Uncovering the Secret Tax at Work: A Hidden Cost and How to Navigate It
The Unseen Cost of Doing Business
In Australia, we're no strangers to taxes. From income to sales, capital gains, and various stamp duties, we pay our fair share. But there's a hidden tax that many of us unknowingly contribute to in the workplace. This concept, coined by Airbnb's CEO Brian Chesky, sheds light on the productivity cost associated with larger teams and the resulting meeting overload.
The Communication Tax Conundrum
Chesky's radical solution? Reduce the number of people in a business or team. He argues that each additional team member brings a productivity cost, leading to more meetings, reviews, and administrative tasks that hinder efficiency. He calls this the "communication tax," a cost that increases with every new colleague.
While we often believe that adding more staff is the best way to boost a team's productivity, each new hire comes with a price. The larger the team, the higher the communication tax, as managers must invest more time and effort to keep everyone motivated, informed, and aligned.
Who Pays the Price?
Interestingly, this tax is rarely felt by top-level executives like Chesky. Instead, it's middle management that bears the brunt, spending valuable time translating information up and down the chain. Jeff Bezos, another prominent figure, believes that individual teams should be no larger than the number of people who can share two pizzas. This rule of thumb suggests a team size of 6 to 8 people, a number that ensures a diverse range of skills and perspectives while avoiding excessive meetings and function duplication.
The Growing Team Size Problem
The issue of team size has become more pronounced as average team sizes have grown. Gallup data reveals that the number of people reporting to a manager has increased from 10.9 in 2024 to 12.1 in 2025, a 50% rise since 2013. This growth has led to a significant increase in communication costs, with Slack co-founder Stewart Butterworth estimating that communication within small teams takes up 20% of an employee's time, which more than doubles with larger teams.
Finding the Ideal Team Size
So, what is the ideal team size? The answer depends on the specific goals and objectives of the team. For simple communication tasks, larger groups can be efficient. However, for teams tasked with specific, accountable outcomes, choosing the right team size can make all the difference between success and failure. It's about finding the sweet spot where the communication tax is minimized.
In a 2020 meta-analysis by Gallup, they concluded that the number of people reporting to a manager wasn't the critical factor for success. Instead, it was the level of engagement and involvement of the manager that made the biggest difference. While workers may not have much control over team size, they can influence the dynamics and outcomes of project-based teams.
Navigating the Hidden Tax
So, how can we navigate this hidden tax? By being mindful of team size and the associated communication costs. It's about finding the right balance between diversity of skills and perspectives, and avoiding the pitfalls of excessive meetings and administrative burdens. As Tim Duggan, author of "Work Backwards: The Revolutionary Method to Work Smarter and Live Better," puts it, choosing the right team size can be the crucial factor in achieving wild success.
And this is the part most people miss: it's not just about the number of people, but also about the quality of engagement and leadership within the team. So, the next time you're considering team composition, think about the communication tax and how you can optimize it for maximum impact.
What are your thoughts on team size and its impact on productivity? Do you agree with the communication tax concept? Share your insights and experiences in the comments below!
