“Most people have zero awareness of what business overhead looks like,” startup executive Erin Robbins O’Brien tells me. “They say, I want to buy this, I want to expense that--and then they’re surprised that there isn’t a lot of money left over for higher salaries and raises.”
O’Brien, chief operating officer at GinzaMetrics for the past two years, is a frequent brainstorming partner of mine on the thornier issues of management that get little airplay in the worlds of leadership training and theory. She’s the no-nonsense person I often turn to for candor and common sense.
O’Brien’s philosophy is simple. “If everyone treated company money like it was their own,” she says, “I believe both businesses and their teams would be better off.”
No doubt. Consider all the ways in which we thoughtlessly, remorselessly run up our company’s bills.
In 2013, according to the U.S. Travel Association, a trade group, business travelers spent $105.4 billion on meeting, event and incentive travel. Meeting Professionals International, another trade group, estimated global spending on meetings and events, including travel, at $600 billion to $700 billion. --New York Times, August 18, 2014
When business people travel on business, they like to fly business class, because, well, it’s built right there into the name. But how often is that the smart thing to do?
A plane ticket from LA to San Francisco is usually around $300 and often more. But since it’s just an hour flight, why should I fly premium class at double price? A center seat and two $8 glasses of wine in economy can get the job done just fine.
And why would I make my company buy a ticket on an airline route that adds to my personal miles account? In all likelihood, I’m complicating logistics and adding hundreds of dollars to the expense, just so I get a minor benefit.
If we have a work chair at our office, it probably costs a good deal more than the one we bought for our home office. Why is that? Why do we feel entitled to overspend on something minor that takes money out of the pockets of customers, of shareholders, of colleagues … and, ultimately, ourselves?
That sort of overhead results in bureaucratic gamesmanship. Lots of money may be dedicated to supplies and equipment. And there’s an urgency to spend every last dollar on those useless luxuries, lest any surplus at the end of the fiscal year result in a smaller equipment budget next year. In short, we all incentivize one another to waste money.
Raises, then, are predictably small. But what if people didn’t order $1,900 ergonomic thrones from Relax the Back? What if they didn’t spend $2,500 on a plane ticket? What if they didn’t order the filet mignon for the annual gala?
Employees will frequently expense extras because of other unhappiness with their organization, whether it’s salary, recognition, or something else. If your team is seeing that happen, it’s time to address the overall environment, O'Brien tells me.
It’s also a matter of being honest with ourselves and putting first things first. “Sometimes managers let their people take a trip to an expensive conference because it’s their way of rewarding good work," she says. "But if the employee is honest with themselves, they may know that it might not be a good use of company money.”
Large businesses may have a tougher path in reforming their bloated bureaucracies. Smaller, leaner enterprises have a much easier path. But in both cases, the issue comes down to what O’Brien calls shared awareness of overhead. When there's a shared willingness to spend the company’s money at least as carefully as you’d spend your own, and when the company is willing to reward its employees for such discipline, both sides benefit.
The only ones who won't benefit, come to think of it, are the airline industries and luxury office equipment manufacturers.
