A company's profits stem from reasonable and appropriate cost inputs. Generally speaking, the higher the cost input, the greater the corresponding increase in profits. However, in the course of business development, a kind of "hidden cost" often restricts the company from making further progress. "Hidden costs" not only fail to bring relative returns but also seriously affect the healthy operation of the enterprise. So, what exactly are these terrible "hidden costs," and what are some examples of hidden costs?

　　In the process of development, companies will always encounter bottlenecks, feeling that operating costs are rising but unable to pinpoint the source of the costs. We call this "hidden cost." It's like a hidden disease in a living organism, lingering and incurable, causing headaches for operators.

　　If these "hidden costs" can be found, it's like finding the "pathogen." Then, the next step of "treating the symptoms" will surely be a time of renewed growth. If we can summarize the various "hidden costs" that often exist in companies, companies can use this to conduct self-checks.

　　I. Meeting Costs

　　Meetings are collective activities for companies to solve problems and issue instructions, but they are also high-cost business activities. Because this activity often involves many leaders, every minute means the total number of minutes of participants. Many companies' managers have not mastered the skills of holding meetings, and there is a "lack of preparation before the meeting, lack of theme during the meeting, lack of execution after the meeting, unnecessary attendance, lack of time control, and rambling speeches" phenomenon.

　　II. Procurement Costs

　　Once, a company, when undertaking a new project, had a daily operating cost of 80,000 yuan for the project team. However, on the eve of the product launch, the procurement department spent a week procuring packaging worth more than 100,000 yuan, on the grounds of finding low-cost suppliers to save procurement costs. The entire marketing team thus had to wait an extra week before signing contracts with clients.

　　This phenomenon actually exists in many companies. The pursuit of reducing direct procurement costs while ignoring the coexisting "hidden costs." Of course, reducing direct procurement costs does not conflict with this article. Here, we want to say that the company's procurement department should take a comprehensive approach from the perspective of overall operations to weigh various indicators in order to truly control procurement cost expenditures.

　　III. Communication Costs

　　In most companies, you will find that serious distortions occur in the communication process between colleagues, such as miscommunication, irrelevant answers, or multiple interpretations... This phenomenon, on a small scale, renders many processes ineffective or causes the loss of many important opportunities. On a larger scale, it may bring hidden dangers to the company.

　　IV. Overtime Costs

　　Many bosses believe that employees' "overtime" work after work is a sign of dedication. However, this may involve very high costs. There are three reasons:

　　First, overtime is not necessarily due to an excessive workload but rather to low employee efficiency. Overtime means low efficiency.

　　Second, overtime consumes more employee energy and physical strength, seriously depleting employees' health. In the long run, this will prevent some key employees from performing their duties for a long time and may pose a burden on the company. For example, some machine operators may cause accidents due to fatigue from long hours of overtime, and the company will have to pay a heavy price for this.

　　Third, overtime employees are not necessarily "doing their jobs." Some employees, under the guise of overtime, use the company's resources to do their personal things while receiving overtime pay. Many of the company's significant losses and data loss occur after work hours, and overtime becomes a blind spot for the company to "hide dirt and grime."

　　V. Personnel Turnover Costs

　　Many companies are very deficient in human resource management. They believe that talent is unlimited, becoming an "unshakeable camp," and employees naturally become "flowing soldiers." It must be said that the departure of an employee is a cost to the company, because the company has to bear the upfront investment in training this employee, as well as the upfront cost of recruiting a new employee for the position, and the risk of whether the new employee is suitable for the position. The departure of an old employee may also lead to the loss of important internal data or information due to professional ethics, and after their departure, they may join their competitors.

　　Therefore, the loss of employees, especially veteran employees, will undoubtedly bring the company several times more expenditure than their income. Many small businesses, after years of operation, you will find that they have always been such a small team, and apart from the boss, no employee has been with the company since its inception.

　　VI. Mismatched Position Costs

　　There is a famous saying in human resource management: "Put the right people in the right positions." Unfortunately, there are really not many companies that can do this.

　　Once, at a recruitment fair, I overheard a conversation between employees, saying that every recruitment fair required all their staff to move tables and chairs because they rented a gymnasium as the recruitment venue. From senior managers to ordinary employees, everyone became "porters." I couldn't help but sigh, this company is engaged in HR and management, how could they pay such high salaries to unprofessional porters?

　　This actually reflects a very clear mentality of the bosses: they believe that these employees are hired to be used, and as long as they have the manpower to do it, they don't need to spend more money to do it. However, we find that the price they pay is very high. The company's employees have been constantly complaining, because a considerable number of them are female employees, who simply do not have the strength to move tables and chairs, and those high-ranking officials have never experienced such "treatment." Some have left. We also stopped recruiting at this recruitment fair because I don't believe that such a team can provide me with good service.

　　VII. Process Costs

　　The chaos in a company is often due to processes. This is a common problem in enterprise management. Any company that develops slowly must have chaotic or unreasonable processes. They bear high costs for this, yet they remain blind to it. Processes are the industrial chain of enterprise operations, like assembly lines. Without scientific and reasonable processes, systematic control over various tasks is lost, many tasks are left unfinished, and many tasks need to be reworked. This will become a mess that binds the company's progress.

　　VIII. Stagnant Resource Costs

　　Stagnant resources are arguably the most widespread "hidden costs" in a company. For example, idle equipment, inventory backlog, low-utilization positions, idle funds, shelved businesses, etc. Although they may not continue to consume the company's investment, they are part of the company's assets, and the company will bear hidden costs such as interest. Therefore, the amount of stagnant resources in a company reflects the level of resource utilization.

　　IX. Corporate Culture Costs

　　Some say that corporate culture is like a company's soul, reflected in the spirit of each member. This culture begins to be established in the early stages of the company's establishment, influenced by the founder's culture, habits, skills, profession, likes and dislikes, so some say that corporate culture is the boss's culture.

　　However, many people may not agree that corporate culture can become a cost, but it is true. We find that some companies' employees are listless and extremely inefficient. No matter how excellent an employee is, once they enter, they will either leave or become the same soon. We have to say that this is an "environmental" problem. And this "environment" is the company's corporate culture.

　　Corporate culture is like the life of a company, it will accompany the company throughout its life, it can only be adjusted, not rebuilt.

　　X. Credit Cost

　　This is a cost that involves long-term returns. Honest business is like honest living. We find that many companies are accustomed to delaying payments to suppliers, delaying employee salaries, deducting others' pay, delaying bank loans, etc., believing that this can reduce the pressure on the company's working capital.

　　However, in the long run, this will become a serious hidden cost of business operations. First, suppliers will definitely calculate the time cost in their quotations, and such companies cannot purchase the lowest-priced raw materials or services. Second, delaying employee salaries violates labor laws and risks being punished. Delaying bank loans and deducting others' pay will greatly discount their creditworthiness, and when the company encounters difficulties one day, it will be surrounded on all sides. Undoubtedly, the company will have to pay a heavy price for this, while it has not gained any benefits.

　　XI. Risk Cost

　　Pushing the company onto the fast track is the dream of every entrepreneur. However, the risk factor also increases accordingly. Especially for large and medium-sized enterprises, although they develop rapidly and have high incomes, once a crisis occurs, it will be catastrophic. Many cases prove that many corporate risks are caused by insufficient anticipation or poor management, and hidden dangers have been planted long before the risk occurs. Many large or well-known companies have perished because of one risk.

　　It can be seen that risk is a significant hidden cost. This phenomenon is not obvious, it is really "silent until it strikes".

　　XII. Entrepreneur Cost

　　"Entrepreneur cost" refers to the cost brought to the company by the boss himself. There is a good saying, "A bad soldier makes a bad army, a bad general makes a bad army". Entrepreneurs are like the leaders of an army, and they are the highest-paid employees of the company. Many private enterprise owners have turned themselves into "emperors" of the company, making all the decisions themselves, and all employees have become executive machines. However, the shortcomings of the entrepreneur's personal factors will add a heavy cost burden to the company.

　　This phenomenon is mainly seen in small enterprises, but it also exists in large enterprises. We can also extend this cost to every department and even every employee of the enterprise. Because everyone is responsible for their own work, we often emphasize that within your scope, you are the leader, and you have the right to make decisions. However, many leaders always put themselves at the center, which will greatly reduce the team's combat effectiveness and increase high hidden costs. I once said to a boss who complained about the lack of talent in the company: "Your company lacks not talent, but the wisdom to discover and make good use of talent."

　　From the above, it can be seen that enterprises often bear many burdens in their operation and management, and hidden costs are the heaviest burden among them. Discovering and effectively reducing the above hidden costs is a powerful measure for enterprise progress.