Cost of modernization VS Cost of inaction
Every decision has its repercussions and the outcome can be good or bad, depending on the choice. For managers or entrepreneurs, one of the major decisions to make is what strategy to adopt or what direction to take. Some choices are easier than others, but one of the hardest decisions to make is to step out of your comfort zone. Many SMEs are entrenched in the comfort of their old management methods, inefficient work processes or outdated manufacturing processes. However, staying in their comfort zone is often what hinders their success and slows their growth. While the status quo may seem comfortable and harmless, it is far more dangerous and costly to a business than one might think. The cost of inaction represents the sum of the costs generated by not addressing a situation or problem. For example, if a problem persists that requires three full-time employees (40 hours/week) who are paid $20 per hour instead of one full-time person at the same salary, not fixing the problem costs the company two extra salaries per year for a total of $83,200. To calculate the cost of doing nothing in this case, we use the number of employees needed to perform the task, the number of hours spent per employee and their hourly wage. If we wanted to…
