Good people do bad work too

This is an emotional brain dump of pragmatism.

We all know people in our fields and social circles that we like as people but do not respect as professionals. This disconnect between affinity and evaluation of skill often causes us to make bad business decisions for the sake of friendship. DON’T.

This is especially true of arrangements of subcontracting work. Ultimately, your bottom line is based on the timeliness and quality of the finished product you present to the client. All subcontracting arrangements require management and direction. Editorial decisions must also be made to ensure that what you deliver is something of which you can be proud; as well as what the client has requested.

Therefore, I posit that working in your social circle is not entirely a bad decision; but certainly one that must be based on respect for work instead of respect for friendship. These arrangements can build social capital, but often create tensions and ego problems.

The reason you do what you do is because you believe you are good at it. Good enough, in fact, that what you offer is better that what someone else can offer. Your opinions matter. Your clients buy your services because of their faith in you. Make sure you trust your reputation to the people you think are the best at what you don’t do.

Side note: I have said before that I believe that it is almost always better to refer work out instead of subbing it. I stand by that. Unless you want to run a company, firm, or agency; at which point I say subcontracts should be converted to employment contracts.

Hugs and Headbutts,

-Bully

What’s your number?

I have been talking with a lot of people lately concerning business development. One of the most frequent topics of conversation is how to build competitive rates and bids. What I am finding most often is that young entrepreneurs tend to have no idea how much they are worth (sometimes overestimated) and even less idea how much services cost.

The strategy listed below is simply a suggestion; however, the prime directive here is that pricing of services is not a dart throwing game.

Let me start with this: don’t price yourself based on your friends; or your last salary. Your last salary is probably closer, but you shouldn’t be building your rates based on anything except the expenses and profit expectation for your business.

Freelancers are bad at this. Small service businesses are bad at this.

So how do you do it if you can’t just take another person’s rates and make them your own?

For a freelancer, this will sound really complicated because you just want to throw out a number and call it a day. Bear with me.

Look at one month.

1. Figure out your expenses (living, business, maintenance) and
2. Figure out how much you need to be making over and above that (work with a financial planner to determine what your life plan is).

Now this is your monthly income figure; but you may work hourly or by job rate.

If you work hourly, divide your monthly income figure by the number of hours you plan to work. This is your time value.

(Expenses + Profit)/160 Hours = Time Value

You have now valued your time, but not your services.

If you are not going to subcontract anything out to others, you will need to take that time value and divide it by .75 in order to come up with your Service Value. This will make sense in a moment. Maybe. [Think of it this way, if you are doing all the tasks - regardless of value - you need your average income to be the Time Value.]

Do this exercise:

1. Take a full job and break it into task groups by category and specialty based on just the general skills needed to complete them;
2. look at the groups and prioritize the work by difficulty. In most cases you will find at least 3 to 4 categories and difficulty levels (try to make this 4).
3. Now take your Service Value and multiply it by 100%, 85%, 65% and 50%.
4. Correlate the tasks by difficulty level to your newly developed prices.

Remember, not every task you complete takes your full skill, but it takes your full time. This is where the idea of subcontracting comes from.

If you want to increase your profit margin, subcontract your lower priced and lower difficulty work out. You should be spending your time doing your best work and your client shouldn’t be paying your full price for menial work. Price your services based on the difficulty values; and find your subcontractors based on these rough numbers. This will help you bid competitively.

A small service business has many more considerations due to different possible models and tax arrangements, but the fundamentals are the same. The differences here are complicated enough that you should engage a business consultant that can help you with a salary development exercise.

Do a purposeful analysis of what you should be charging and stop comparing yourself to people around you; because most of those people threw a dart.

You owe me.

-Bully

The case against robots

Disclaimer: @jose602 is a robot and he’s okay.

There is something to be said for the production processes forwarded by the industrial revolution. There is also something to be said about knowing where those processes end and individual thought becomes a facilitator of speed.

Corporate America is full of lower level jobs where the individual is expected to perform specialized repetitive tasks for the sake of efficiency. When one of these processes backs up, the solution is to automate or throw people at it. However, there are many areas where we have simply decided that ’specialized’ and ‘repetitive’ means efficient.

Example:

I was recently asked to review a client’s process for handling what is essentially an escalated customer service response mechanism; in order to assist in developing interventions to mitigate a huge backlog. The process had regulatory requirements for timeliness that were not being met and the regulator was coming down on the client for sending out formal requests for extension to the timeframes en masse. In this process, they had broken down the necessary activity into specialized production tasks:

1. Sorting – Sorting is a simple repetitive task, so it was given to a lower level staff member.
2. Intake – Intake is a data entry and scanning job; also given to a lower level staff member.
3. Assignment – Assignment – or distribution of workload – was given to management based on trending and supervisory expertise; but was not considered a time consuming task.
4. Research and Response  – Research and Response was given to skilled workers hired for writing and critical thinking skills. (this was described as a combined task performed by one tier)

My initial observation was that this structure makes theoretical sense. It was only upon observation and review of the work product that I was able to determine the problem.

The back up was clearly in the tier related to Research and Response, as expected. This is the most time consuming part of the process. The client was aware of this and began adding people to the tier expecting that less volume per person would increase efficiency. There are two problems with this solution:

1. Efficiency is an equation = work output/work input x 100. The solution increases neither value because you are simply adding more people with the same capacity for input and output. And you’re going to bleed money. Executives don’t look at the traditional energy equation when they think efficiency; they look at “how much am I getting for my money?”. By the economic measure of efficiency, we change people to dollars: $50 gets you 50 files; $100 gets you 100 files. Do you feel more efficient now?
2. Secondly, you will have to perpetuate the model unless the increased volume is a temporary condition. What happens with periodic spikes? You end up workload managing instead of improving capacity of the existing resources.

This solution is temporary and expensive. Increasing the efficiency of the current staffing is a much more desirable outcome.

Further observation of the work functions and product were extremely revealing. The Research function is meant to determine whether rules were followed by both parties and whether subjective professional judgment was appropriately applied. The R&R team was tasked with reviewing the incoming inquiries; determining the nature of the inquiry; and distributing their caseload to subject matter experts for responses that would be placed in a letter to the inquirer. The job description function of this team was to draft the response letter and ensure that it contained a restatement of the issue, a description of the research that was performed, and provide an expert determination of validity.

This is how they did it. They reviewed the inquiry and typed the issue (generally verbatim) into a database. They copied this database field into an email which was sent to a subject matter expert. The subject matter expert would work through a queue of questions and respond based on their knowledge of the rules or circumstance by placing a comment directly into the database record. The team member would then pull up a form letter template that contained paragraphs of introduction and a statement that the inquiry was reviewed by a subject matter expert. Into this template, they would place the issue description and response paragraph from the database.

You see the problem?

The Research and Response team was not performing either task that they were ostensibly assigned to; and their job functions were intellectually far below their employment level.

The responses from other departments were never read by the team member. Rather than becoming a subject matter expert in their own right; they simply cut/pasted information into the form letter and sent it out. Therefore, anytime that a similar case came in, the time consuming step of sending the information to another party for review and awaiting response was needlessly taken.

The team was filled with robots and the robots were slowing down the process because they had been instructed not to think beyond the level of identifying – based on keywords – who else should research and respond.

My instruction to the client was this: Stop automating a process meant for humans and you will see an increase in efficiency.

The client needed to remove the instruction to simply populate templates with other people’s content and allow for the team members to read and absorb the inquiry and it’s associated expert response in order to train it’s employees up. Let the people that you pay to write well thought out responses write well thought out responses; and learn the business rules at the same time. Subject matter experts also often speak in jargon; so a cut/paste response probably wasn’t serving the company very well in the long run either.

There are still many instances where the Research and Response team needs to have a subjective decision reviewed by an expert prior to formulating the response to the customer; but this intervention removed the need for many of the time delays built into the “efficient” process and the need for additional expenditure for temporary assistance. The R&R team members are now able to draft many more responses autonomously and only pull out complex cases for the review process.

Faster production. Same amount of money. Workers empowered. Client happy.

I am not a robot,

Bully