Comment by sharkweek
7 years ago
Big companies (rather, people at big companies) WANT to spend money on this kind of stuff for all sorts of reasons.
-A team might have use-it-or-lose-it budget, so they have to spend it on something, and a contractor might be the lucky recipient!
-Tax purposes!
-Spending a lot on a contractor gives them someone to "fire" when they need to explain why something wasn't getting done or something went poorly!
The list goes on!
All that being said, as a consultant myself, I consider those types of projects windfall, as they tend to be the ones that end abruptly. It's kind of a scary feeling getting paid without actual work to do. I have found I 100% prefer the projects where there are clear tasks, goals, and results to report, if for nothing else than my own sanity.
I remember growing up and going to work with my Dad. There was like a 3 hour period where he had no work for me to do. He told me I'd only get half wages for the day (I was like 12) since the last few hours I did nothing. I felt betrayed. He empathized with me, saying 'It sometimes feels like more work to not have any work to do'. I completely agree.
In my current role, there is no real roadmap or trajectory for what I should be doing or how I should report on it, etc. I have felt at times that I was just collecting a check, and that felt really scary. I expected I would love to have a job where I could kind of just do whatever I wanted on my own time table. But I have learned it's actually very stressful, and at best very boring. Luckily I got a roadmap created and prioritized, so I feel better. But it is an odd experience.
Better yet, at an internship, create your own roadmap (complete with a timeline, too) and, with no external validation, so it.
so hard
One of my bosses was the recipient of one of these during a corporate merger, and I think it did a lot of damage to him. He has been mostly was coasting off of his reputation from before he slacked off for 3+ years in that role. But it doesn't look like he's able to last for more than a year anywhere. I suspect that he was one of those competent-but-lazy types whose skills rusted out to to just lazy.
Its stories (and personal experience) like this that make me laugh when people try and say that governments are inefficient and lacks accountability.
Big things are more likely to be inefficient and lack accountability. Governments are big, so are big corporations.
My experience working my way up from small companies didn't really bear this out. Budgets at my bigish company are strict and audited; having a contractor results in regular check-ins from managers to see if it can be cut off. The smallest companies I worked for were family slush funds.
Interestingly enough there is also evidence, that a government structure with much smaller parts (decentralization) is even more inefficent, and especially prone to corruption.
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Yes, this. It's worth emphasizing whenever someone trots out the inefficient-government dogma.
Big corporations are inefficient and lack accountability. Governments are like big corporations in that manner, but also can't be held accountable by the market.
Corporate monstrosities can get away with being inefficient insofar as they can stay out of the red overall. Governments can get away with being inefficient insofar as we are forced to continue funding them via taxation. Note: giant, unaccountable, inefficient corporations usually became so large through monopolies created through government force (i.e. regulation).
Getting bigger any organization inevitably achieves a level of complexity where it becomes less, and less efficient by spending increasingly more resources on communication, and politics (in wider meaning of the word, not electoral). Do you think governments are small organizations? UPD: Apperently, I'm not the only one here who came to the same thought :-)
Right - the government is the world's largest employer, with all the inefficiencies that come with that title.
Which government? Which world?
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Governments lack accountability because there is no incentive to be sustainable. They just tax people more or run a higher deficit.
If Whole Foods wastes their money and goes out of business, I don’t care. I’m not being forced to pay them to make up for it.
At least private companies are losing their own earned money when they're inefficient, not someone else's.
Private companies are also dependent on a highly developed society to make everything they do possible.
There are many reasons that Google and Amazon didn't exist a thousand years ago, and it isn't solely due to the lack of computing technology.
And so it is entirely sensible that everyone should contribute towards keeping the highly developed society functioning as best as it can.
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How are dollars I have paid to the government any more mine than dollars I have paid to a company?
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yeah, more like any 'large organizations' without a dictator
One would think the use-it-or-lose-it problem would've been solved by now. It's so obviously dysfunctional. Is there really no better way to determine budget?
I think the issue is management unwilling to trust other levels of management to make the call when they need money / a strong desire some folks have to filter / make decisions for others.
I don't know what the fix is for that except to take a chance and trust folks but ... it doesn't seem to be a thing and instead they come up with easy systems to just make arbitrary decisions and there ya go.
It boggles my mind sometimes that "Like if you don't trust that guy to make decisions... why is he a director here?"
Sadly it filters down, I've been places where it was clear the director of my department couldn't do much at all... at that point why should I be there, it doesn't matter if he and I talk, agree, or anything then ....
Steve Jobs said something about it making no sense to hire people in decision making roles and not let them make decisions. Granted, Steve was also able to hire some fine people.
The problem is the further down you go the more narrow the focus. When I worked on MS Office I was always annoyed they were spending all the money on other products with few users and no revenue.
After all we were the ones taking in the dollars. Of course at an organizational level it was understood they need to invest in the next big thing even if it’s not making money right now.
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He also had some experience hiring terrible people.
Practice may not make perfect, but it sure damn helps. As long as we learn from our mistakes.
Some organization have this issue where you get a budget for your group, and if you don't use it then upper management will think you don't need more resources next year and will budget less or even cut from your department. If you don't use it, they reallocate it to a department that needs it and you never get it back.
Another part is where if you get a hiring budget they expect you to use it because if you aren't spending it on personnel then it means you aren't hiring the best available people at that time.
Non-profits usually spend out their budget.
Regulated utilities can charge a % + the cost of hiring you if it is a capitalized cost, i.e. hiring a contractor to implement a project.If a contractor works 100% on a capital project it's profits especially in a low inflation economy or when the profits are not going to be as good due to forecasting issues it can pump the books.
There are probably other reasons I can't think of.
You just restated the problem in more detail.
What I'm asking is, if the above system encourages managers to waste money, why hasn't anyone come up with a better system?
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Budgeting is basically forecasting, and in most businesses it’s not much better than guesswork.
There are ways that are arguably better, like bottom-up budgeting, but they take a lot more work, and are arguably more subjective.
Internal information systems can be so poor that the best prediction of next years budget is last years budget.
In government (usa) it absolutely still exists. As the financial period ends each department spends hugely and really wastefully to ensure their full budget is spent. Its actually quite infuriating.
It’s the same in corporations.
There are, of course, better ways; the thing is that non-dysfunctional methodology is not evenly distributed.
This comes to mind:
https://en.wikipedia.org/wiki/Recurrent_laryngeal_nerve
I don't understand the relevance of that Wikipedia article
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Unless you are getting taxed >100% I never understood why you'd want to throw away money for "tax reasons". Can someone please help me understand this, it always comes up and I feel dumb for not understanding.
They may have a tax rebate which requires them to "invest" $x each year and failure to do so will result in penalties, perhaps nullifying the agreement and requirement to reimburse previous rebates.
So the company hires a few contractors to help get them as close to $x as possible, but they don't really have any work for them to do.
Simple example:
My FSA card is pre-tax money to be used for healthcare expenses. Towards the end of the year, I ended up still having a balance that would go away if not used, so I bought things that I would not have otherwise purchased.
That's a bit different. You're effectively getting "taxed" 100% on whatever is left over so you might as well spend the money on anything that has non-zero value to you.
But if you, say, only lost 30% or 50% of the balance, it's not immediately obvious if you should spend the balance or not.
OT but this is such a weird aspect of FSAs. I can carry some amount over with my plan which makes things a lot easier.
From my experience, FSA's doing go away at the end of the year.
You have to spend X anyway, because the money is pre-tax or non-taxable, you can spend 1.5X-2X, so the extra money is 'free'.
I'm with peteradio, I also never understand this line of reasoning.
Let's say the company has earned 1,000$ and the tax rate is 50%. Your expenses X are 100$.
So 1,000$ - 100$ = 900$. Of which 50% (450$) are tax and 50% (450$) are profit.
Now double X to 200$:
Then 1,000$ - 200$ = 800$. Of which 50% (400$) are tax and 50% (400$) are profit.
That means your profit is 50$ lower (400$ instead of 450$) then if you hadn't increased your spending?
Clearly my thinking is wrong somehow, but where?
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Under what situations does this happen? We use marginal tax rates...
In limited cicrumstances it can make sense. If you're investing in a multi-year project you may as well maximize your investment in one year and take the loss against other taxable income that year. Then, when the project is finished, you pay taxes on the income that year. Only you can take those funds and invest them into a new multi-year project...
Some companies get tax breaks for hiring X number of workers in certain locations. Which is why sometimes you get companies hiring a bunch of people at a data center who don't do anything related to the data center, but mostly exist as a way to get a tax break and good press.
Sometimes to get yourself in a lower bracket.
I was tempted to ask if you have any tips for finding such jobs ;) but actually the times when I’ve been most unfulfilled in my career have been when I’ve been bored at work. I’d much rather be working like crazy (within certain parameters), keeps things interesting!
That said I do know people who’ve been paid to turn up at an office and just work on their side projects. Could probably handle that!
Get going for a few of these simultaneously and you are set.