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Opportunity Cost and Compounding Your Management and Executive Time

December 6, 2023 5 Min Read Article, Transfer & Exit, Transition/Exit Planning
Mario O. Vicari, CPA
Mario O. Vicari, CPA Retired Director

Tick Tock. Time is not fungible. Use it well or lose it. The decisions you make about how you spend your time and the things you focus on in your role at your company are profound and can have a dramatic effect on your business, career, and personal growth.

But how often do we really take a hard look at how we spend our time in our roles as managers and executives? For most people it is not often or never. We have a title and set of responsibilities, and we show up every day to get all the work done since there is never a shortage of things to do. We get in the habit of doing things and don’t stop to determine if we should be doing higher-level work that can contribute more to the growth of the company and ourselves. It is human nature to revert to that which is familiar to us – in our comfort zone – rather than to push ourselves to higher-level, value-added work. 

If you are in a management or executive role at your company, the decision on how to use your time comes with a significant opportunity cost for your company and your career because if you get slotted into a routine, you could be hurting the company and yourself. If you are not pushing yourself to do the most important and valuable work each day for your role, the cost of the lost opportunities for both you and the company can be significant because the effect of these decisions compound over time. 

Tick Tock. The opportunity cost to the company is obvious. If there are more valuable things to contribute, the company should benefit and prosper as a result. On a personal level, the opportunity cost may be even more profound because of compounding of your skills and the personal growth that results from pushing yourself to take on higher-level work. We spend at least one-third of our waking hours working, so why not do the work that matters, makes you happy, and contributes the most to your organization? Having a sense of accomplishment and contribution for the one-third of our time we spend working has a dramatic effect on our overall happiness in our careers and our lives. 

When we think about how we spend our time, it is important to pay attention to the Pareto Principle which says that 20 percent of your effort produces 80 percent of the results. Filtering your activity through this lens can provide insights into those activities that are value-added and those that are not. The fundamental question to ask yourself is this: 

Am I getting the highest and best use of my time so that I add the most value to the company in exchange for my compensation?

One of the missteps individuals make in this area is to not try to do more high-level work because it is not part of their current compensation package. Why work harder and take on more responsibility if I am not getting paid to do so? 

The answer is twofold. First, pushing yourself out of your comfort zone to take on more higher-level work allows you to develop new skills which then allow you to contribute more to the company’s success. Second, when you demonstrate that you can do higher-level work, your opportunities and pay will increase along with your growth in skills and the value you create for the company. 

The obvious next question is that since there are only so many hours in a day, how do you take on more important work and responsibility and still handle everything else on your plate? The answer is to look at everything you are doing and determine where you can:

  1. Eliminate
    • Tasks and Workload – Take a look at your tasks and workload and eliminate unnecessary work – work that is redundant or with people who waste your valuable time 
    • People – Pay close attention to “Time Vampires” – people who suck up your time and drag you into their problems, issues, or just generally get in the way of getting things done efficiently. Eliminating this distraction can create a ton of capacity if you are intentional about dealing with them 
  2. Delegate – If there is someone in your organization who can do the work the same or better than you do, then delegate the work to them
  3. Automate – Use technology to reduce the time allocated to tasks or activities

The key to these three choices is to create space or capacity in your work schedule so that you have the time to focus on higher-level, value-added work. 

I have been practicing this approach to focus my time on its highest and best use for more than 10 years and the effect on my productivity, skill development and happiness with my work contribution has been profound. Fair warning – it is not easy to do and requires constant focus and discipline because there is so much work to get done and it is easy to revert to old habits. I still review and refine my approach at least twice per year and it takes constant focus and effort.  

In that regard, I have developed a process to go about this exercise which will be Part 2 of this blog. 

Tick Tock.

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Mario O. Vicari, CPA

Mario O. Vicari, CPA

Retired Director

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