The Law Of Diminishing Returns – Michael Dennis, CBF

Diminishing Returns
Diminishing Returns

One aspect or application of the Law of Diminishing Returns states that there is a break-even-point at which the cost of additional resources [including time and energy and effort] does not match the benefits associated with the application of these resources.   This is true in manufacturing, as well as in credit and collections.  At a recent credit group meeting, I took an informal poll over lunch and found that no one at a table of 12 worked less than 50 hours a week and the majority worked 55 hours or more.  Every one at that table agreed that they wanted were trying to demonstrate their commitment to the success of their employer, and not one credit manager wanted to be labeled a clock watcher. Next, I asked:  How many of you work more hours than your peers and your manager?  The answer was almost everyone.

Here are some indications that you ether you have passed the break-even-point:

·         You are working more than 50 hours a week

·         Your spouse, or children, or co-workers or manager consider you to be a workaholic

·         At least once a week, you return to the office less than 12 hours after you left the previous day

·         You start reviewing your messages and emails before arriving at the office

·         You work weekends more than once a month

·         You gather more information than is necessary to make the credit decision based on the rationale that More is Better

·         When performing financial analysis, you calculate more financial ratios than you actually need or use to in the decision-making process

·         When internal customers request an explanation, you provide a lengthy narrative attempting to answer questions that have not been asked which may or may not be relevant to the internal customer

Michael Dennis, MBA, CBF, LCM
Michael Dennis, MBA, CBF, LCM

Please visit the Encyclopedia of Credit at for time management and time saving strategies.

By: Michael C. Dennis. Michael is the co-author of the Encyclopedia of Credit. Please visit