What Is the Difference Between Gross and Net Work and Why You Should Care?
In this article we show that there is a huge difference between your gross and net amount of work and that this difference determines your productivity. We will also show you how to measure it and what benefits of such a measurement are.
1. The Difference Between Gross and Net Work
I came to the office of my business accelerator on a Sunday morning. As often I was the only one in the office on the weekends. Just when I wanted to go for lunch, Renato, a fellow entrepreneur, came in. We decided to go forlunch together and talk about our lives as founders of startups.
Renato was telling me that the life of an entrepreneur was hard. He had never been working with so much passion on something, but he also never had to work so long hours. This kind of surprised me because Renato was not in the office of the accelerator that much. So I asked if he worked most of the time from home to which he responded: “I rarely work from home. I am very strict about separating my private life from my business.” I was a bit shocked, as I was not only spending long hours in the office but also working long hours at home.
So I asked Renato, “How many hours do you work?” His answer shocked me even more: “I think I must be working more than 70 hours.” This was shocking as I was writing down all my hours to the minute and was adding just over 40 hours. How was this difference possible?
This shock prompted me to investigate more and I soon found out a big discrepancy between me and everyone else I talked to:
● I was the one who came to the office the earliest and left the office the latest.
● While in the office I was, the one who seemed to be most focuse on work while others seemed more interested in socializing.
● I constantly was working from home and I was working on the weekends.
Nonetheless, I was the one who, at just over 40 hours, apparently was working less than any other founder I talked to, who were supposedly all working around 65 hours.
I then came across one developer who told me “I try to never work more than 25 hours in a week.”
25 hours? How is that even possible???
He then explained to me that it was not productive to work more than 30 hours and bad for health.
I researched this and indeed, a lot of researchers were saying that working more than 30 hours per week adds only little to the amount of work accomplished and working more than 50 hours can actually be counterproductive.
OK. I was relieved. Maybe working only 40 hours did not make me lazy after all. But why was everyone who was apparently working much less, telling me that they worked 60 or 70 hours?
So I started to investigate further and look into the kinds of tasks my fellow entrepreneurs were working on and I came to understand the difference between gross and net work.
Let me explain. Everyone gets 24 hours a day and 168 hours a week. This time can be spent working (on time), or can be spent as off time.
Working on the financial statement of the company is clearly work time, while sleeping is clearly off time. But a large chunk of our time is spent in a way that could be classified as either work time or off time.
We can show the classification in this table with sample work activities:
From the above you see that a large part of our activities are not 100% work but are more work support activities that are in between work and leisure. If you were to be paid by billing a client you could not write down these activities as billable hours. Here are a couple of examples:
● If you talk to your client small talk like “how have you been”, “how is your family” etc. then this is not billable time.
● If your clients are in Spain and you are learning Spanish to communicate with them, it is not billable time.
● If you have to install a new operating system it is not billable time.
● If you have to go to Amazon to order a new office chair it is not billable time.
● If you have to talk to your co-workers about personal stuff it is not billable time.
● If you are commuting to work it is not billable time.
The time that you could bill your client is called the net work, adding all the other tasks that are somehow part of the business but that could not be billed is called the gross work.
When my fellow founders were saying they worked 60 to 70 hours, they were referring to gross work. On the other hand, when I was saying that I was just working over 40 hours, I was referring to net work.
There is a big difference between gross and network. We can call this difference DELTA. DELTA is important because you can become more productive not only by increasing your gross work, but also by decreasing DELTA.
2. Best Way to Measure Net Hours
How do we best measure delta, the difference between gross and net work?
Let’s looks at this simple equation:
Delta = Gross work time — Net work time
The gross work time is straightforward to measure. The net work time requires time tracking.
For the gross work time we just calculated reversely, so we calculate all the non-work activities and subtract them from 24 daily hours using this equation:
Gross work time = 24 hour day — clearly non-work hours
The clearly non-work activities are things like: sleeping, eating, taking a shower, spending time with family and friends, and doing sport activities (unless you work as an athlete).
So we just have to add all of these activities together and subtract it from 24 hours per day, to give us the gross work time.
It is more difficult to get to the net work time, especially because producti work and work-like activities are intermingling. Due to this intermingling many people just assume the gross work time as their net work time.
For example, if they go to the office at 9:00 am and have a lunch break at 13:00 for one hour, they would assume 4 hours of work in the morning. And if they then work from 14:00 to 18:00, they would assume 4 hours of work in the afternoon. So they would assume a total of 8 hours of net work. This assumes a delta of 0 in those 8 working hours.
But keeping the delta, the difference between gross and net work time at 0, and thus being always 100% productive, focused and concentrated only on activities that you could bill, is impossible. So in order to know delta we need to track our time when working on these billable, productive work activities.
The best way to do this is via a system called “Agile Time Tracking”. In Agile Time Tracking:
● First, break down your projects and big tasks into small tasks and subtasks.
● Then estimate the time required for each of these small tasks.
● Before you start a new task you first look at the time estimate.
● Then work for a short amount of time and then adjust the time estimate in case you see work took less or more time.
You can read more about Agile Time Tracking here:
“How Agile Time Tracking Can Benefit Your Remote Team”
After a few weeks of doing Agile Time Tracking you will get a much better sense of the difference between gross and net work and thus enjoy the many benefits of knowing the delta.
3. Benefits of Knowing the Difference Between Net and Gross Work
There are various benefits to knowing the difference between net and gross work.
3.1. Being able to compare to others
The first benefit is that you get a clearer idea of how your work ethic compares to that of others. If nobody in your team is measuring net work then you might not know how your work ethic compares, as some people might spend a lot of time in the office but actually do very little productive work. But as soon as everyone writes down their net work hours, you can see how your work compares to that of others.
3.2. Being more productive
There are three ways to increase work output:
- Increasing your gross work time.
- Decreasing delta while the gross work time stays the same.
- Being more effective during the net work.
3.2.1 Increasing your gross work time
When you want to get more work done you can just spend more time working, increasing your total gross work hours. But this means less time for yourself.
3.2.2. Decreasing delta while the gross work time staying same
The second way to increase your work output is by not increasing your gross work amount but just decreasing all the things that are not part of productive work. So for example things like: talking to coworkers, commuting time, checking the news, reading some self improvement books. All of these tasks are somehow related to work, and therefore are gross work, but they do not help you to increase your work output right now. Therefore, decreasing them can increase your output.
3.2.3. Being more effective during net work
The other method is neither increasing gross or net work but just being more productive while working on generating output. This can be achieved by other productivity hacks we discuss elsewhere.
So if you want to have more output without working more gross hours, you need to decrease the delta, the non billable work hours.
3.3. Being better at planning
Once you are aware of the time you spend on different tasks, you will be much better able to plan the amount of work you will be able to achieve.
3.4. Reducing delta
The most important benefit of knowing the difference between gross and net work, the delta, and knowing which tasks make up your delta, is that you are able to reduce the delta, by either eliminating these work related tasks or reducing the amount of time you spent on them.
