There's a tax your company pays every single day. It doesn't show up on any P&L. No CFO tracks it. No consultant has built a practice around eliminating it.
But it's there. In every department. Every week. Quietly draining productivity and burning money.
I'm talking about the hidden cost of fragmented professional contacts.
The Meeting That Changed My Perspective
Last year, I watched a procurement director spend an entire afternoon trying to find a Spanish translator for a vendor contract negotiation.
She emailed three colleagues. Checked LinkedIn. Posted in a Slack channel. Finally found someone through a friend of a friend who charged a premium because it was last-minute.
The twist? Her company's sales team had been using an excellent Spanish translator for two years. Same building. Same company. Different department.
Nobody knew.
That translator—let's call her Maria—had done dozens of jobs for Sales. Perfect track record. Competitive rates. But Procurement had no way to discover she existed in their company's network.
This isn't a failure of communication. It's a systemic problem that exists in virtually every organization with more than 50 employees.
The Anatomy of the Problem
Professional contacts are scattered across your organization in predictable patterns:
Sales has their CRM. Salesforce, HubSpot, or Pipedrive—meticulously maintained because it directly affects their compensation.
Legal has a mix of Outlook contacts and a spreadsheet someone started in 2019. Maybe a list of outside counsel on SharePoint that hasn't been updated since the last general counsel left.
HR and Recruiting has an ATS full of candidates but no systematic way to track professional references, industry contacts, or the consultants they've vetted over the years.
Finance relies heavily on personal relationships—accountants, auditors, banking contacts—stored primarily in individual employees' phones and email contacts.
Procurement maintains vendor databases but lacks information about the service providers other departments have already vetted and used successfully.
R&D and Engineering often has the most valuable external contacts—researchers, academics, technical consultants—and the worst systems for tracking them. These contacts typically exist only in individual engineers' personal networks.
Executives carry the company's most strategic relationships in their heads and personal phones. Board connections, investor contacts, key industry relationships—rarely documented anywhere the organization can access.
The result is seven different departments solving the same basic problem—"who do we know who can help with X?"—seven different ways.
Calculating the Real Cost
The hidden tax manifests in three ways:
1. Duplicate Discovery Effort
When Procurement searched for that translator, they didn't just lose an afternoon. They:
- Spent senior employee time on low-value research
- Made decisions with incomplete information
- Potentially chose a worse option than what was already available internally
- Added another contact to another siloed database that another department won't be able to find next time
Multiply this by every time someone in your organization needs to find a lawyer, consultant, contractor, vendor, or service provider.
For a 200-person company, conservative estimates suggest this happens 50+ times per month across all departments. At an average of 2 hours per search (including the back-and-forth, vetting, and coordination), that's 100 hours monthly spent reinventing wheels that already exist within the organization.
At a blended cost of $75/hour, that's $7,500 per month. $90,000 per year.
For a service that someone, somewhere in the company, has already found and vetted.
2. Quality Inconsistency
When departments operate independently, quality becomes inconsistent and institutional learning doesn't compound.
Sales found Maria through a rigorous process. She proved herself over multiple engagements. That knowledge—Maria is excellent, reliable, competitively priced—represents organizational learning.
But that learning stays trapped in Sales. When Procurement searches fresh, they're starting from zero. They might find someone better than Maria. More likely, they'll find someone worse. Or more expensive. Or both.
Now multiply this across every professional service category your company uses. The organization never develops institutional wisdom about who's excellent and who's merely adequate.
3. Knowledge Evaporation
Here's where the hidden tax becomes most expensive: when employees leave.
Your VP of Operations has spent five years building relationships with freight forwarders, customs brokers, and logistics consultants. She knows which ones are reliable, which ones cut corners, which ones are worth a premium for urgent shipments.
When she leaves for another opportunity, what happens to that knowledge?
If she's unusually organized, maybe she leaves behind a list. More likely, her contacts go with her—stored in her personal phone, her LinkedIn connections, her private mental database of "people I trust for X."
Her replacement starts from scratch. Five years of relationship-building and vendor evaluation—gone.
According to various industry studies, replacing institutional knowledge costs 50-200% of an employee's annual salary. For senior roles, the figure skews higher. Much of this cost comes from rebuilding the relationships and external networks that walked out the door.
Why Existing Tools Don't Solve This
You might wonder: shouldn't our existing technology stack handle this?
CRM systems are designed for Sales. They track deals, not relationships. More importantly, they're built around the assumption that contacts belong to the company, not the individual. This works for sales leads but fails for the broader category of professional relationships.
Google Contacts and Outlook are personal tools. They have no concept of organizational sharing, no way to tag contacts with context, no mechanism to make one person's excellent translator discoverable by a colleague in another department.
LinkedIn has become a social network, not a contact management tool. Connections are for personal branding and job searching, not for organizational knowledge sharing. You can't search "who in my company knows someone at this target account" because LinkedIn doesn't know who works at your company.
Spreadsheets and SharePoint lists are where contact databases go to die. Someone creates them with good intentions. They're updated for a few months. Then the creator leaves or gets busy, and the spreadsheet becomes a historical artifact—increasingly out of date and increasingly ignored.
The common thread: none of these tools were designed for the dual challenge of maintaining personal professional networks while also unlocking organizational value from collective contacts.
The Characteristics of a Real Solution
Having worked through this problem across multiple organizations, I've identified the characteristics a real solution would need:
Dual-layer ownership. Contacts need to belong to individuals (it's their professional network, built over years) while simultaneously being discoverable by the organization (with appropriate permissions). This isn't either/or—it's both/and.
Cross-departmental by design. The value comes from breaking silos, not reinforcing them. A tool that only Finance uses is just another silo with better branding.
Context preservation. It's not enough to know Maria is a Spanish translator. You need to know: Who used her? For what projects? How did it go? Is she still active? What does she charge? Context transforms a name into actionable intelligence.
Lifetime portability. Professionals change jobs. The relationships they build should follow them—while the organization retains access to the contacts that were shared with the company. This seems contradictory but it's actually complementary: if employees know they get to keep their contacts, they're more willing to share them with their employer.
Respectful of privacy. Not every professional contact should be shared with an employer. A tool that assumes everything is company property will never get adoption. People need control over what they share.
The Strategic Opportunity
Here's what makes this problem strategically important: the company that solves it gains compounding advantage.
Every contact shared and tagged makes the next search faster. Every departure that doesn't drain institutional knowledge makes the organization more resilient. Every duplicate effort avoided frees capacity for value-creating work.
Meanwhile, competitors continue paying the hidden tax. Their procurement teams search fresh every time. Their institutional knowledge walks out the door with each departure. Their departments remain siloed, each solving the same problems independently.
This isn't about having a slightly better vendor database. It's about whether your organization can leverage its collective relationships—or whether those relationships remain trapped in individual silos, invisible and inaccessible.
Questions Worth Asking
If this resonates, here are questions worth exploring with your leadership team:
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When was the last time someone in your organization searched for a professional service provider that another department had already used?
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What happened to the professional contacts of the last three senior people who left your company?
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How would a new hire in Operations find out which logistics providers their predecessor trusted?
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If your CEO needed an introduction to someone at a target company, how would you figure out if anyone in your organization already had that connection?
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How much time per month do your employees collectively spend searching for professional contacts that already exist somewhere in the organization?
The answers to these questions reveal the magnitude of your hidden tax.
What Comes Next
The problem of fragmented professional contacts is solvable. The technology exists. The concepts are straightforward. What's been missing is a product built specifically for this dual challenge—personal ownership plus organizational benefit.
That's changing.
In future posts, I'll explore specific aspects of this problem: why CRM fails for 80% of your company, what happens to contacts when employees leave, how to surface the hidden connections in your organization's network, and what a privacy-first approach to professional networking actually looks like.
For now, start by noticing the hidden tax in your own organization. Once you see it, you can't unsee it.
