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Why Do Companies Spend Money on Stupid Shit?

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I get hit up by recruiters or past coworkers to come work for their company. Companies seem to have this notion that if they have eccentric benefits, it will draw people to come work there. Perhaps there are some individuals who like to work for free or get "perks" that they could easily purchase themselves in exchange for tens of thousands of dollars, but I don't get it. Here are a couple of the last encounters I've had that have left me scratching my head.

The first is a company I used to work for. I left in 2012 for a smaller company and more money. I would be lying if I said they haven't hit me up at least five times in the last three years or so. Why is that important? Well, it's the same shtick every time:

"Hey Knowles this is so and so from the company. I would like to know if you would be interested in coming back?"
"Sure, I enjoyed my time there, my minimum salary requirement is $X."


This is where a couple of the recruiters responses differ. And to their credit some are more honest than others.

“We can't afford that, we can offer $X-someValue. Would that interest you?”
“Yes, but you going to have to make a hard sales pitch on the work. Either it's super interesting or I get to have command and control over it, etc...”
“Okay sure, I'll make sure the interviews are on point and accurate and we won't waste anyone's time.”


That was November 2014 and they wasted all of my time. The interviews went exactly as they did when I got out of college. No one had any idea that I had already worked there and the interviews were high level and pointless. Oh and the benefits had gotten worse since I left. Strike 1.

Flash forward to the most recent one, May 2016. My actual recruiter from 5+ years ago hit me up with a huge speech on how the company has changed and they're doing this and that, etc... Okay, I take her phone call:

“Knowles, the company is looking to keep and retain the best, bla bla. We have a hackerspace that does this and that. We're prepared to have as many as three people work right under neath you [yes, that actually was said]. What is your 'I'll move now' number?”
“That actually sounds interesting, my I'll move no questions asked number is $Y (this is X plus a large sum). But my minimum is $X (same X As before). Otherwise it's just not worth it.”
“Okay, I'll talk with our managers [or whatever] and I'll touch base early next week.”


She never followed up. This company in 2012 had a 20% attrition rate. It's my understanding that it hasn't gotten any better. Not only did you lead with the spiel that you wanted to hire and retain your employees, you talked about all the neat crap you're supposedly doing. Yet, you hesitate to actually pay your candidates what they ask when you reached out to target them. The least you could do is send a quick email or voicemail and say thanks, but no thanks.

Or you know, haggle. This entire charade is pointless if people aren't willing to haggle. Make me a sweet offer. Unless you know your perks are bullshit. Then why bother?

What was the purpose of the hackerspace? Are you using it as an incubator for more contract work? The answer to that was no. So you're spending all this money on a location that doesn't affect your bottom line? How about pay all of your current employees who don't suck an additional 10-20%? Bam, I've just solved your attrition problem. You're welcome.

I have a friend that still works there and the hackerspace was described as a couple dudes working on some random Python on the weekend. I'll pass - Strike 2.

You might be going Knowles, I don't understand any of this. Well let me explain:

In this field you work for a contracting company where you bill hours on government contracts. For large companies, they have a lot of people on overhead. Meaning that their hours are not directly billable to the government (or whoever is paying for the contract). Their pay comes from the billable hours of people actually doing work on a contract. People are in various labor categories which are generally tied to years of experience. Typically more experience = higher labor category = more money.

In 2012, this company was charging 2-3x (I have heard differing numbers from multiple sources) what they paid their employees on contract. Each year I had a 10%+ raise, clearly there is wiggle room. To be fair, coming fresh out of college, the salary was market competitive. I think both I and the company got a good deal for those couple years. They got amazing labor on the cheap and I got experience.

So what are they doing with that overhead money? Hiring overhead staff people. HR, security, whatever. I'm sure most of these people are good at their jobs, all the ones I had to interact with were not. It would have been easier to do it myself. But I digress.

So this company, rather than bump up an employee's salary to keep them, creates a hackerspace. What in the fuck? Who is running operations over there? I understand that not everyone gets a bajillion dollars coming out of college, but if you are trying to poach professionals with years of experience, you have to come better than that.

At the end of the day, we still have to deal with the bureaucratic nonsense that is government contracting, might as well get paid. Self actualization is dead in this industry.

Scenario two happened a couple weeks ago. A guy I worked with tangentially hit me up to come work for a company he now works for. Neat! This is actually how I think job changing should work, by personal referral. So we have the conversation:

“What kind of work are you doing? My minimum is $X”
“We do [varying list of technologies]. Is that number movable? We have great benefits.”
“Send me a list of the benefits, but there's not a lot of wiggle room [I then proceeded to lay out the numbers].”
“I'll check with our HR manager [or whoever]”.


--and now a small digression...

Let me just say that “I'll check with so and so” is a huge red flag for me. It's happened twice. What this means is that the company plays games with its salary. Therefore this guy has no idea what other people make for a given labor category. Which means that the company is going to haggle every employee down because no one has a frame of reference to what the labor category actually pays versus what the company pays you.

I am fortunate to work for a company that basically says, the labor category pays this, we take $T off the top and the rest is paid to you minus FICA, Medicare, et al., the end. Any person at that category on that contract gets paid the same (unless the prime contractor pulls some shit and lowers rates, etc...). It's super easy. Here is what we pay, take it or leave it. None of this, “it's a spooky mystery”.

Everyone needs to get paid. Period. Be honest about it.

--back to the story...

So he sends me the list of benefits. Mostly standard stuff. They pay insurance premiums, have a 401k with a “discretionary contribution” at the end of the year, etc...

--oh man another digression...

Let me just say that a “discretionary contribution” is bullshit. Either you put in the same money each year or not and if you don't this is why you don't release the number. Unless this is directly tied to how much money the company made and there is a way for individual contributors to directly impact this bottom line (aside from just going to work normally) it's bullshit. Don't play that game.

--anyway...

At the list of the end of benefits are two items that make me double take. The first was Orioles tickets. They provide Orioles tickets. For those who do not know, the Orioles are Baltimore's baseball team. And baseball tickets are dirt cheap. Midrange, 3rd or 1st base tickets are maybe $60-85 bucks a pop. They also have raffles for Orioles season tickets and season tickets to the Hippodrome. The Hippodrome is a theater that has Broadway plays. Are you fucking kidding me? You want to dock 50k of salary for $85 tickets a couple of times a year AND THE CHANCE TO WIN TICKETS??? I can't even. Strike 3.

Oh man money? I wanted Orioles tickets!
Wait, money can buy many Orioles tickets.
Explain.
Money can be used to buy goods and services.


Why are companies spending money on this stupid shit? This is why there is no company loyalty anymore. Stop making terrible decisions. Even small companies aren't immune. My current company is getting robbed by John Hancock: our 401k is complete garbage. Perhaps I'll do a post on that sometime. Knowles out.

5 Comments On This Entry

Page 1 of 1

cyphersmith Icon

24 July 2016 - 03:32 PM
TAX WRITE OFF! you can't write of paying an employee as a tax write off. You can write off perks as a business expense.
4

jon.kiparsky Icon

24 July 2016 - 07:38 PM
Tax law probably explains a lot of this stuff. In addition, there's legal motivations for other weird behaviors. If you work at a place that "has no vacation policy, you just take vacation when you want to", that's because a, employers found that employees don't typically take their vacations anyway and b, if there's not a stated "X weeks per year" policy, they don't have to pay out for vacation you don't take.

Then there's some things that are much easier to explain: if you give an employee free coffee, they don't walk down the street to the coffee shop. Now you're back at your desk in five minutes, where maybe it took fifteen or twenty minutes to get your coffee before. If you can save ten minutes per employee per day, that's probably making up for the coffee in spades. Free food on site? Same idea on a bigger scale. It cuts down on the friction time of getting you fed, it's a big tax write-off, it looks great to the kids you're trying to recruit, and it makes for good lifestyle pieces in the local press.
(I'm not saying free food or coffee are a bad thing, but when you look at why it's done, it's not just some sort of sporadic act of kindness.)

Baseball tickets? This is probably something where the team management goes to local businesses offering bulk deals at a steep discount, trying to put some butts in seats and some full wallets within reach of the vendors.
1

KYA Icon

24 July 2016 - 08:36 PM
It would seem that the tax benefits would be dwarfed by simply not spending the money in that category.

Free food and coffee, I agree. If I don't have to trundle down the road to get a cup, then it is a net plus. I still wouldn't advertise it as that is almost expected in today's environment (at least coffee). and you don't have your employees take a huge salary cut for it.

As an aside, from what I saw in Mountain View this past December, they have to offer free food. There is no where within twenty minutes to get something to eat. There is just nothing near campus except a Starbucks.
0

jon.kiparsky Icon

24 July 2016 - 09:42 PM
Sure, but if you're asking "why do companies spend money for stupid shit?", that's going to be part of the reason.

Quote

As an aside, from what I saw in Mountain View this past December, they have to offer free food. There is no where within twenty minutes to get something to eat. There is just nothing near campus except a Starbucks.


Well yeah. That's Mountain View for you. There are a few good chaat places, but they're all on El Camino.
0

Michael26 Icon

25 July 2016 - 03:39 AM
Aww why didn't they haggle. I love to haggle.
"Ten?! Are you trying to insult me?! Me, with a poor dying grandmother?! Ten?!" :)
0
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