Most business owners instinctively know when something feels off in their organization. They’ll see the symptoms: missed targets, unproductive meetings, team misalignment, and the constant feeling of working harder but getting nowhere. What’s harder to see is the actual cost of letting these issues continue.
The Hidden Tax of Business as Usual
Before discovering EOS®, I led a team of 650 people. Sometimes, I could feel something wasn’t right, but I couldn’t put my finger on the problem. Unfortunately, that often meant I was paying a tax I couldn’t see. But unlike other business expenses, the cost of not having a system was hiding in plain sight.
Every unproductive meeting that could’ve been an email. Whenever someone needed clarification on unclear directions or had to track down who was responsible for a task. Every employee we had to replace when another team member left. Those all impacted the bottom line.
The measurable costs are staggering:
- A collective $1 million is wasted every 20 seconds by businesses around the globe by companies who do not effectively implement their business strategies. (That amounts to nearly $2 trillion wasted annually worldwide.)
- Ineffective meetings cost U.S. businesses nearly $375 billion annually; companies with more than 5,000 employees lose up to $101 million a year on ineffective meetings.
- Poor communication leads to a nearly 20% reduction in productivity (or the equivalent of losing one business day every week).
- In 2024, nearly half of U.S. employees reported they were considering leaving their jobs; the majority cited lack of engagement and well-being as reasons to quit.
- A leader who voluntarily leaves their company can cost the organization up to 200% of their annual salary to replace.
The Compounding Effect
Warren Buffett talks about the miracle of compound interest in investing, but there’s a dark side to compounding when it comes to business problems. Issues hidden in plain sight can create a particularly dangerous situation, especially for businesses without a clear system for correcting them.
If owners fail to address the root causes of those hidden taxes, the real expenses will go even deeper. By not addressing the current issues, owners expose their businesses to even more insidious risks to their company’s future. As an EOS Implementer®, I’ve worked with dozens of company leaders throughout West Michigan who left themselves exposed to these same risks.
1. Strategic Risks
Without a clear vision and strategic framework, team members are unsure where to focus their attention. This lack of focus often leads to confused scrambling, leaving little room for innovating or analyzing industry trends. A team might regularly miss pivotal market shifts that their competitors catch. In the manufacturing, technology, or service industries, this lack of strategic clarity can cost millions in lost revenue opportunities.
2. Operational Risks
Even with clear priorities, without defined accountability and processes to conduct business tasks, team members waste valuable time and energy. Owners essentially pay leadership team members to sit in hours of unproductive meetings that produce few decisions or action items. Worse, responsible leaders are not held accountable for completing tasks.
3. Cultural Risks
Perhaps the most expensive is the cultural drain. The strategic and operational risks can result in a rudderless ship that breeds frustration and resentment. Team morale suffers and top talent—fed up with the chaos—jump ship. You may remember seeing statistics from Gallup that estimated replacing top talent could cost as much as twice their annual salary.
Understanding Your Hidden Costs
As a business owner, you may not realize how much these hidden taxes have impacted your business. To get an idea of how business-as-usual costs your organization, try this exercise:
- Take average hours spent weekly in unproductive meetings × the hourly rate of every attendee
- Estimate the turnover costs in the past year for replacing key team members (e.g., recruitment, training, and lost productivity getting a new person up to speed)
- Add these together.
- Commit to minimizing this number
The total often surprises even the most seasoned leaders. But that doesn’t even include costs related to lost revenue, lower productivity, and missed opportunities.
Preventing Hidden Costs
The good news is you don’t have to continue with business as usual. Once you understand what’s at stake, you can learn how to prevent these losses. The companies I’ve worked with that run on EOS® consistently avoid these costs through:
1. Strategic Clarity
EOS® helps business owners gain clarity on their long-term goals for their company and how they plan to achieve them. Having clear, shared priorities will align everyone in their organization around a common vision. It also helps leaders make faster, more confident decisions because they focus their time and energy on those priorities.
2. Operational Excellence
Business owners also learn how to create and document the core processes that make their businesses run efficiently and effectively. By Running on EOS™, their leadership team learns practices for productive meetings with clear outcomes to create traction toward those big goals. The accountability built into EOS® ensures team members complete tasks on time and everyone knows who is responsible for achieving them.
3. Cultural Strength
The most significant impact is on team health. Teams work together toward shared goals and become proactive at solving problems at all levels of the organization. As a result, team members are more engaged, and the organization experiences lower turnover because people want to stay in an open and honest environment.
The Path Forward
EOS® provides clear, simple, proven tools and disciplines to help organizations like yours avoid these unnecessary costs. Owners like you have experienced far greater success than ever imagined, all because of a clear operating system.
I’ve helped many owners get everything they want from their businesses. Are you ready to stop paying hidden costs in your business? Call me for a free 90-Minute Meeting to learn how.
