a meeting is to gauge how much that meeting actually costs in real dollars.
Now, there's a couple of episodes on the Meeting Leadership Podcast that can actually help you to do this. One of them, episode 20, is called how to measure the real cost of a meeting. In there, you're going to get a meeting cost calculator formula to help you measure the actual cost of an hour of a meeting. Then in episode 34, it's called how to measure the annual cost of meetings, and this is for really the people that are at the head of the organization, the business owner, the people in the C-suite, this kind of thing.
03:02 - The example of Alberta Health Care
If you can get a handle on what you're spending on meetings, and I'll give you an estimate for example, now I live in the province of Alberta in Alberta, Canada and Alberta Health Care services spends over $22 billion a year. They've got just north of a hundred thousand employees. Now on quick math, you can reasonably say they're spending half a billion to a billion dollars a year on meetings every year. And if you're the CEO of that organization, wouldn't it be worthwhile knowing if you could cut like 5% of the worst meetings out of the situation so you could re-allocate those people to other activities that were of a higher benefit?
03:35 - Don’t fear the ‘switching costs’
When you think about it that way, especially from a leadership perspective, it sounds pretty logical, right? And yet bad meetings are rampant. So why is that happening? Well, I think one of the main reasons is actually switching costs. And here's what I mean when I say that. Now, if you brush your teeth with Colgate toothpaste and you were told you had to switch to Crest, would you? Have you ever threatened to switch banks for bad service, but you just never get around to it? I mean, so often people get stuck with what they've got because it's such a hassle to make a change. Well, I believe this is a basic premise of human nature and it's one of the main reasons that we really put up with so many bad meetings because who really wants to have a hard conversation and tell another person in the meeting that they just don't need to be there? I mean, sure, your meetings will be better if there was an agenda, but creating an agenda, it's just so much work. Until you realize that meetings really are the most essential communication tool in your organization. They directly are related to profitability, employee satisfaction. I mean, if you bring it into your family setting, it's how your family meeting's going, how your volunteer meeting's going. It really is so important, but because people perceive that the switching costs are going to be too high, we keep putting up with these lousy meetings.
04:54 - Recap: Why all leaders should measure the opportunity cost of meetings
Now let me take a moment to recap the main reasons why all leaders should measure the opportunity cost of meetings. Well, to start with, time. If you want to save time, cut your worst meetings, get yourself and your people onto better higher earning activities. The second thing is money because meetings, well, they are not free. And if you're making an investment in your people's time, the dollars that you're spending on their wages and that kind of thing, you want them performing the most profitable activities possible. The final suggestion that I'd like you to keep in mind is engagement. If you send too many people to too many bad meetings in your organization, you know the results, you know how lousy that is for things like retention and getting people to again be working on the things they need to be working on. So if you want to save time and money and have a higher level of engagement across your organization, then take the time to measure the opportunity cost of all of your meetings.
05:51 - Meeting Leadership Academy - https://meetingleadershipinc.com/academy
Now I'd like to let you know that this episode of the Meeting Leadership Podcast is brought to you by the Meeting Leadership Academy. I am super, super proud of all the great training opportunities that are being offered through the Academy, great live training for you and your team and some great online options as well. If you'd like to learn more, please visit meetingleadershipinc.com/academy. And as always, thank you so much for listening and we'll see you tomorrow on the Meeting Leadership Podcast.
06:18 - Podcast Outro
Thanks for listening to the Meeting Leadership Podcast. Be sure to subscribe for more strategies to help you become an outstanding leader. And don't forget to rate and review so we can bring you fresh content every day. We'll see you tomorrow right here on the Meeting Leadership Podcast.
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AGENDA ACRONYM PDF (FREE)
• A ttention Grabber
• G reat Goals
• E xcitement
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• D ecide Now
• A ccountability Check-In
LINKS FROM THIS EPISODE
- MLP 020: How To Measure The Real Cost Of A Meeting - https://meetingleadershipinc.com/20
- MLP 034: How To Measure The Annual Cost of Meetings - https://meetingleadershipinc.com/34
- Meeting Leadership Academy - https://meetingleadershipinc.com/academy
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