We’ve been in business for 35 days and have been fortunate to experience strong growth while providing our services to 16 unique clients. We’ve been able to provide a wide range of technology, graphic design, and website solutions for businesses in all different industries of all different sizes. As we bring on more clients we have more responsibilities, and we’ve been observing how our distribution of hours is skewing heavily towards client time.
No surprises here. As we increase the amount of time we spend on clients our cash increases.
We would love to be spending 100% of our time with our clients, but there are other functions of the business that we need to tend to, including our latest project, Firedove Incubator.
So, how does a small firm like ours increase the amount of hours we can commit to our clients and other business activities? The answer is deceptively simple.
The time has come for Firedove Technology to increase the size of our team. Before we announce our newest addition to our flock, we wanted to share with you how we are using our data to guide this decision.
Firedove Technology does not have the capacity to guarantee two (or even one) full time salary. We live and die on our invoices coming in on time. Some weeks are rather lucrative and others bring in minimal amounts of revenue. In the absence of consistent salaries, we needed to come up with an equitable way to pay everyone in the organization a fair amount that wouldn’t put us into any financial jeopardy. This is our solution.
The image above is an theoretical breakdown of hours by an individual, Employee A, at Firedove. We’ve decided to weight each of our tracked hours with a different value. Client Time has a multiple of 5 (as it is what brings in most of our revenue) and Personal time has a multiple of 0 (as this time doesn’t add value to our company). By using these multiples, we can reasonably assess the value of each person’s contributions based on the activities that they participated in that week.
In this example, we can see that Employee B worked 19.5 hours for Firedove compared to the 40 hours Employee A worked. If we calculate the division of labor solely using the total hours, Employee A is entitled to 67.2% of the earnings that week, whereas Employee B would be entitled to 32.8%. The difference between Employee A and Employee B is that Employee A had contributed a greater amount of hours that week towards Client Time than Employee B did. By using our weighted system, Employee A is entitled to 71.3% of the earnings (representing a 4.1% increase) whereas Employee B is entitled to 28.70% of the earnings.
By using data we can understand who is adding the most value to the company and reward them proportionally. Some organizations have a company and compensation structure that resembles a monarchy or oligarchy. At Firedove Technology we are attempting to model our company like a technocracy.