How Much is Your Time Worth? – Unexpected engineering lessons from “The 4-Hour Workweek.”
Last week I had a typical conversation with a potential client. After the engineer described a problem his company was having, the conversation went something like this:
Potential client (PC): “Great! You do have an impressive background and you’re right – we have a lot of gaps that you can help us fill.”
Me: “It helps to have a pair of expert eyes look over your R&D processes.”
PC: “That makes sense. We worked with consultants before and were amazed how much time they saved us! How much would your services cost?”
Me: Describe various services. Give a range of very reasonable prices.
PC: “Oh…well the budgets are tight, the economy is bad…no one has money…I think we will try to do this in-house…”
Me: “Haven’t you been trying to do this in-house for a while now?”
PC: “Well yeah, but the budgets are really tight…so we’ll try to do it ourselves… We’ll call some vendors, read some technical papers…”
Me: “How long do you think that process will take you?”
PC: “Well, probably much longer than if you were working with us…”
Me: “And how much do you estimate that time would cost?”
PC: “Well, since we’ll just be using in-house engineering time, it would not cost us anything.”
Me: “????!!”
When I was working on my ME bachelors degree at University of Delaware, I was the epitome of a poor college student. I was completely at the mercy of student loans, the disbursements of which were consistently and predictably screwed up every fall semester by the university bureaucracy machine.
My parents believed that if their kids wanted a college education, it was up to those kids to figure out how to finance it. Being brought up in the former Soviet Union with a father who was a leading scientist in Fluorine chemistry, my siblings and I never looked at education as something optional. It was just something that you did. You ate, you slept and you got a PhD. So when the time came to go to college, we were going to do whatever it took. That is when I was introduced to student loans.
Which sounded great on paper, except for the teeny problem that like clockwork, the loan disbursements were always delayed by about 2 weeks every single fall semester of my collage career. During those two weeks, I survived by eating bread slathered with butter (a recipe I picked up from the Motherland) and borrowing money from friends for my coffee addiction.
The skill to be thrifty became even more useful in grad school, where my brand new family had to survive on a measly grad student stipend. Those student years taught me a variety of ways to save money, the main one being that you could save the most money, when you did stuff yourself.
For example, you could hire a cleaning lady to clean your house or you could save $100 and clean it yourself. You could take your car to a full-service car wash, or you could save $20 and wash, vacuum and polishing the car yourself. You could hire a math tutor for your son, or you could tutor him yourself…You get the idea. During my penny pinching years in college it was all about doing as many things as possible myself, thus avoiding paying someone else to do it for me.
So when I finally got a real job with a real paycheck, I was still stuck in a “do it yourself” mentality. I no longer needed to penny pinch, but the option of paying someone to clean my house, and make life in general easier and more pleasant just never occurred to me.
I am an engineer. And, as most of you know, from the very first Engineering 101 class we are taught, encouraged, and beaten into the idea that we HAVE to figure stuff out on our own. If the problem is hard you just work harder to figure it out. If you can’t solve an equation in a day, you just stay up at night and solve it.
It is a taboo for an engineer to ask for help on anything.
This practice of figuring stuff out on our own make us better engineers. It also weeds out the weaklings who give up after measly five hours of trying to solve an asymptotic equation. This was my opinion, until after a few years of a demanding work schedule, balancing two kids, a husband, and a California mortgage, I proceeded to have a small nervous breakdown.
I was trying to do everything myself. Every situation, whether engineering-related or not, had to be resolved by me. The biggest problem was that I did not see that as a problem. That is until I had my breakdown, which led me to read many books on philosophy and the purpose of life. One of those books was The Four-Hour Workweek by Tim Ferriss. Many valuable principles are described in this book. But the idea that really caused me to re-examine my engineering approach to life was this:
Time is a much more valuable commodity than money. You can figure out ways to get more money, but there is a limited amount of time allocated for each of us in this life.
Tim also introduced me to a rather unpopular concept with engineers – outsourcing. Paying other people to help you do stuff, exchanging your money for someone else’s time, asking for help – whatever you want to call it.
The idea that I did not have to spend time doing stuff that can be done cheaper and much more efficiently by someone else was an epiphany to me. I put it to work right away.
One task that was sucking up a huge amount of my time was cleaning the house. I hated doing it; it exhausted me and killed better part of my weekend. So I found a cleaning company and outsourced that task. When I left for work the first day of the cleaning, the house looked as if a tornado ripped through it. When I came back that same evening, the house was spotless. It has never been that clean the whole time we lived there. It felt as if a mountain fell off of my shoulders. From that point on, I was out $100/month, but I gained a spotless home, an extra 8-16 hours/ month of time to spend with my family and a good portion of my sanity! The benefits far outweighed the costs.
My next experiment with outsourcing had to do with updating my résumé. By that time I have gained a lot of experience as an engineer and marketing/sales professional and needed my résumé to reflect that. My first thought was that I was going to have to spend a lot of time staying up at night to do this and the thought was not appealing.
I decided to outsource it. I hired a great résumé writer who guided me through the whole process over the phone. In the end, I was out $200 but gained a top-notch professional looking résumé, a serious boost in self-esteem and extra 5-8 hours of life (which I would have spend formatting, revising and typing). Since I first realized the potential of outsourcing, the importance of time started to become more obvious everyday.
Fast forward several years in the future, I now run a company sticking to a philosophy that if a contractor can do something better and faster than me, I will be happy to exchange money for that service, because in the end, my time and sanity is much more important. I found great providers that now update my website (http://midcolumbiawebs.com/ if you’re looking for a webdesigner), take care of my accounting, and keep track of my sales. I use the time that would be spent on learning Quickbooks or messing around with HTML code to study things that interest me and bring value to my clients.
How about you? When was the last time you automatically said “no” to a service provider just because it cost money, without taking into account the fact that you will be robbing yourself (and your company) of the precious time you can be spending on things that really matter?
Think about it and then give me a call. Let my company help you save time, money, and make better products as a result.
1-800-931-9907.
Tags: 4hww, Consulting, engineering, Four Hour Workweek, mvp modeling solutions, Productivity, research, Tim Ferriss
Great post, Masha! I, too, was moved by Tim Ferriss’ book. In fact, I’ve embraced his idea of using a virtual assistant to help with grunt work tasks that don’t require a physical location. For example, I sometimes need excel databases to be cleaned up in a particular way, or images photoshopped. Can I do it myself? Yes. Should I do something like that for 5 hours? Heck no. If I’m doing anything on a computer repetitively, and I can see a clear pattern, I send it to my personal assistant, Louise, in the Philippines!
I recommend http://www.odesk.com to find and manage virtual assistants and projects.
This is a great article Marsha. As a small business owner, I always have more things to do and not enough time to do it. So, I “outsource” the jobs I don’t have to do or want to do to college interns that work for me. I have also realized that I don’t need to chase after every business opportunity — every client is not my client and that is okay. I have a niche recruiting firm and I can not help all people, but the one’s I can offer my assistance to is happy and satisfied. It’s the value you provide that helps you demand the price you deserve.
Great post, Masha!
Moving engineers and business owners 1mm outside of their comfort levels - preserving the status quo that they can solve everything themselves - is daunting. It’s the largest conceptual distance they possibly will ever have to traverse.
Engineers may feel that if they outsource or bring in an external consultant, they are acknowledging that they are not bringing value to their organization. Therefore they may feel that their job may be in jeopardy. So their perception of how much their time is worth may be huge. An important question to ask prospective clients is to determine whether they have experienced layoffs, a cut back in work hours, etc. so that we, as consultants, understand the environment into which we are placing our recommendation to outsource.
Masha — I agree — great post.
I learned to “outsource” while in graduate school. A close friend (a woman) who was a business student did an analysis of the value of her time and what she would have to pay for services such as housecleaning. Needless to say, the cost analysis showed that you are losing money when you do things yourself that others can do for you — often better and faster.
So even when I first got out of grad school — and had very little money — I paid a housekeeper to clean for me. And now, more than 30 years later I still have a housekeeper! It’s just good economics!
I nodded yes all the way through the discussion of the client who was getting work from his staff for free. I have been consulting for 20 years (just celebrated the anniversary) and long ago decided that other consultants were my allies, not my competitors. My real competitors are the people inside the client’s company. The corollary to this is that I never provide a detailed outline of how I will solve the client’s problem, because I know that it will certainly be used as a project outline for somebody inside to solve the problem.
Years ago, somebody gave me a tool for estimating how much employee time was worth in a business. It started with the idea of the productive unit; in the case of an airline, the productive unit is the airplane and everybody and everything else at the airline works in support of keeping the airplane busy and full of passengers. In an R&D outfit, like I worked in for more than 20 years, the productive unit is the individual research professional - not the manager, not the lab tech, not the librarian, not the guy who mows the lawn, etc. So in the R&D outfit, you divide the total annual budget by the number of hands-on chemists, engineers, physicists, etc., to get an annual rate. Interestingly, dividing that by the number of minutes in the year gave a rate of $2 minute (this was 1980; probably much higher now).
I conclude that Masha’s client was paying a dollar or two a minute for an in-house engineer to do a job that she might have done quicker and better for about the same rate - and Masha would not have wasted time in group and committee meetings, coffee breaks, safety meetings, or shooting the bull with the person who delivers the mail.
Final thought - when I was new to consulting, somebody told me that people will value my time at the rate I value it, and not a dime more. Nobody ever brags that he has a cheap lawyer or a cheap surgeon. Why would we want to let them brag they have a cheap chemist?
Geoff
Hi Masha,
Thanks for this insightful story. I have also noticed too much of “I will do it” in my work. Part of it is that I have a lot of fun actually doing it and learning as I go along.
I also have some experience with outsourcing (when my boss came to me and said “you WILL outsource this
), and well managed it is a great resource. At the same time my industry (pharmaceuticals) went on an outsourcing binge and while plenty of good people are moving back to India and China, the results are still mixed.
The “not in my budget” response is a common phenomenon. Managers usually don’t see the entire picture for many reasons (business secrecy etc.) and together with the current bonus structure the real savings cannot be realized. I see this also on the capital budget side, when a purchase of an instrument could be a great time saver.
Again, this was a great reading. Please keep this blog alive.
Best regards,
Slawomir Janicki
Hi Masha,
I really enjoyed your post because it was quite relevant to a recent experience. In order to travel to China recently, I needed to get a visa from the consulate in Toronto - a 1 hour drive. I could have had a travel agent obtain it for me (paid for by my client) but I thought, “no, I’ll just get it when I’m passing through the city..”. Well, as luck would have it I never went through the city at a convenient time and the departure date arrived. Finally I HAD to go and it was the first day after the Chinese national holiday and the first open day of the month - in short it took me 10 hours to get my visa. But that’s not all, I then HAD to go and pick it up. In all, I spent 12 hours and $25 worth of gas to save my client about $25. So my time is worthless. Not very smart and a good lesson to outsource those jobs that should be outsourced. For what it’s worth, my benchmark for outsourcing is $50 per hour, which means I will be outsourcing my book-keeping, and if there is a next time, getting my visa.
Thanks for a very timely article!
John Stockton
Hi Masha,
You might have been hitting on the ideas of
http://en.wikipedia.org/wiki/Division_of_labour
presented by Adam Smith and refined by Ludwig (Richard’s brother) von Mises
and the more sophisticated notion of
http://en.wikipedia.org/wiki/Comparative_advantage which show that in the end you have win-win situations.
Best regards.
Great discussion. I find it scary how much I have agree with Tim Feriss in general.
TO Jeff Waters: Those are great pointers. Do you (or anyone here) have any recommendations for powerpoint preparations?
Hi,
Didn’t Oscar Wilde summarise this more than 100 years ago. He said, “The cynic knows the price of everything and the value of nothing”.
I feel that too many of our “leaders” and “clients” perceive us all as interchangeable resources. This seems to devalue the intrinsic motivation required to develop our professional education or formation. Much of our knowledge is dependent on the path we have strolled along to learn it. So our form of human resource isn’t often that interchangeable. It is scarce and, therefore, (theoretically) valuable.
By economic convention we should all be making shed loads of money - and therefore it would make sense to outsource those things that we can’t do so well (or distract us from creating our wealth). This provides an opportunity for others to do things we can’t or won’t do: to do them more economically than ourselves. Unfortunately we’re not bankers - and are rarely in a position to hold others to ransom.
In my professional life, I once had to populate a database with lots of esoteric data. None of my team wanted to do it. However one didn’t mind writing a procedure to validate the data. And we hired a temp to input the data 3 times. We just checked for errors and differences - saved us hours, hundreds of pounds (dollars in your money) - and all were happy. Win. Win. Win.
Internal competitors to external consultants sometimes don’t account for the full economic cost of their employment. They don’t account for the organisational overheads - but hey if it’s a choice between hiring an outside consultant - or outplacing an employee - that may be a tough decision.
Privately I value a cleaner enormously - and more than that the team of Polish guys who clean and valet my car. All these people give me time (or my time back) … which ultimately is so much more valuable than money :-).
Cheers,
David Kelsall
Hi Masha,
My previous post got a bit garbled by a “server busy” message after submission.
“Cheers,
David Kelsall”
was at the bottom of the original post.
What if you have loads of time on your hands? I have no kids, no time-consuming hobbies and the time spent at work is also within reasonable limits. I have balked at the idea of paying someone to clean my house just because I can afford it. Therefore I still do it myself. The time I could save by paying someone else would not be used for any meaningful activity - probably I’d just sit more in front of the TV
Clearly the idea of external help only applies to scarce commodity…
Dear Jeff, Jahari and Babette
Thank you for your comments! Glad to hear that you all have found value in outsourcing and in cheap labor of collage interns (I payed my dues as an intern, so I am allowed to say that).
Babette, you are absolutely right about engineers being afraid of brining in consultants, because they think that they will be seen as unable to do their job, if a consultant is called in. But the truth is, if you are a good, smart qualified engineer and a researcher, you should never be afraid that someone might snatch your job from underneath you, because you should be creative enough to constantly learn and re-invent yourself and your work, so that you are always providing value to the company, even if a consultant is able to do a part of your job more efficiently.
When engineers understand how to work with, and learn from, outside consultants instead of being threatened by them, the in-house engineer’s value and job security increases tremendously.
Geoff,
Great comment!
Come to think of it, you’re right! I do not waste time in “group and committee meetings, coffee breaks, safety meetings, or shooting the bull with the person who delivers the mail” when working with a client, as you cleverly pointed out. Good point to bring up with potential clients.
Masha
John - great China story! Thank you for sharing, it made me laugh out loud!
Slawomir - thanks for the compliment on the blog. It’s readers like you who keep it gong!
As far as your comment - if you like doing the work, then by all means keep doing it! I completely understand. For example, I find programming addictive. It is not essential to my business or life in general, but i LOVE writing and debugging code. I know its a bit sad, but debugging code to me is a bit like a drug. I can stay up all night trying to get some subroutine to work, and i truly enjoy it.
Can a real programmer write a piece of code waaaay faster and more efficiently then me? Absolutely! But, if I need a subroutine written I might choose to do it myself, because I enjoy it, NOT because i feel like I have to do everything myself.
The main difference being choosing your activities and “having” to do them.
Dear Kari,
Thank you for your comment. I can tell that you probably have not yet read the 4HWW :). I highly recommend it to you. When you start reading it, you’ll see that your time IS the most scarce commodity!
If you have nothing else to do aside from doing boring stuff that you can outsource, then the problem is NOT that you have too much time. The problem is that you aren’t using it to do things that you like.
So I would tell you to still outsource the boring stufff, and during all the free time, start actively looking for things that you really enjoy. Join clubs, find hobbies, start taking classes, get more involved with professional activities… you might have to try out a few things before you find out what you truly enjoy. Of course that’s just my personal take on things.
To Linus A: I’m not sure what you were looking for in terms of powerpoint… but my biggest piece of advice to anyone giving presentations: Read “Presentation Zen” by Garr Reynold’s. Oh how I wish that was required reading for all presenters! I cringe in 90% of the professional presentations I’m forced to sit through.
Jeff,
I meant, I would like to outsource my technical powerpoints from time to time.
Was looking to see if you have had good luck with it and could recommend. I wanted mostly help with certain templates and some graphics and want it dirt cheap (j/k).
Linus A*, I have experience in creating powerpoints, templates and graphics. I may be able to help you with your needs. Email me @ leo.jax@gmail.com
Great post, Masha!. The important thing is that we always learn the lesson the hardway, that is when as engineers in particular starting to let the job go or delegate when we thought it is not manageble with all other jobs which we are trying to do ourselve. Once we start delegating, we came to know how our life got relaxed and we find more time for more important issues. I haven’t read TIM FERRISS, but now I would go for it. Thanks for the post
Linus A: Now I understand. I haven’t outsourced full ppt creation (actually, because I enjoy the artistic part of it… which falls in the category of “if you love it, do it rather than outsource it.”)
I have needed some photoshop and vector art created for my ppt presentations, however, and have had great success outsourcing that to my virtual assistant with some simple instructions.
If you search Odesk, you’ll probably be able to filter on terms like Powerpoint, presentation, and/or image editing to find a good resource. You can also filter on price and find any price point from $2/hour to $20/hour depending on skills, experience, English proficiency, and location. I recommend trying a few people and if you find one that suites your communication style and speed, stick with him/her! It doesn’t cost much to try a few.
Masha, as a beginner I may not be able to share any experience but I do feel that these words will be of guidance to me when I find no way out in an engineering problem. I had the feeling that asking was not right and it is equivalent to copying and has no dignity in it. But, then I need to put aside this ego and accept that Time is more important.
Thank you so much. Sharing is noble. Keep sharing.
ajeshsairam@gmail.com