There’s an old, wise saying, “Money makes money. And the money that money makes, makes money”. Compound interest blows me away, it may be the 8th wonder of the world. It can aid or harm you immensely depending on if you are saving or borrowing money. The simple explanation: compounding happens when money in savings are reinvested to generate their own earnings. The worst thing one can do is interrupt the compounding effect, and time is the primary driver of success.
James Clear does a wonderful job illustrating the compounding effect of self-improvement in his book ‘Atomic Habits’. Just like money compounds through compound interest, he demonstrates how the effects of your habits multiply as you consistently repeat them. The concept that your current outcomes can be attributed to a lag in your past habits hit me hard, and has greatly influenced the way I think about my personal habits, as well as our organization’s habits.
Organizational success works the same way; your team’s trajectory can be completely off target because of just a few small habits. Sometimes just a small tweak in the way we are scheduling our day can lead to massive results. Consider this, you have a crew of 4 employees and each day they spend 30 minutes in the morning talking about last night’s football game. They head in to grab lunch 15 minutes before lunch begins and take another 30 minutes after lunch getting back to the job site and working again. Then, they finish off the day a half hour early, getting cleaned up, and ready to go home. I have spoken to many cities and companies that would describe this as a “typical” day.
Well, that typical day comes at a cost of 1.75 wasted hours, per employee, per day. So, in a single day, this crew of four wasted 7 hours; basically one full time employee just by the way they manage their day. How does that compound? With 260 work days in the year, that equals 1,820 hours, again that is basically one employee per year. This is also assuming that they are spending their time well the rest of the day. You can continue to do the math over time and the picture doesn’t get any better, but this is just a rudimentary way to look at this. The wasted time doesn’t allow for compounding so you are losing much more than just 7 hours a day.
I mentioned in an earlier article how we were able to go from sweeping our city once per year to nineteen times. All the credit goes to employees who have learned how to manage their time and energy well to make such a significant contribution to the residents of our city. But the compounding effect goes far beyond having cleaner streets for our residents. There is a lag between the work we are doing, and the real results. Never underestimate the compounding effect of good work using the example of street sweeping. A few of the compounding effect results could be:
Cleaner streets (no kidding).
Less debris and safer for bikes/pedestrians (again, duh).
Much less debris in the storm drain system (very expensive, and time consuming to remove).
Less time and money cleaning the drain system.
TVing drain lines is much easier because they are not clogged (saves time and money).
Fewer pollutants are getting into the city’s water bodies.
It is now easier and faster to sweep the streets (not the caked on mud or debris).
Less plugged inlet gates (We are picking up all the leaves and not allowing them to back up the storm water system).
Less flooding in rain events (The system works properly, this potentially saves houses being damaged or car accidents).
What this also shows is the impact of the time being wasted by our four employees, in the example above, goes much further than just the hours wasted. If those four employees were all street sweepers, look at the list above and think about the domino effect of all the work they didn’t do! The compounding effect goes much deeper than seven hours wasted a day!
There is so much value in consistently doing the right thing. Just like mentioned in the Public Works Iceberg most of the impact of great work is never actually seen by the public. Basically everything after number one on the list above is completely unnoticed by residents of a city. I would actually argue that number one (Cleaner Streets) is invisible too because most residents don’t notice a clean road, but they will notice a dirty one.
As I have been involved in local government and worked with other cities, the most common culprit to compounding work is time. Just like with money, if you interrupt it, or don’t respect it, the compounding principle doesn’t work. Well, at least not in your favor. A lack of quantifiable objectives leads to devaluing time, because if it always can wait until tomorrow, then it’s always a day away from being completed.
Tiny changes in the way we spend our time and resources add up to big changes. The reason I believe most people and departments are failing is because of Parkinson Theory. This theory believes that the work expands to fill the time allotted for its completion. Simply put, if you have two hours to do a certain task you will complete it in two hours. If you have ten hours to complete that same task, you guessed it, it will take ten hours. So what if you don’t put a deadline on it at all? That’s right it probably isn’t getting done.
The sad truth is most people think they are far more productive then they really are and their output probably isn’t as big as they believe it is. Just like that 32-pound fish your Uncle Fred claims to have caught thirty years ago. It was probably more like an 18 pounder. One city I worked with told me they started tracking the number of hours their street sweeper was actually out on the road and it came to an average of 2 ½ hours per day. This city worked ten hour days.
When I asked our employee how he was able to sweep the city 19 times, he said, “It was easy because I manage my time well, and I am consistent. I clean and prepare the sweeper the night before, and I take a lot of pride in how much stuff I take out of the road, and keep out of our storm drains.” First and foremost credit to him, he takes so much satisfaction in his work and it shows in every way. I believe the results are tied to the fact that we track and keep records on how many miles they sweep and how much debris we remove from the road because this gives an employee a quantitative value they can aim for and be proud of. The most impressive thing about this employee sweeping our city 19 times, he only spent 860 hours in the sweeper, less than half of his time spent at work was sweeping as he has other responsibilities that pull him away from doing it every day.
This compounding effect goes beyond work, it also matters in leadership. When leaders set the tone with high standards and expectations for themselves that will be passed on throughout the organization. Personal development and leadership development go hand in hand, and so much of our success in this life is based on the “who” we are surrounded with. Organizations should look to pass on leadership skills, theories, and most of all do their best to lead by example. Great leaders build more leaders, leadership grows, and compounds. This is truly how organizations become great.
Comments