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The Energizer Blog

  • Writer's pictureEileen McDargh

Beware of Being Penny Wise and Pound Foolish

Beware of Being Penny Wise and Pound Foolish

Resilient organizations headed by resilient managers don’t just look at cutting costs for survival. Rather, they look at what the TRUE cost of such cuts will be.

Case in point:  Chef Joseph heads up the pastry kitchen of a well-known hotel in a major metropolitan city.  The hotel hosts huge events and can actually serve as many as 10,000 in a single night through its various function areas. Chef Joseph was hired for his talent and ability to grow and groom his help.

However, at a recent function, the chef and I had a very interesting (and sad) conversation.  He complained that he rarely got to do what he was hired to do. Instead, the majority of his time is spent staring at a computer screen, placing orders and learning a new software system.

It seems “management” decided to get rid of the purchasing department and now insists that Chef (and others), perform these functions. This means that Chef must find codes for food items, order them and then generate an invoice. Instead of having purchasing send one master invoice to a vendor, each person is charged with creating his own.  (Imagine, too, how upset the vendor is getting with having to respond and file numerous invoices.)

Not only is Chef now a very highly paid accounting clerk, but his unhappiness at being pulled from his true work, shows on his face. He added that management decided not to hire from within but rather bring in culinary talent from other areas.

“It’s hard enough to get eager young talent and when there is no obvious future for them,” shrugged Chef, “they leave.”

Remember, easy solutions to problems often create bigger problems in the long run.

Here is how to prevent it:

  1. Know the actual hourly wage of salaried personnel. This includes all benefits, SSI, taxes, etc.  In one organization where senior executives insisted on reviewing and signing off on slide decks, it was discovered that their real hourly cost was creating slide decks in excess of $25,000. When this was pointed out to them, the practice stopped except in critical times.

  2. Ask what specialized work will not get done, or will be done poorly, if the employee is not returned to the work she was hired to perform.

  3. Involve those concerned with the best, most efficient way to get a task accomplished.  What a manager spends on an intern might be returned tenfold if talent stayed focused on core tasks.

  4. Decide if this “extra work” adds to the employee’s critical knowledge base and if it can serve the organization (or the employee) later on.

  5. Remember, what makes logical sense on paper can very well be a wildly stupid decision later on.

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