Wednesday, April 18, 2012

Perceived value of time

Interesting report from TOA technologies claiming that waiting for home services costs the US $37.7 Billion a year.  I'm not going to comment on that, we all know how annoying it is to wait for the cable guy.  I read the report and what got my eye was the way the report valued time.  They asked people to estimate the worth of their time:
Nearly a third (31%)  of respondents who make less than $50K annually estimate their median average cost of waiting for an hour to be $13 (range $11-15); after the average 4.3 hours out of work for one in-home service appointment – it racks up to more than 2 full days lost at work for this hard hit group . Depending on their level of education and the age of the respondent, there is a wide range of opinions on the value of time.
Looking at these figures people do not value their time as they are paid.  Someone on a $100k salary is on approximately a $50/hr rate.  Someone on a $30k salary is on approximately $15/hr.
When we look at the perceived values for 1 hour, the perception is valid up to the $35-50k salary range. The perceived value levels out at about $20/hr before jumping to $26/hr for the high rollers.
What does this mean for us as Lean practitioners, possibly a lot.  For a start we know those below $50k a year understand the labour cost of waiting.  When money is tight we are far more aware of its worth and our own.  For those above $50k/yr there appears to be the start of a disconnect between waiting and its costs.  This is important in Alberta where many skilled workers are to be found in this higher income zone. 
The fact is if you don't know what your time is worth you can't make valid decisions on what the cost of waiting is. The result is that many company are incurring the wrong cost.  Paying out high high dollars to staff to wait to save a few dollars on shipping costs.

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