20 Times A Company Made A Dumb Decision To Save Money That Eventually Cost Them More
Penny-wise but pound-foolish decisions made by corporates.
When times get tough it's natural to look at where leaner measures can be used to save unnecessary expenses. However, there are several occasions where this strategy can be enacted incorrectly. In fact, the idiom ‘penny-wise and pound-foolish’ comes to mind when you hear of people who stringently cut corners only to have it backfire in the long run. Scroll below to read a juicy selection of stories from people who had the satisfaction of witnessing exactly this happening in the organization they worked at. So settle back and let the penny-pinching tales ensue.
More info: Reddit
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Image source: dinosore, Open Grid Scheduler / Grid Engine
Shut off the HVAC system to save on electricity costs during the summer. Had to pay over half a million in mold remediation costs. F*****g morons.
#2
Image source: HazMama, Preston Zeller
Buying 30 buses with 100-200 less horsepower than the previous ones, turns out you need s**t tons of power to get up the steep mountain hills in Norway.
#3
Image source: sonsonmcnugget, Adrien Olichon
The roof of our building was leaking bad. Got quotes for doing just a third of the roof and for doing a whole new roof. They choose to do third of the roof. All it did was move the leak. A month later they did the whole roof. They would have paid a lot less had they done it right the first time.
#4
Image source: el_monstruo, Karolina Grabowska
The company my mom worked for had new offices built and instead of hiring movers they had the staff move. They had 3 injuries occur including my mom tearing her ACL. The HR director, who my mom was friends with, said it cost them 16x the amount they were quoted for movers to cover medical, legal, etc. costs.
#5
Image source: TrickBoom414, Anna Shvets
Thinner "recycled" plastic bags. We just have to use two now.
#6
Image source: Diabetesh, Andrea Piacquadio
Someone I know worked for the "oldest american" hoist company. They decided to outsource production to china. The cost of transport, losses, customs, etc made the chinese hoists just as expensive as their american made ones and then the chinese company stole the plan to make and sell themselves for less.
#7
Image source: Background_Ear7166, Laura James
To cover nightshifts in the hospital a new manager imposed a rolling rota of days and nights... 75% of the staff handed in their resignation as this was not an optional thing...
Classic play silly games, win silly prizes.
#8
Image source: junotinychonk, Cedric Fauntleroy
Underpaying the nurses so they quit and had to pay agency 3x the going rate
#9
Image source: velvet_satan, Rachel Claire
We used to get a travel per diem for our meals. Most people would eat cheap like get a free breakfast at the hotel and get a $5 footlong and split it for lunch and dinner and bank the rest. I traveled a lot so it was like a nice perk. The company got wind of this and changed their policy to we had to buy and expense all our meals. The problem was they had to have the same policy for all employees so they couldn’t put a cap on meals due to the sales guys having to take out clients and stuff. We took full advantage of it and ate like kings. My meals expenses were twice what they were paying in per diem.
#10
A company I worked for (a fortune 500 company) was having a hard time getting employees for 8.00 an hour, our competitors started at 10.00 an hour at the time, this was 5 years ago. Someone at corporate had the bright idea to stop using preemployment drug screening, allowing the positions to be filled by people who we normally would disqualify. This company was a national auto parts chain, and we had a fleet of delivery trucks, there were so many accidents both inside and outside of the stores over the 18 months that they did this. Through lost productivity, theft, and several liability lawsuits the company lost millions of dollars even enough to affect its stock prices. Image source: Impressive-Floor-700#11
Image source: eron6000ad, Andrea Piacquadio
Company ran a campaign for "outside the box" ideas in cost cutting, with stock awards for proven savings. Our facility maintenance manager claimed a $300k savings by eliminating unnecessary capital spare parts in the warehouse and received a $30k award.
Six months later a critical compressor failed resulting in the plant reducing to half capacity at a $500k per day profit loss. It would only take two days to repair, however, the parts were no longer in the warehouse. They were among those eliminated and sold for scrap. It took 90 days to receive replacements.
Total loss to our company was just over $50 MILLION.
#12
Image source: go4tli, Pixabay
Business traveler must fly to the closest airport to the destination.
Is Airport A one mile closer to the destination than Airport B? Yes. Are the airline tickets 2x as expensive? Also yes.
#13
Image source: plantman01, Andy Arthur
currently got a job at a pharmaceutical company that has water tanks that are too small to handle our water requirements, so the company spends $10k per week having the tanks replaced and fixed. i spoke to the worker who handles the replacements and he said its the stupidest f*****g thing hes ever seen. they can just get the correct water system size for $100k-150k
#14
Image source: mtgguy999, Wendelin Jacober
Old job, we had a fancy large format printer. The guy in charge of supplies kept buying knock off ink cartridges. A genuine new cartridge was probably $80 I don’t know what the knock offs cost. Every time the cartridge ran out the operator would try to replace it but it wouldn’t work and the line had to shutdown and the operator would but in an IT ticket. As the IT guy i would need to though 4 or 5 or more cartridges before i got one that worked. The duds would just get thrown away. The supplies guy didn’t work for IT they worked for the operations department. Still we talked to him about it several times and he would just blow us off and keep getting the knock offs.
#15
Image source: avanross, Kuba Grzybek
I work in R&D and prototyping for a small home theater company.
My boss doesnt like how it looks when we make big purchases under his supervision.
So he consistently denies my proposals to buy a $500 3d printer, preferring to spend about $200-$300 per month to have another shop 3d print for us, and then paying me my salary to sit around for 2-5 days per job, doing nothing, while waiting for the 3d print shop to process their dozens of other customers.
All so that he’s not the one on the hook for a $500 machine that his employees are already fully capable of using.
I estimate we’ve spent about $1000 on 3d printing so far, plus the cost to have our delivery guys pick them up, plus the wasted down time
Gotta love spending entire weeks sitting around on my phone waiting for a single tiny plastic part that i could make myself in an hour
I just dont get it
#16
Image source: ideit, Marc Mueller
Refused to expand. My company "had a good thing going" working with small mom-and-pop clients for low prices. The issue is that it worked well because the employees were all extraordinarily talented but in the early stages of our careers so our pay didn't quite match our capabilities. Once we started to catch on that we were getting paid 60-70k but could easily make 100k+ by switching companies, we started pushing our boss to charge more and market to higher tier clients so we could all make more but he simply refused. We wanted to stay, wanted the company to grow with us, wanted to do what we were capable of, but the boss was comfortable and didn't want to spend the money or take the risk.
Well, surprise, we all started leaving for companies offering us 50-100% pay jumps. He replaced us with low cost employees. Work quality suffered, and clients started leaving. The company sputtered along for a couple years then finally went under.
#17
Image source: lighthousek, cottonbro studio
I worked in a daycare that at first was pretty relaxed. If a child missed a milestone it wasn’t a big deal.
We got a new director that decided to get really strict about milestones. Her thinking was we can advertise that all our kids hit milestones at XYZ. We also got rid of some things that were too “babyish”for the older kids. Like no more changing table in the 3s room. 2 year olds weren’t allowed to have pacifiers, 4 year olds weren’t allowed stuffed animals.
Now once again, she did this because she wanted to be a more competitive daycare and increase the rates. For example “hey our daycare is great, all of our 3 year olds are potty trained!” Yeah because if they aren’t they get kicked out. I can talk about potty training all day but god forbid we have neurodivergent kids in the 3s room who need pull ups.
Parents got pissed. It didn’t help that most of the staff was against these changes and were vocal to the parents about it. Not only that, but now their rates were going up.
At first they were vocal about. But it honestly sucks to find a new daycare when your kiddo is happy. Then the kids started becoming unhappy. A parent asked why her kid didn’t nap and told her it’s because I’m not allowed to give them a paci.
Let me tell you. Mama who worked 10 hours a day to pay an asslode of money to daycare for her kid not to nap or be happy? Yep I got an earful.
What happened next was a chain reaction. A couple kids were pulled out, followed by some straight up getting kicked out, and now we weren’t taking on as many clients because of our strict requirements. As well as our more expensive rates. Now kids didn’t have their friends anymore. More kids got pulled out.
And that was it. It became so unprofitable it was sold and rebranded.
#18
Image source: operative87, Jerome Govender
I used to be the head of security for a club that had the most tight-fisted owners I’ve ever heard of.
I kept telling them that we were dangerously understaffed. The police told them the same. So did the fire brigade, they said there wasn’t enough of us to evacuate the venue if we had to, they were right too. The owners wouldn’t listen.
The club was taking around 45k per week but they wouldn’t pay for radios for us to least be able to communicate. We had so many incidents there that it was just insane. There just wasn’t enough of us to actually watch the whole club and even when we did see something we couldn’t call for back up. I found a set of second hand radios for under £200 but they refused to buy them I ended up buying whistles for the team to at least give us something to use to get each others attention.
They also wouldn’t pay to get CCTV installed which upset the local police.
One night a bartender came out to the door and told me there was a fight inside, there was no security inside just 2 of us on the door. When we went in there was around 60 people brawling on the dance floor. We did what we could but it was beyond our control. Eventually the police arrived but wouldn’t come inside they stood outside and essentially instructed us to kick everyone out and they would keep them out. We spent 45 minutes dragging people out of there.
Many people were injured and after the fight one of the guys who had been fighting came back and stabbed a guy he had fought with.
The police decided enough was enough and approached the council who as expected revoked the premises license. They lost the club altogether.
#19
Image source: Tulikettuja, Tima Miroshnichenko
When lockdown hit, they immediately decided to 'save money' by furloughing almost all of the staff in order to get some government money.
But we were a software company. Everyone could have written software from home. And that's precisely what all our competitors did.
So first, we fell behind massively. Second, people on furlough grew antsy and quit for new jobs that allowed them to, you know, work. Third, the small handful of people left behind at the company were suddenly swamped with demands and got burned out and annoyed.
We could have made so many strides adding Covid-relevant features to our app, the way our competitors did. But nope. Short term panic led to long term loss.