Penny Wise and Pound Stupid - Business Version

kaylarStarred Page By kaylar, 6th Nov 2012 | Follow this author | RSS Feed
Posted in Wikinut>Business>Analysis

Losing money and productively with extremely stupid protocols which seem sensible on paper.

How To Lose

Many businesses lose thousands if not millions of dollars a year by what can only be fit into a 'penny wise and pound stupid' set of 'protocols'.

In some cases this paradigm is obvious, (save to the Boss) in others the Employer's reasoning is one of those 'sounds good, isn't' ideas.

Although many of the events presented here are clear 'common sense', many Employers do not own that trait. In fact, many can dispute for hours as to why these facts are not.

Some keep talking as the locks are put on the doors, or the workforce migrates en masse.

None of the examples are hypothetical.

Docking Pay

Mr. Lost used to pay by the month. He didn't make a deduction when an employee was unavoidably away, and those who worked for him tried their best to get to work as soon as possible. Many arrived with five hours on the clock, and 'caught up'.

For some reason Lost decided to start deducting hours; which of course meant an Employee went from a Monthly to virtual 'hourly' paid worker.

Once Lost began making his hourly deductions workers ceased to participate in his calculations. They simply took the day.
They did the Math.

The cost of going in to work after missing three (or more) hours was measured. Adding expenses to go to the office and come home proved that they'd actually only lose a pittance and get a free day.

It was not much of a decision; avoid lateness by absense. Those who might have been able to get to the office at ten or eleven would go home instead..

The knock on, of course, was having lost yesterday's pay was to do as little as possible today and tomorrow.

Hence, instead of workers racing to their posts a few hours late and doing twice as much to make up the time they had been out, they took the leisurely route home.

Sign in Sign Out

When workers arrive and the protocol of sign or punch in was there before they started, there is no problem. When it is introduced after, the problems are obvious.

Workers are now tied to the clock and they know how to make a mockery of this.

For example, if they arrive late, aware their pay will be docked they might stay later to 'make it up'. Not that they will be working, they won't be. Unless you count clock watching as work.

Others will sign in bang on time, get lost, return at some other time, sign out on time, but the amount of work is negligable.

In these kinds of offices, 'shutting' down' usually begins about thirty minutes before punch out.

Day's Work vs Piece Work

About a year ago Mr Foolfool decided to build a second story on a small building.
In real life it wouldn't have taken a month to go from floor
to ceiling and be able to rent out the premises.

After all, the entire floor space was about 1000 square feet (to be generous).

A year later, Mr. Foolfool's construction is still not finished.

An intelligent person engaging such work would have asked; "How much to put up the second story?" Gotten a price for labour, a quote for materials and done his budget.

Mr. Foolfool, however, decided day's pay was how he would go, and if the workers
said Six bags of cement he would buy Four to prevent them from stealing.

The amount of money he has spent on the building is about five times what it should cost, but due to his cheapness it will cost six times before it is finished.

The pennies he pays to his workers has led to creative ways of unworking. For example, how long does it take someone to measure a piece of steel?
Here, about fifteen minutes.
One can watch a worker mix a small portion of cement, carry it up to the second floor use it, and come down again.

The idea of giving a set of workers a 'lump sum' of xyz dollars was so horrifying to Mr. Foolfool would rather pay pennies for more than a year. As the workers drag out the work he doesn't seem to get the longer they take the longer it will be before he can rent the premises and begin to make back his money.

Negotiate Cost

Mr. Cheap can impute that the worker is trying to 'rob' him and cut the price. He might feel proud of himself. The Worker feels aggreived. Hence Mr. Cheap will get exactly what he paid for. Usually this is a half job.

If one doesn't like the price one hears, ask another. It is usually the case that skilled workers know the cost of a job and aren't trying to rip off anyone because they have a reputation.

Semi-skilled layabouts might try to rip off, sure, but hiring them in the first place is insuring a laybout job. Cutting them down too sharply on price insures a waste of money and often damage control.


Don't become fascinated by clocks. If the work is being done go with it.
If a good worker is late or absent don't get out your pad and pencil, let it ride. The first day you make it a 'half day's pay' will usually be the last time. The next time it will be a day's pay. And the subsequent days will see a remarkable decline in productivity.

Where you can pay for a job, do it. This insures that it is done. The operable word is done. You want the work done. Supply the tools, materials and get a time line.

Don't negotiate. If the worker says X dollars and you think that is high then say "I'll get back to you". If they jump up with a 'discount' take it. If they don't, do a bit of shopping around. Their bid might be the cheapest.

Bosses who get the best work seem to slightly 'overpay' give lots of benefits and create the environment in which the worker doesn't want to lose the job.

Workers who want to keep their jobs do that bit extra.


Board, Boss, Days Pay, Decisions Protocols, Deduction, Hourly Pay, Monthly Pay, Pay, Policy, Resentment, Salary, Time, Unwork, Work

Meet the author

author avatar kaylar
I am passionate about history, culture, current events, science and law

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author avatar Mark Gordon Brown
7th Nov 2012 (#)

Many employers only seem interested in paying themselves top dollar.

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author avatar kaylar
7th Nov 2012 (#)

Some of the things I've seen defy all logic. And when one seeks to get some kind of response the insanity these people spew makes it kind of clear that they are going out of business and are totally unaware of it.

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author avatar Lady Aiyanna
7th Nov 2012 (#)

As a business person I select my team by hand picking them for the job and the minute they show they are unable to cope I get them to step out of the business and sign off their rights to the same.
Its not intentional but it is needed to keep a business running smooth wherein emotions take a back seat and you become very hard nosed and ruthless to avail the profits.
I personally have run businesses since the age of twelve and these are my own. The people have to pay on time and there is a clock-in chart and register with fines if they failed to adhere to it. It worked I got my money on time and every time with only one person in the history of my business having to pay the price as I charged a heavy penalty. But that said, I always look at the schedule of payments to make sure it is comfortable for them and accordingly balance out things to ease their financial stress as its never one size fits all, its more customised to fit.
With regard to timings, same, introduce fines, it always works and you get paid none the less.
I never charge by the day, its always by the hour and I know how to get my maximum from it to keep the business afloat and there is never a question of a loss.
My costs are based on the skill grading and I charge them with two variable amounts wherein one is for regular mainstream and the other is for specialised training. I always give a break down of the fees so that everyone is aware of what is being charged for.
A god business person always draws up contracts in advance and then works out a timetable and keeps to it as the penalties are very dire for breaking of contracts which are punishable by law.
I never work as an employee wherever I am but am a contract person who does my job to the money that is paid and walks out with my head held high without a blemish as its my name and my reputation that I am answerable to as my brand name.
Sometimes counting pennies is wiser than taking the pound that is earned through blood money that contains tears, pain, hurt and malice within them. I am such a person...

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author avatar kaylar
7th Nov 2012 (#)

Depends on the Environment you are in. The harsher you are to employees the less work you get. The meaner you act the meaner you have to act.

I could imagine in my country you trying to fire some one just like'd have a law suit just like that.

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author avatar Peter B. Giblett
7th Nov 2012 (#)

There is much to be said for saving money in business, but there is a right and a wrong way to go about it. You are right that workers know when they are being screwed and do find ways to recover "their losses", and when a company is going through bad times it is often better to be honest with the business outlook and the workforce will back the company to ensure it stays in business, often volunteering pay cuts to secure job continuity.

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author avatar kaylar
8th Nov 2012 (#)

That is exactly right. I can list people who underpaid and it cost them.

Many workers who feel 'part' of the corporate family will do everything they can to keep the business alive.

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author avatar Carol
7th Nov 2012 (#)

Great work kaylar, many thanks.

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author avatar kaylar
8th Nov 2012 (#)

Thank you Carol

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author avatar cnwriter..carolina
15th Nov 2012 (#)

commonsense is a commodity that seems to have disappeared in this day and age...thank you kaylar for a great piece

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author avatar kaylar
15th Nov 2012 (#)

You are very welcome cnwriter

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