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Companies also need to measure the ratio of resources expended to the amount of value being produced, even if cash flow and profit are good at the moment. Unsu

Companies also need to measure the ratio of resources expended to the amount of value being produced, even if cash flow and profit are good at the moment. Unsustainable business practices can remain hidden until the decline begins. When that happens, inept management has to scramble to figure out what's going on and will almost certainly make worse decisions than a lack of sustainability was sussed out much earlier. An apt example would be companies that need to keep hiring more engineers merely to keep the software from collapsing under its own weight. Often times, upper and middle management aren't paying attention to this and are completely distracted by growth and profit, despite the fact that most of their engineering staff are far less productive, perhaps to the point of hardly producing anything at all.

atoav 3y ago
I guess it is about control in the end. Even if your employees are working completely remotely you could always check their output. But the problem is that typically a big part of middle managment has no idea how they would even start to do that. So the alternative is go there and talk to them while observing reactions — and derive your conclusions from that. But that doesn't work as well remotely. You can't surprisingly be there and catch your employees at doing the wrong thing. What other unspeakable evils might they be doing while you are not watching? Now of course you are right, just watching the numbers is not enough. But if your middle managment has no way of knowing if their subordinates are doing their jobs remotely, your business would be in a blind spot even if not a single person worked remotely.
didibus 3y ago
> to measure the ratio of resources expended to the amount of value being produced That's just profit. I think what you mean is that they need to make sure they can sustain themselves if revenue drops, say because of an economic downturn? Cash flow and dept measure that to some extent. But even if, we say those metrics don't tell us enough for this scenario, I find it's pretty obvious remote or in-office doesn't seem very impactful either. You'd want to reduce your costs and be leaner, dropping expensive office space actually seems like maybe a way to be leaner. Maybe some layoffs are in order to reduce payroll and cancelling all non revenue generating ventures/projects which are only burning cash and not making any as of yet (at least pausing on them). Etc. I'm hard pressed to imagine how in-office helps you at all here. Unless you magically think employees will be so productive, you can half the staff and still have them operate everything without having to cut any scope or corners. But that's ridiculous. That's what I meant. If that was true, you'd be able to measure some impact to performance, but you don't, and that means you can at best expect a very marginal effect.
- ravenstine 3y ago
  Sorry, by "value", I meant the value delivered to the customer, and "resources" as a broad abstraction around things like revenue, size of staff, and so on. In other words, while I think that profit can be one of the best measures of productivity, a measure of expenditure relative to a unit of delivered value can be important in forecasting whether profits now will continue to sustain. This is because profit can continue rise for long periods of time despite operational issues festering internally, and those issues will either come to a head when there's a market adjustment (as you mentioned) or if they get to a point where simply adding more staff/resources can no longer sweep them under the rug. In the latter situation, the company may actually still continue making a profit, but it will struggle to grow any further, and those profits may start to dwindle if a more agile newcomer to the field drinks said company's milkshake. > Cash flow and dept measure that to some extent. Yes, that's a lot like what I'm thinking. Or, if possible, something along the lines of number of staff needed to deliver value (ex. features, improvements, fixes, subscriptions, yada yada) at a stable rate per customer. I seem to only be able to think in terms of software companies, but I'll go with it. If a company is finding that it needs more and more engineers every year to support software that has not changed fundamentally in years and isn't delivering value at a greater rate than in prior years then, hypothetically, that could be a sign that the business could actually be making more of a profit through better decision making. At worst, it means the business could be more sensitive to when market conditions change and fail to adapt quick enough. But I'm repeating myself now. > I find it's pretty obvious remote or in-office doesn't seem very impactful either. It's not obvious to others, apparently. I've been witness to so much time wasted in office environments that, if I were a boss, I'd rather people waste their time at home than pay rent to give them a place to waste their time, so it's at least obvious to me. Then again, I'm not cut out to be a leader and I don't have the ego to want to lord over employees. In any case, I think incentives are better determinants of whether employees waste time. If a company pays employees adequately, actually empowers them, and takes measures to prevent the employee experience from being sabotaged, I think most employees would spend more of their time being productive even if they still aren't technically working every single paid hour. Most of the time, people reduce their effort in response to the environment they're subject to. If an employee isn't getting competitive pay, doesn't believe they can move up outside of nepotism, feels alienated from the fruits of their labor, and hates their daily routine of constantly fighting overcomplicated processes, then of course they're going to give less of a shit, office or not. A lot of employers simply don't want to admit that their employee experience is terrible, or that paying a salary that was once considered good 10+ years ago, and that's why nobody wants to try hard. Blaming remote work is almost always a cop-out. > Unless you magically think employees will be so productive, you can half the staff and still have them operate everything without having to cut any scope or corners. But that's ridiculous. That's what I meant. I'm not exactly sure what you're communicating here (could just be poor comprehension on my part), but I think we're on the same page. Based on your second to last paragraph, it sounds like your saying that whether employees are in-office is irrelevant because the biggest sources of drag are other things like frivolous projects and overhiring, as examples. I definitely agree, and I've worked at places that burned lots of cash while simultaneously being avoidant towards remote work; one place I worked for had burned millions of dollars over 3+ years developing what was essentially a glorified clone of CouchDB. There was never any revenue model for it, but was someone's foolish idea with no adults in the room to axe it. It's like, if you're gonna set money on fire, I'd appreciate letting me burn some of it so I don't have to drive in to the office every day. Better yet, give me a few million so I too can write my own useless software.

atoav 3y ago

I guess it is about control in the end. Even if your employees are working completely remotely you could always check their output. But the problem is that typically a big part of middle managment has no idea how they would even start to do that. So the alternative is go there and talk to them while observing reactions — and derive your conclusions from that. But that doesn't work as well remotely. You can't surprisingly be there and catch your employees at doing the wrong thing. What other unspeakable evils might they be doing while you are not watching? Now of course you are right, just watching the numbers is not enough. But if your middle managment has no way of knowing if their subordinates are doing their jobs remotely, your business would be in a blind spot even if not a single person worked remotely.

didibus 3y ago

> to measure the ratio of resources expended to the amount of value being produced That's just profit. I think what you mean is that they need to make sure they can sustain themselves if revenue drops, say because of an economic downturn? Cash flow and dept measure that to some extent. But even if, we say those metrics don't tell us enough for this scenario, I find it's pretty obvious remote or in-office doesn't seem very impactful either. You'd want to reduce your costs and be leaner, dropping expensive office space actually seems like maybe a way to be leaner. Maybe some layoffs are in order to reduce payroll and cancelling all non revenue generating ventures/projects which are only burning cash and not making any as of yet (at least pausing on them). Etc. I'm hard pressed to imagine how in-office helps you at all here. Unless you magically think employees will be so productive, you can half the staff and still have them operate everything without having to cut any scope or corners. But that's ridiculous. That's what I meant. If that was true, you'd be able to measure some impact to performance, but you don't, and that means you can at best expect a very marginal effect.

ravenstine 3y ago
Sorry, by "value", I meant the value delivered to the customer, and "resources" as a broad abstraction around things like revenue, size of staff, and so on. In other words, while I think that profit can be one of the best measures of productivity, a measure of expenditure relative to a unit of delivered value can be important in forecasting whether profits now will continue to sustain. This is because profit can continue rise for long periods of time despite operational issues festering internally, and those issues will either come to a head when there's a market adjustment (as you mentioned) or if they get to a point where simply adding more staff/resources can no longer sweep them under the rug. In the latter situation, the company may actually still continue making a profit, but it will struggle to grow any further, and those profits may start to dwindle if a more agile newcomer to the field drinks said company's milkshake. > Cash flow and dept measure that to some extent. Yes, that's a lot like what I'm thinking. Or, if possible, something along the lines of number of staff needed to deliver value (ex. features, improvements, fixes, subscriptions, yada yada) at a stable rate per customer. I seem to only be able to think in terms of software companies, but I'll go with it. If a company is finding that it needs more and more engineers every year to support software that has not changed fundamentally in years and isn't delivering value at a greater rate than in prior years then, hypothetically, that could be a sign that the business could actually be making more of a profit through better decision making. At worst, it means the business could be more sensitive to when market conditions change and fail to adapt quick enough. But I'm repeating myself now. > I find it's pretty obvious remote or in-office doesn't seem very impactful either. It's not obvious to others, apparently. I've been witness to so much time wasted in office environments that, if I were a boss, I'd rather people waste their time at home than pay rent to give them a place to waste their time, so it's at least obvious to me. Then again, I'm not cut out to be a leader and I don't have the ego to want to lord over employees. In any case, I think incentives are better determinants of whether employees waste time. If a company pays employees adequately, actually empowers them, and takes measures to prevent the employee experience from being sabotaged, I think most employees would spend more of their time being productive even if they still aren't technically working every single paid hour. Most of the time, people reduce their effort in response to the environment they're subject to. If an employee isn't getting competitive pay, doesn't believe they can move up outside of nepotism, feels alienated from the fruits of their labor, and hates their daily routine of constantly fighting overcomplicated processes, then of course they're going to give less of a shit, office or not. A lot of employers simply don't want to admit that their employee experience is terrible, or that paying a salary that was once considered good 10+ years ago, and that's why nobody wants to try hard. Blaming remote work is almost always a cop-out. > Unless you magically think employees will be so productive, you can half the staff and still have them operate everything without having to cut any scope or corners. But that's ridiculous. That's what I meant. I'm not exactly sure what you're communicating here (could just be poor comprehension on my part), but I think we're on the same page. Based on your second to last paragraph, it sounds like your saying that whether employees are in-office is irrelevant because the biggest sources of drag are other things like frivolous projects and overhiring, as examples. I definitely agree, and I've worked at places that burned lots of cash while simultaneously being avoidant towards remote work; one place I worked for had burned millions of dollars over 3+ years developing what was essentially a glorified clone of CouchDB. There was never any revenue model for it, but was someone's foolish idea with no adults in the room to axe it. It's like, if you're gonna set money on fire, I'd appreciate letting me burn some of it so I don't have to drive in to the office every day. Better yet, give me a few million so I too can write my own useless software.