The Concept of Hourly Rate for Better Time Management...

The Concept of Hourly Rate for Better Time Management...

In recent posts, we've talked a lot about improving your skill of time management. Before turning to other subjects for a while, I wanted to offer one last idea to help you better refine your ability to choose your highest value activities.

I've said before that time equals money. Either you spend money for time or time for money. The most important part of the equation is to ensure that you are getting the best return on both your time and your money.

To help our business coaching clients with this differentiation, we often discuss the concept of selecting your highest value activities based on your hourly rate. Why? Because most business owners and entrepreneurs don't think in terms of hourly rate, yet, often do work that does not justify the hourly rate (extrapolated to annual income) they want to earn. Here's a great question to help you focus in on your highest value activities (i.e. activities worthy of your hourly rate), "Would I pay someone else my hourly rate to do this task?"

Don't know your hourly rate? Well, here's a simple formula: determine how much income you want to earn and then divide that number by 2,000 (2,000 is based on fifty, 40 hour work weeks). Obviously, to be more accurate, you would take your actual number of work weeks (read this post if more than 50) and divide by your average number of hours per week.

So for instance, if you plan to earn $200,000 this year, then your hourly rate is approximately $100 per hour ($200,000 / 2,000). Whenever you decide to personally do or not do something, the clarifying question you would ask yourself is this, "Would I pay someone else $100 per hour to complete this task?" If the answer is no, then this is not one of your highest value activities and it should be delegated to an employee or subordinate or outsourced to another firm for completion.

The only way you will earn $200,000 is by consistently doing the tasks that you would pay someone else $100 per hour to complete.

Like any new skill or habit, this will be a struggle at first, because being an entrepreneur, you are used to doing it all yourself.

You will have to make the decision on the outset of the task..."Do I do this task, or do I delegate this task?" Because in my personal experience and in working with many of my coaching clients, I know that once you are into fixing a printer (or whatever the task may be) that you thought would take less than 30 minutes and now it has been two hours, you are more likely to push forward and complete the task yourself.

And at the end of the day, you are either having to work longer to make up for the miss-spent hours or you have missed out on significant opportunities during the time you should have called in a printer repair person to fix your problem. You spent $200 or more of your time on a task worth probably less than $50.

Not a very good return on investment.

The more you discipline yourself to focus on only the things you can do and delegate the rest, the more comfortable you will become with this concept and its application and the more likely you are to earn your desired annual income. Here's a great article on how Pfizer is empowering their managers and employees to utilize this concept to its fullest and spend more time on their core work and highest value activities.

Ron McNutt is a certified FocalPoint Coach in Charleston, South Carolina.

If you’d like to contact Ron about this article or on any business improvement strategies, you can email him here.

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Steve Thompson,
President,
FocalPoint Coaching, powered by Brian Tracy

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