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The Tyranny of Silly Expense Control Rules

41 points by pitdesi 15y ago

DanBC 15y ago
This gets a bit off-topic, sorry. The British Broadcasting Company started a rule about "no biscuits for meetings of only internal BBC staff". That saved them over £200,000. I don't know what that was in USD in 2001, but it's a reasonable amount. I also don't know how much good-will they lost amongst staff. (http://www.guardian.co.uk/media/2001/jul/25/broadcasting.bbc http://www.guardian.co.uk/media/2001/jul/25/broadcasting.bbc) > According to a report compiled by the BBC's "revenue, procurement and services" department, the BBC spends £3m a year on catering hospitality, of which £350,000 goes on free tea and coffee for staff - not counting refreshments provided for meetings. > A further £210,000 is spent annually on biscuits for meetings of BBC executives and middle managers, with half of the snacks consumed at BBC Television Centre in west London. About £500,000 goes on complimentary lunches, meals and buffets for employees; £80,000 on alcohol and £100,000 on "miscellaneous staff events". Remember that the BBC is funded by a "tax" / licence fee that people must pay if they install or use a TV to receive broadcast signals. "TV" in that sentence includes computers / smart phones capable of receiving live streaming Internet. "Broadcast signals" in that sentence does not just include BBC. A person might never watch anything by the BBC, they still need to pay the tax.
- tomjen3 15y ago
  That is what I hated about the article. No companies shouldn't be doing this to their staff. It is bad for business. But that the same time I want the government to be forced to undergo not just this level of scruteny but a far harsher one. Why? Because I am forced to pay for it so they damn better work hard for it.
  - dredmorbius 15y ago
    And if the cost of that micromanagement is 10x the value derived from it? Cut your nose to spite your face much?
  - quanticle 15y ago
    It's a question of benefits vs. costs. Yeah, retailers could eliminate shoplifting if they really wanted to. But, to do so, they'd have to turn their stores into prisons, with full cavity searches at the exits. This is obviously bad for business, so most retailers accept a certain level of shoplifting and aggressively prosecute the shoplifters they do catch. The problem is that with government, there is no mechanism for assessing whether the costs of a regulation are outweighed by its benefits. What good does banning biscuits at company meetings do? Yes, you've saved 200 thousand odd pounds sterling, but what has it cost you? More importantly, what's the accumulated costs of all of these little regulations. Individually, they don't sound like much, but if you get enough of them, they really start to drag on productivity. What's worse, the impact of these regulations tends to be non-linear. Something as little as "no more free pop at all hands meetings" can lead to an exodus of talent if it happens to be the last straw, as it were. EDIT: Joel Spolsky had a very nice column on this, but I can't find it at the moment.
    - DanBC 15y ago
      Not only is there a loss of morale but you need to employ people to do the scrutinising, and then set up systems to gather evidence. Preventing someone over-claiming on biscuits and gasoline / petrol milage just added lots to cost and made people unhappy. See also (again in the UK) the many people entitled to some benefits who do not claim those. I believe (but have no evidence) that part of the reason is the vigorous scrutiny that people go through. This doesn't stop criminal gangs from making large sums of money from benefit fraud.
      - nobody314159 15y ago
        That's why many companies have flat expenses rates for executives. The day rate is $XXX in Europe, $YYY in USA and $ZZZ in Japan, there are tables of relative cost available. If you want to stay in a cheaper hotel/with friends/use your airmiles you keep the money, if you want to spend extra and stay in a nicer hotel - eat at fancier restaurants - fine you pay the extra yourself.
  - anigbrowl 15y ago
    Auditors and management consultants tend to cost a lot more than snacks.
    - cromulent 15y ago
      I did a lot of consulting for a very large automotive firm about 10 years ago. I turned up at one meeting and every invitee had arrived, unusually. Then - lattes, cappuccinos, and sandwiches arrived! Gleefully, they told me: because you're here, we get to order coffee and food. They also had a new rule about "no food for internals only". As all economists know, people respond to incentives. You invite externals, you get free food|coffee|biscuits. Design your incentives very carefully.
  - nobody314159 15y ago
    I work in a government funded university. I had to travel to London as an adviser to a day of government meetings. Fair enough the government ultimately pay me. I did however make the mistake of buying a coffee and a burger at the station on the way back! My entire expenses claim was denied (train/taxi/etc) because a lunch had been provided and the meeting was only one day and so only one meal could be claimed for. Eventually after much back and forth the govt dept sent someone to my university to 'explain things to me'. I can claim for one meal - but it didn't matter how much it cost! I could have claimed for a 12course banquet at the Ritz, but I couldn't claim for two separate slices of pizza - because that was two meals.
- dotBen 15y ago
  I worked at BBC between 2000-2006 I never saw a biscuit in a meeting, let alone ate one - although I'm sure thats because I was at the most junior level of the organization at the time (year 2000). But let's just calm down a little over this £200,000 figure - 27,000 people worked for BBC in 2001. So that's £7.41 a year per employee on biscuits and snacks to be consumed in meetings. Doesn't sound all that crazy to me, personally. I wonder how much BBC paid per year per employee on toilet bowl cleaner or light bulbs? In more recent times the BBC has had a massive reduction in it's budget and so the amount of cost cutting going on there totally eclipses the biscuit debacle. Finally, it's not a tax. Taxes are paid to governments. BBC is not part of the government (thank god). And while you may resent paying £2.80/week for the BBC the British media landscape would be a lot poorer without it - even if you were to never watch a BBC channel or look at a BBC website. If you don't believe me, try living in the US for 6 years and examine the horrible state of media in this country.
  - DanBC 15y ago
    I upvoted you but . . . You say that you worked there, and had meetings, but never saw a biscuit? Thus, the figure isn't £200,000 / 27,000; but is £200,000 / however many people went to meetings where biscuits were served. Also, £7.41 a year per person for meeting biscuits is a lot of biscuits when you have economies of scale like the BBC. Finally: It might not be a tax but don't forget it's a special licence fee, protected with its own bit of legislation, where non-payment results in fines and non-payment of those fines was a significant cause of imprisonment of women. There aren't many other products with that kind of fee-structure. I agree the BBC is brilliant. I do think it's weird that Bob (who never ever watches BBC, or uses the website, or listens to BBC radio) but who has a telly has to pay the licence while Ann (who does listen to BBC radio all day, while noodling about on BBC websites, ) doesn't.
    - brador 15y ago
      For even more perspective, the BBC takes in $5.7 BILLION from this "tax" each year. That's $5,700,000,000. Source: http://nerdr.com/uk-bbc-tv-license-fee-us-perspective/ http://nerdr.com/uk-bbc-tv-license-fee-us-perspective/ For a TV channel. Surely there are better uses for that tax money than paying off some silver spoon TV Execs?
- asolove 15y ago
  Yes, true, but the point is something like this: things that reduce costs in a way that is centrally measurable and worthy of bragging are not the things that waste real money, but are the things that will hurt morale. - They saved £200,000 by not having biscuits at meetings of executive and middle-managers. - They continued having large, expensive meetings of large, expensive staffs of executive and middle-managers who don't add value. They would have saved ten times as much by getting much better biscuits and firing large swaths of their management staff.
  - gaius 15y ago
    Indeed, let's put that into perspective http://www.guardian.co.uk/media/2009/jun/25/bbc-expenses-mark-thompson-private-jet-jana-bennett http://www.guardian.co.uk/media/2009/jun/25/bbc-expenses-mar... and http://www.telegraph.co.uk/culture/tvandradio/5639533/BBC-expenses-Executives-stayed-at-Oceans-11-hotel-in-Las-Vegas-as-they-spend-45million-on-travel-and-accommodation-in-a-year.html http://www.telegraph.co.uk/culture/tvandradio/5639533/BBC-ex...
- Someone 15y ago
  To put that into perspective: the BBCs revenue is over £3 billion a year and the BBC has over 20,000 employees.
- tzs 15y ago
  It should be noted that "biscuit" is one of those words that has somewhat different meaning in the UK and the US. What they call a biscuit in the UK would be called a cookie in the US. (A biscuit in the US is a small leavened bread, similar to a scone).
  - deleted 15y ago
    [deleted]
  - DanBC 15y ago
    Thanks for the cultural note! I even meant to include that.
- rmc 15y ago
  The linked article seems like the Ebenezer Scrooge in charge of the BBC have banned simple down to earth homely biscuits. The article uses phrases like "a couple of Rich Teas and a chocolate digestive are an extravagance" and "there were some very nice custard creams. But apparently they are very expensive". However biscuits can vary a lot in price, from fancy brand name biscuits to white label, 'own brand' biscuits. I'll also bet the employees were picking them up in corner shops at an even higher mark-up. As a result the BBC was probably paying too much per biscuit. Since it's hard to (a) enforce a maximum price per biscuit (who's job will it be to count the number of biscuits per packet? :P), or (b) institute an organised corporation wide biscuit-buying-and-distribution system, they probably went with the simplest approach of banning paying for any biscuits.
Sukotto 15y ago
As a general rule, people get punished if something they're responsible for lets something bad happen. They almost never get rewarded for removing unnecessary rules and regulations caused by overreactions to those bad things happening. Examples of this abound.
patio11 15y ago
Sometimes I wonder whether e.g. schools are absolutely petty about buying replacement pencils in the hope that this reduces the only cost which matters for schools which, for political reasons, they have nearly no control over: employee salary and benefits. Thirty seven weeks to get a $12 receipt reimbursed might eventually cause someone to quit, saving you millions.
- jbooth 15y ago
  Occam's razor here. Schools have been getting crunched for cash every year for the last 10 or so, and every couple years a new local politician is elected with promises to "eliminate waste", after the last guy declined to run again in disgust at how little he could do (can't change the revenue level or union contract, all he can do is try to account for stupid pencils). New guy wants to do something, though, so the end result of that is penny-wise and pound-foolish policies. No need for a grand conspiracy.
brown9-2 15y ago
How much personal time would the process have to waste of yours in order for you to forfeit being reimbursed for $1500?
tripzilch 15y ago
So he shredded and did not reclaim $1500 in expenses because it would took an hour of his time to do so? (assuming it would take as much as it would "Heather") Am I understanding this correct? He threw away $1500 because he couldn't be bothered to turn in the receipts? Am I the only one that can't quite bring up a lot of sympathy for such a situation? "The tyranny" ... come on. Not if you're in a position to "make the rational decision" to throw away $1500.
- nobody314159 15y ago
  Because next time there is an internal scandal and they need a victim to show they are tough on corruption or they need to make some redundancies they can go through the files and find someone who made a mistake over claiming for a cup of coffee and fire them - a great saving redundancy payments. Didn't HP do this to one of their CxOs?
- mirkules 15y ago
  Remember, this is Arrington. Either the $1500 was exaggerated or he's being sensationalist. Likely, both. However, my personal experience with bureaucracies like these has led me to collecting these little red-tape gems and writing a book.
- rdl 15y ago
  He could have at least deducted it on his taxes as unreimbursed business expenses.
bm98 15y ago
http://www.google.com/search?q=%22now+find+the+umbrella%22 http://www.google.com/search?q=%22now+find+the+umbrella%22
mentat 15y ago
It seems that the larger the company, the harder the expense report is to fill out. Given the amount of time people spend filling out expense reports you would think that companies would want them to be easier, but I suspect that if expense reports were easier then people wouldn't just eat $1500. Making the expense reporting process hard directly benefits the company at a highly distributed cost to employees. What would be great is to see some of the internal emails or meeting minutes where this is actually decided.

41 points by pitdesi 15y ago

DanBC 15y ago

This gets a bit off-topic, sorry. The British Broadcasting Company started a rule about "no biscuits for meetings of only internal BBC staff". That saved them over £200,000. I don't know what that was in USD in 2001, but it's a reasonable amount. I also don't know how much good-will they lost amongst staff. (http://www.guardian.co.uk/media/2001/jul/25/broadcasting.bbc http://www.guardian.co.uk/media/2001/jul/25/broadcasting.bbc) > According to a report compiled by the BBC's "revenue, procurement and services" department, the BBC spends £3m a year on catering hospitality, of which £350,000 goes on free tea and coffee for staff - not counting refreshments provided for meetings. > A further £210,000 is spent annually on biscuits for meetings of BBC executives and middle managers, with half of the snacks consumed at BBC Television Centre in west London. About £500,000 goes on complimentary lunches, meals and buffets for employees; £80,000 on alcohol and £100,000 on "miscellaneous staff events". Remember that the BBC is funded by a "tax" / licence fee that people must pay if they install or use a TV to receive broadcast signals. "TV" in that sentence includes computers / smart phones capable of receiving live streaming Internet. "Broadcast signals" in that sentence does not just include BBC. A person might never watch anything by the BBC, they still need to pay the tax.

tomjen3 15y ago
That is what I hated about the article. No companies shouldn't be doing this to their staff. It is bad for business. But that the same time I want the government to be forced to undergo not just this level of scruteny but a far harsher one. Why? Because I am forced to pay for it so they damn better work hard for it.
- dredmorbius 15y ago
  And if the cost of that micromanagement is 10x the value derived from it? Cut your nose to spite your face much?
- quanticle 15y ago
  It's a question of benefits vs. costs. Yeah, retailers could eliminate shoplifting if they really wanted to. But, to do so, they'd have to turn their stores into prisons, with full cavity searches at the exits. This is obviously bad for business, so most retailers accept a certain level of shoplifting and aggressively prosecute the shoplifters they do catch. The problem is that with government, there is no mechanism for assessing whether the costs of a regulation are outweighed by its benefits. What good does banning biscuits at company meetings do? Yes, you've saved 200 thousand odd pounds sterling, but what has it cost you? More importantly, what's the accumulated costs of all of these little regulations. Individually, they don't sound like much, but if you get enough of them, they really start to drag on productivity. What's worse, the impact of these regulations tends to be non-linear. Something as little as "no more free pop at all hands meetings" can lead to an exodus of talent if it happens to be the last straw, as it were. EDIT: Joel Spolsky had a very nice column on this, but I can't find it at the moment.
  - DanBC 15y ago
    Not only is there a loss of morale but you need to employ people to do the scrutinising, and then set up systems to gather evidence. Preventing someone over-claiming on biscuits and gasoline / petrol milage just added lots to cost and made people unhappy. See also (again in the UK) the many people entitled to some benefits who do not claim those. I believe (but have no evidence) that part of the reason is the vigorous scrutiny that people go through. This doesn't stop criminal gangs from making large sums of money from benefit fraud.
    - nobody314159 15y ago
      That's why many companies have flat expenses rates for executives. The day rate is $XXX in Europe, $YYY in USA and $ZZZ in Japan, there are tables of relative cost available. If you want to stay in a cheaper hotel/with friends/use your airmiles you keep the money, if you want to spend extra and stay in a nicer hotel - eat at fancier restaurants - fine you pay the extra yourself.
- anigbrowl 15y ago
  Auditors and management consultants tend to cost a lot more than snacks.
  - cromulent 15y ago
    I did a lot of consulting for a very large automotive firm about 10 years ago. I turned up at one meeting and every invitee had arrived, unusually. Then - lattes, cappuccinos, and sandwiches arrived! Gleefully, they told me: because you're here, we get to order coffee and food. They also had a new rule about "no food for internals only". As all economists know, people respond to incentives. You invite externals, you get free food|coffee|biscuits. Design your incentives very carefully.
- nobody314159 15y ago
  I work in a government funded university. I had to travel to London as an adviser to a day of government meetings. Fair enough the government ultimately pay me. I did however make the mistake of buying a coffee and a burger at the station on the way back! My entire expenses claim was denied (train/taxi/etc) because a lunch had been provided and the meeting was only one day and so only one meal could be claimed for. Eventually after much back and forth the govt dept sent someone to my university to 'explain things to me'. I can claim for one meal - but it didn't matter how much it cost! I could have claimed for a 12course banquet at the Ritz, but I couldn't claim for two separate slices of pizza - because that was two meals.
dotBen 15y ago
I worked at BBC between 2000-2006 I never saw a biscuit in a meeting, let alone ate one - although I'm sure thats because I was at the most junior level of the organization at the time (year 2000). But let's just calm down a little over this £200,000 figure - 27,000 people worked for BBC in 2001. So that's £7.41 a year per employee on biscuits and snacks to be consumed in meetings. Doesn't sound all that crazy to me, personally. I wonder how much BBC paid per year per employee on toilet bowl cleaner or light bulbs? In more recent times the BBC has had a massive reduction in it's budget and so the amount of cost cutting going on there totally eclipses the biscuit debacle. Finally, it's not a tax. Taxes are paid to governments. BBC is not part of the government (thank god). And while you may resent paying £2.80/week for the BBC the British media landscape would be a lot poorer without it - even if you were to never watch a BBC channel or look at a BBC website. If you don't believe me, try living in the US for 6 years and examine the horrible state of media in this country.
- DanBC 15y ago
  I upvoted you but . . . You say that you worked there, and had meetings, but never saw a biscuit? Thus, the figure isn't £200,000 / 27,000; but is £200,000 / however many people went to meetings where biscuits were served. Also, £7.41 a year per person for meeting biscuits is a lot of biscuits when you have economies of scale like the BBC. Finally: It might not be a tax but don't forget it's a special licence fee, protected with its own bit of legislation, where non-payment results in fines and non-payment of those fines was a significant cause of imprisonment of women. There aren't many other products with that kind of fee-structure. I agree the BBC is brilliant. I do think it's weird that Bob (who never ever watches BBC, or uses the website, or listens to BBC radio) but who has a telly has to pay the licence while Ann (who does listen to BBC radio all day, while noodling about on BBC websites, ) doesn't.
  - brador 15y ago
    For even more perspective, the BBC takes in $5.7 BILLION from this "tax" each year. That's $5,700,000,000. Source: http://nerdr.com/uk-bbc-tv-license-fee-us-perspective/ http://nerdr.com/uk-bbc-tv-license-fee-us-perspective/ For a TV channel. Surely there are better uses for that tax money than paying off some silver spoon TV Execs?
asolove 15y ago
Yes, true, but the point is something like this: things that reduce costs in a way that is centrally measurable and worthy of bragging are not the things that waste real money, but are the things that will hurt morale. - They saved £200,000 by not having biscuits at meetings of executive and middle-managers. - They continued having large, expensive meetings of large, expensive staffs of executive and middle-managers who don't add value. They would have saved ten times as much by getting much better biscuits and firing large swaths of their management staff.
- gaius 15y ago
  Indeed, let's put that into perspective http://www.guardian.co.uk/media/2009/jun/25/bbc-expenses-mark-thompson-private-jet-jana-bennett http://www.guardian.co.uk/media/2009/jun/25/bbc-expenses-mar... and http://www.telegraph.co.uk/culture/tvandradio/5639533/BBC-expenses-Executives-stayed-at-Oceans-11-hotel-in-Las-Vegas-as-they-spend-45million-on-travel-and-accommodation-in-a-year.html http://www.telegraph.co.uk/culture/tvandradio/5639533/BBC-ex...
Someone 15y ago
To put that into perspective: the BBCs revenue is over £3 billion a year and the BBC has over 20,000 employees.
tzs 15y ago
It should be noted that "biscuit" is one of those words that has somewhat different meaning in the UK and the US. What they call a biscuit in the UK would be called a cookie in the US. (A biscuit in the US is a small leavened bread, similar to a scone).
- deleted 15y ago
  [deleted]
- DanBC 15y ago
  Thanks for the cultural note! I even meant to include that.
rmc 15y ago
The linked article seems like the Ebenezer Scrooge in charge of the BBC have banned simple down to earth homely biscuits. The article uses phrases like "a couple of Rich Teas and a chocolate digestive are an extravagance" and "there were some very nice custard creams. But apparently they are very expensive". However biscuits can vary a lot in price, from fancy brand name biscuits to white label, 'own brand' biscuits. I'll also bet the employees were picking them up in corner shops at an even higher mark-up. As a result the BBC was probably paying too much per biscuit. Since it's hard to (a) enforce a maximum price per biscuit (who's job will it be to count the number of biscuits per packet? :P), or (b) institute an organised corporation wide biscuit-buying-and-distribution system, they probably went with the simplest approach of banning paying for any biscuits.

Sukotto 15y ago

As a general rule, people get punished if something they're responsible for lets something bad happen. They almost never get rewarded for removing unnecessary rules and regulations caused by overreactions to those bad things happening. Examples of this abound.

patio11 15y ago

Sometimes I wonder whether e.g. schools are absolutely petty about buying replacement pencils in the hope that this reduces the only cost which matters for schools which, for political reasons, they have nearly no control over: employee salary and benefits. Thirty seven weeks to get a $12 receipt reimbursed might eventually cause someone to quit, saving you millions.

jbooth 15y ago
Occam's razor here. Schools have been getting crunched for cash every year for the last 10 or so, and every couple years a new local politician is elected with promises to "eliminate waste", after the last guy declined to run again in disgust at how little he could do (can't change the revenue level or union contract, all he can do is try to account for stupid pencils). New guy wants to do something, though, so the end result of that is penny-wise and pound-foolish policies. No need for a grand conspiracy.

brown9-2 15y ago

How much personal time would the process have to waste of yours in order for you to forfeit being reimbursed for $1500?

tripzilch 15y ago

So he shredded and did not reclaim $1500 in expenses because it would took an hour of his time to do so? (assuming it would take as much as it would "Heather") Am I understanding this correct? He threw away $1500 because he couldn't be bothered to turn in the receipts? Am I the only one that can't quite bring up a lot of sympathy for such a situation? "The tyranny" ... come on. Not if you're in a position to "make the rational decision" to throw away $1500.

nobody314159 15y ago
Because next time there is an internal scandal and they need a victim to show they are tough on corruption or they need to make some redundancies they can go through the files and find someone who made a mistake over claiming for a cup of coffee and fire them - a great saving redundancy payments. Didn't HP do this to one of their CxOs?
mirkules 15y ago
Remember, this is Arrington. Either the $1500 was exaggerated or he's being sensationalist. Likely, both. However, my personal experience with bureaucracies like these has led me to collecting these little red-tape gems and writing a book.
rdl 15y ago
He could have at least deducted it on his taxes as unreimbursed business expenses.

bm98 15y ago

http://www.google.com/search?q=%22now+find+the+umbrella%22 http://www.google.com/search?q=%22now+find+the+umbrella%22

mentat 15y ago

It seems that the larger the company, the harder the expense report is to fill out. Given the amount of time people spend filling out expense reports you would think that companies would want them to be easier, but I suspect that if expense reports were easier then people wouldn't just eat $1500. Making the expense reporting process hard directly benefits the company at a highly distributed cost to employees. What would be great is to see some of the internal emails or meeting minutes where this is actually decided.