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Coordination Tax

Canonical definition (Arco Lexicon)

The overhead cost of human-to-human alignment — the meetings, approvals, status updates, and manual handoffs required to keep a traditionally structured business functioning.

Extended Definition​

The Coordination Tax is not a management failure. It is a structural consequence of building businesses around human labour. Every additional person added to an organisation creates new coordination requirements — new handoff points, new approval chains, new communication overhead. In a legacy firm with 50 or more employees, this tax typically consumes between 20 and 30 percent of operating budget. The work is real, the cost is real, and none of it produces revenue.

In the Log​

First used: 2026-03-17

Part of the Arco Lexicon Ecosystem — maintained by Arco Venture Studio