Losing a dollar to save a penny seems like a supremely dumb business strategy unless you are trying to short-sell your own company. Which is also supremely dumb, since it’s pretty illegal. But short-sightedness is unfortunately as common as bark on a tree, and some people in upper management are experts in little else but shooting themselves in the foot.
Fortunately for us and posterity, internet users have gathered some of their experiences with companies trying to penny-pinch and paying the price for it. So get comfortable and read through this collection of policy backfires that are sure to induce some pleasant schadenfreude. Be sure to upvote your favorites and comment your own stories.
#1
They hired newer employees at 25% more salary without adjusting old employees who had been there for years.
When this was found out they were told “life isn’t fair”, “the markets changed”, and “you didn’t negotiate well when we hired you”. So what did the old employees do? They left. And all the domain knowledge they built up over the years was lost so the new employees couldn’t perform.
Be loyal to your loyal employees. It’s a lot harder to replace them than people think.
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211points
#2
Underpaying the nurses so they quit and had to pay agency 3x the going rate
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206points
#3
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.
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.
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184points
Even massive household names with billions at stake still find ways to endanger themselves with poor decision-making skills. A tiny little media company called Warner Bros. Discovery decided it needed to try and save $3 billion last year, a pretty tall order even for the most financially responsible of us. So they decided to find a few ways to cut costs. Most famously, they took an already completed film, Batgirl, and canned the whole thing, among other projects. They also removed over 200 episodes of Sesame Street from HBO Max and shut down CNN+.
The precise savings are unknown, but the uncertainty affected investors since, let's face it, a movie studio deciding to scrap a finished movie is not a move of confidence. This was all done, reportedly, to help Warner Bros. Discovery recoup some money in the form of tax-write-offs. Regardless of the reasoning, investors were wary and the company lost around$20 billion in market cap. This is a fancy way of saying people thought the company's potential value was a cool $20 billion smaller than it was before these decisions.
#4
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.
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155points
#5
The FinTech company I worked for decided to offshore all of IT Support jobs to India, which resulted in about 35 of us training our replacements for 3 months until our jobs were terminated. Not even a month after my last day myself and many other former colleagues were receiving calls from management asking if we wanted our old jobs back, but legally it would be a 12-month contract since we received severance pay - almost everyone declined. I've received regular updates from one buddy who actually went back and the last 12 months has been a death spiral -- almost every large client bailed in favor of our competitors, those who remain are still pissed off and eager to leave, and 4 people are staring at ticketing queues that were previously managed by 35 of us.
A billion dollar company was profitable and thriving but the decision to save, I don't know, a couple million bucks, wound up sabotaging the entire business. Great job.
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147points
#6
Refused to raise my pay to the same level as my coworker's, not because of any difference in experience or workload but because he was five years older than me. I quit, at which point they realised that I had been handling a lot of my boss' tasks and that my coworker and I had basically been doing the work of three people, so they had to hire two people to replace me. And then my original coworker got fed up and quit too.
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143points
Now, often enough, the driver behind these decisions seems to be nothing but simple greed. Or at least it can look that way from the outside. Sometimes a company really does need to find ways to make money. Or sometimes an executive really does think they have a brilliant idea. Let's for a moment assume that the higher-ups really thought it was necessary for the company. Wild idea, right? So even in a best-case scenario, why do smart, capable professionals make terrible decisions?
#7
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.
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135points
#8
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.
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130points
#9
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.
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120points
Despite what they might want you to think, executives are still just ‘regular’ humans along with the rest of us. They attach emotions to ideas that possibly don’t deserve them and they see patterns in events that aren’t actually there. Self-interest also skews a lot of data. If we desperately want something to happen, our brains will start to find evidence that supports our plan and ignores information that might limit it.
#10
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.
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116points
#11
Lay off a bunch of veteran people so they can bring in newer workers for cheaper. They find they couldn't bring in newer people for cheaper so they hire newer people at close to the same price as the veteran workers. Veteran workers are mad they have to train somebody making almost the same as they are with no experience and start leaving. Company has to pay fewer remaining veteran workers even more to get them to stay while paying inexperienced workers close to what the workers they just laid off were making.
To my knowledge, prior to the lay offs, the veteran workers weren't even complaining about pay. Now the department is at a worse state and more expensive than what it was prior to their plan to save money.
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109points
#12
The home health agency I work for was bought out by a hospital system in the next state over. They decided to cut costs by eliminating the position of the person who would obtain authorization from the insurance companies for services and move it all to their centralized auth department in the other state. Only problem was, they had no idea that things worked differently for our state's medicaid program than it did in their state. They ended up getting denied for well over a million dollars in the first year for services we provided because they didn't properly obtain authorization. But hey, they saved maybe 30k in salary so good on them, I suppose.
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108points
The simplest solution is to involve another party that can, at the very least, give you an outside perspective. A new person is less likely to have your specific emotional biases. However, a lot of upper management roles are not particularly cooperative. Bosses feel like they need to maintain their authority and will reject ideas from subordinates pretty quickly. Or, even worse, the people they might consult might be other higher-ups who are also pretty interested in saving, at almost any cost.
#13
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.
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107points
#14
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.
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104points
#15
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.
93points
#16
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.
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92points
#17
Outsourcing the call center to central America. We were one of the only companies in our line of work that ONLY operated in the US, and customers loved us for it. Their customer base cut down by 1/3 within 2 years of outsourcing, and now they are hanging on by a thread. Wouldn't be surprised if they went under within the next 5 years.
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91points
#18
Not giving the guy doing 2.5 full time jobs a slight raise, instead letting them walk and paying 3 new people (combined) at least twice what they were paying him to do all the same work at like 65 percent the quality level
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86points
#19
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
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83points
