Valuing
Your Time -
Find out what your time is worth
Introduction:
A first step in good time management is
to understand the value of your time.
If you are employed by someone else, you
need to understand how much your employer
is paying for your time, and how much profit
he or she expects to make from you. If you
are working for yourself, you should have
an idea of how much income you want to bring
in after tax. By working these figures back
to an hourly rate, this gives you an idea
of the value of your time.
By knowing the value of your time, you
should be able to tell what tasks are worthwhile
to perform, and which tasks give a poor
return. This helps you cut away the low
value jobs, or argue for help with them.
Using the Tool:
Calculating the Value of Your Time:
If you are an employee and you don’t
have a charge-out rate, estimate the annual
value of your time using the table below
(we show you later how to estimate these
figures if you can't get hold of them).
|
Your salary |
|
Add |
Your benefits |
|
Add |
Employer's payroll tax |
|
Add |
A contribution for rent, equipment,
heat, light, etc. |
|
Add |
A contribution for overheads and supporting
services |
|
Add |
Profit expected |
|
| |
|
|
Total: |
|
|
These figures can be difficult to get hold
of. As all we need is an approximate figure,
the following may help:
- Your salary and benefits: you should
know! The value of benefits will often
be shown on, for example, end-of-year
tax statements.
- Employer's Payroll Tax: is dependent
on the country you live in. Your Human
Resources or Accounting Department may
be able to tell you this.
- Contribution for rent, equipment, heat,
light, etc: it is difficult to get to
this figure unless you can read the accounts
of your organization. With this in mind,
you can use a value of 10% of your salary
and benefits as a 'rule of thumb'.
- Overheads: again, this information
is difficult to get unless you can read
your organization's accounts. Use a value
of 40% of your salary and benefits as
the rule-of-thumb for this.
- Profit Expected: in reality, this will
depend on the sector you are in. Again,
in the absence of reliable figures, use
a value of 50% of all other costs as the
profit you should bring in. This is a
good value for a company that sells people's
time. Other businesses may expect greater
profit from your activity.
Example:
As an example, a lawyer may earn a salary
of $55,000 per year, with an additional
$10,000 of benefits. The country she works
in has a payroll tax of 12.5%.
The annual value of her time can be estimated
at:
|
Her salary |
$55,000 |
|
Add |
Her benefits |
$10,000 |
|
Add |
Employer's payroll tax |
$65,000 x 12% =
$7,800 |
|
Add |
A contribution for rent, etc. |
$65,000 x 10% =
$6,500 |
|
Add |
A contribution for overheads |
$65,000
x 40% = $26,000 |
|
Subtotal: |
|
$105,300 |
|
Add |
Profit expected |
$52,650 |
|
| |
|
|
|
Total: |
|
$157,950 |
|
Calculate the Number of Working Days:
Next, calculate the number of working days
in a year as:
|
Total Possible Working
Days: |
|
Deduct
|
Holidays |
|
Deduct |
Public Holidays |
|
Deduct |
Sickness, training, etc |
|
| |
|
|
Total: |
|
|
Example:
Again as an example, if the lawyer has 25
days holiday each year, and lives in a country
that has 12 public holidays, then the number
of working days is:
|
Total Possible Working
Days: |
52
weeks x 5 = 260 |
|
Deduct |
Holidays |
25 |
|
Deduct |
Public Holidays |
12 |
|
Deduct |
Sickness, training, etc |
12 |
|
| |
|
|
|
Total: |
|
212 |
|
From these figures, calculate firstly a
daily rate:
$146,250 / 212 = $745 / day
And then calculate an hourly rate:
$690 / 7.5 = $99 / hour
If you are self-employed, use a similar
approach to work out the hourly value of
your time; however, make an appropriate
allowance for the time that you will be
marketing and selling your services and
running your business.
Working through this calculation, you may
be quite surprised how high the value of
your time is!
Using This Figure:
This figure shows you the average value
you should aim to deliver with your time
if you aim to be a satisfactory performer.
If you want to be a high achiever in your
organization, you should aim to offer substantially
better value than this.
In looking at your workload, think about
a rough value of each of the things you
do. Where possible, your aim should be to
concentrate on tasks with a value greater
than the calculated value of your time.
Eliminate tasks that have a lower value
than your time whenever appropriate.
The next
article helps you identify time wasters
that you can eliminate...
- To download
this section of Stress.MindTools.Com in
PDF format to use and print at your convenience,
click here
- Read the next article in this section
on Activity
Logs, and start to identify timewasting
activities
- Start using prioritized To
Do Lists as a simple technique for
increasing your effectiveness
- Learn how to get the help you need with
effective delegation
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box? Subscribe
to our newsletter
today...
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