The Soft Cost of Broken Processes Most of us know about broken processes because we’ve lived them. It doesn’t feel good to fill out that extra form with the same information you already put in the last form or wait 8 days for approval from someone on vacation…but beyond annoyance, what do these broken processes cost? To answer this question, we’re going to borrow a term from the construction industry. The ‘soft costs’ of doing business In construction, costs are divided into two categories: soft costs and hard costs. Hard costs are the costs of actually getting the work done, mainly labor and materials. Soft costs are considered indirect costs that don’t go towards getting the work done but are necessary anyways. This can include insurance premiums, legal fees, and other ‘extra’ costs that get tallied onto the project. If you were to break down the costs of conducting your business into hard costs and soft costs, how would you do it? For most companies, hard costs would be the work that goes into creating and delivering products and services to customers (what they get paid for). Soft costs would cover administrative tasks, project management, human resource management, and other ‘extra’ costs that are necessary to conduct business but don’t go directly towards delivering products or services.
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