I just completed reading Freakonomics. It’s been a while since I couldn’t put down a business book. I purchased this book on Saturday night and started reading it on Sunday. I finished it a few minutes ago. It took up some of my mornings, even making me late for work. At the core of this book is the unique perspective that Steven D. Levitt takes when he analyzes situations.
What I lack in intelligence, I make up in tenacity. I enjoy looking at a problem from every perspective before recommending a solution. More often than not, someone else unlatches the right solution as I pry for more and more information. From a young age, my father taught me that looking at everything as a puzzle instead of work is fun. To a fault, sometimes, it’s how I approach my work as a product manager.
Conventional wisdom seems to be the internal wisdom of our company and many others. Mostly, folks think they know the clients’ wants and they try to develop the right solution. The team we’ve put in place now is questioning that approach and attacking the issues by talking to all stakeholders, from sales to support, clients to our boardroom. This approach leads us to solutions that are a competitive advantage and meet our clients’ hunger for features. Every day is a problem, and work towards a solution. It’s a great job!
My greatest personal ‘Freakonomics’ occurred when I worked for a newspaper back East. I’m not in any way on par with someone like Mr. Levitt; however, I did a similar analysis and came up with a solution that stymied the company’s conventional wisdom. At the time, my department had over 300 part-time people without benefits… most at or just above minimum wage. Our turnover was horrible. Every new employee had to be trained by an experienced employee. A new employee took a few weeks to get to a productive level. I scoured over data and identified that (no surprise) that there was a correlation between longevity and pay. The challenge was finding the sweet spot… paying folks a fair wage where they felt respected while ensuring that budgets weren’t blown.
Through much analysis, I identified that if we increased our new hire annual budget by $100k, we could recoup $200k in additional salary costs for overtime, turnover, training, etc. So… we could spend $100k and save another $100k… and make employees far happier! I designed a tiered system of wage increases that both lifted our starting pay and compensated every existing worker in the department. A handful of employees had maxed out their range and did not receive more – but they were paid far more than the industry or the job function.
The results were much more than we had predicted. We wound up saving approximately $250k by the end of the year. The fact was that the wage investment had a domino effect that we had not predicted:
- Overtime decreased due to increased productivity.
- We saved a ton of administrative costs and time because managers spent less time hiring and training and more time managing.
- We saved a ton of recruitment costs for finding new employees.
- The overall morale of the workforce increased substantially.
- Production continued to increase while our human costs were reduced.
Outside our team, everyone was scratching their heads.
It was one of my proudest achievements because I was able to help both the company and the employees. Some employees cheered the management team after the changes went into effect. For a short period, I was the Rock Star of Analysts! I’ve had a few other big wins in my career, but none brought the happiness that this one did.
