Government wastes money and drives up our taxes. I hear that complaint a lot. What I typically don’t hear is corporate spending and profits drive up the cost of goods and services, making living more difficult for us day-to-day.
Let’s look at a few ways that corporations spend that could be considered waste. I’m not referring here to abuses by individuals, which can happen in either environment, but to practices that are a normal way of operating.
Retreats are a good place to see the difference in expectations and environment. These long periods of time set aside to focus on strategy, team-building, goal setting, innovation, or working out particular problems, and sometimes a bit of entertainment, generally involve a lot more expense in corporations than government. It’s not uncommon for corporations to fly a large number of people to a resort for several days. Golf games, fly fishing, hunting, rock climbing, skiing, spa treatments, gifts and luxury quarters are standard fare. All meals and an open bar, the company picks up the tab.
Government retreats are most often single day events, held locally at a community or conference center or hotel, maybe even onsite—just in a room that’s far enough away from offices to keep people from wandering off to answer phones, emails and put out fires that can be otherwise managed. Meals are alcohol-free, unless employees pay for it themselves. Typically, government money can’t be spent on liquor. Receipts must be itemized, for verification. Gifts and entertainment typically can’t be paid for from government coffers either. So if the retreat lasts more than one day, employees pay for their own night on the town or day at the spa.
But, you may say, this is just one sort of expenditure, maybe even a minor one. Well, event costs do add up. But other common operational decisions involve over-spending as well. According to Accenture, “most companies professionally manage less than 50% of their spend” compared to 90% at best in class companies.
Corporations often over-spend on media marketing, continuing along with a budgeted amount or campaign even when its success hasn’t been measured nor alternative approaches considered. Over buying or leasing real estate is another place where corporations waste money—assuming expansion that never materializes yet paying to retain the facilities on an ongoing basis. According to Inc. magazine, “the average firm has 30 to 50 percent more real estate than it actually needs, due to redundancy and underutilization.” Corporate training that doesn’t impact strategic goals or organizational effectiveness is another way that companies spend unnecessarily. According to Forbes, billions of dollars are wasted this way.
You may be thinking, yes, but my taxes are paying for government waste. Corporations earn their money, so they can spend it how they choose. To that, I say, the escalating prices of everything we buy pays for the corporate waste. If government is tax and spend, for corporations, it’s spend and charge.
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