Here is the back-grounder for the 2nd assignment for The Natural Step and Business
The Real Costs of Going to Work
When we say "I am off to work" what we usually mean is that we are off to work in a place. This place is a distance from where I live and my community. We go to work not when we feel like it or when we have to but when the custom dictates it. As employers we also often fee that we need is a prestige place that will impress visitors and clients.
An enormous amount of the direct and indirect cost of work is built into this paradigm.
What are the costs for you the employee? Ron is a manager in Private Banking at the Royal Bank Plaza, one of the most expensive business addresses in Canada. He commutes from the suburbs averaging three hours a day. He has a large office with rosewood furniture. His office is connected to many meeting rooms, most of which are empty. There is a large support staff on call throughout the day. He spends about 10-20 hours a week in internal meetings.
This all looks quite normal. Until you ask him how many clients visit him in a week and how they really want to do business with him.
Ron see 2-3 clients a week in this office. Most of his business is conducted over the phone. Most of his clients would like to connect their computers to Ron's. But this is not allowed. Most of his clients would prefer Ron to come and see them but he does not have the time because he has to spend so much of it at the office. His time at home, he has three children, is very limited because he leaves home at 6:30 am and usually is not back before 7:30 pm. He has a full briefcase which eats into his home life even further. He is not in control of his life. He has run out of time. Here is how the numbers play out for Ron:
Gross Salary - $80,000
Bonus Opportunity - $15,000
So far it looks good Ron can make up to $95,000 a year or $60 an hour (working 200 days a year for 8 hours a day)
But remember the tax man takes 45% of his gross leaving him with $52,250 in his pocket or $32 an hour net.
Because Ron has a family he lives in a suburb and drives to work each day. His wife with 3 children also needs a car. Lease car payments, on one car and depreciation on the second car, insurance, maintenance and gas total $33,000. $27,000 of this expenses is directly related to getting to work. As a banker, Ron has to look the part, so he has to buy no less than 2 suits a year and all the right accessories $1,500 for office clothes.
Ron's direct costs of simply getting to work are - $28,500
Net real take home pay - $23,750 or $15 an hour net.
His commute takes 3 hours a day. This is lost time when he is not with either his colleagues, at work or with his family. Time commuting means that he loses 600 hours a year or the equivalent of 75 eight hour working days. If you costed this out on an hourly basis the indirect costs would be $19,200. The largest real cost to Ron is in having time and energy with his family.
The direct and indirect costs of Ron getting to work are about $42,000 or most of his net pay after tax.
Real Cost for the Employer
Prestige office space that gives the right impression - 1,000 square feet plus use of meeting rooms - $48,000
Time taken in meetings to talk about minutiae (15 hours a week for 40 min. for 40 weeks at $60 an hour gross). Time in meetings on a day basis is the equivalent of another 75 working eight hour days. No wonder Ron has not time either to serve his clients properly or meet his family needs, $36,000.
Support staff to Ron, salary and benefits - $55,000.
It costs the Royal Bank an additional $139,000 to have Ron come to work in the traditional manner.
Think of how you work. Think about the people that work for you. Does your picture look as odd as Ron's? Wheat can you do structurally to change this. What would working at home most of the time do for you and your family and your productivity?
The technology is available now to enable Ron and you to live a very different life!