In 2005, General Motors Co. had to decide whether or not to invest $400,000 for special tooling, as well as spend an additional 90 cents per unit, to fix an ignition switch glitch. GM decided not to bear that cost, despite the fact the switch could cut off engines, disable power steering and brakes, and also disable airbags. Subsequently, a total of over 2.5 million cars were manufactured using that part.
This is a classic and sad case of “Penny Wise, Pound Foolish”. The decision not to spend the money upfront resulted in a later, exponentially higher cost, after the switch defect was linked to the deaths of more than a dozen people. GM will pay in excess of a billion dollars to rectify the decision – and it can never fully resolve the loss of brand and corporate trust, or bring comfort to the families who lost loved ones.
All of us made decisions every day about where to invest our hard-earned money. Certainly it’s good to be scrappy or to do more with less during the startup phase of a business (or when launching a young adult life with brick-and-board bookshelves). However, at some point along the cheap-to-indulgent continuum, your own values, productivity or budget can be blown by scrimping on things that you would do better to pay for upfront. We may never have a decision as troubling to make as GM executives faced, but here are a few routine situations when you might spend a little now, but save a lot more down the road:
- Personal computer security, including home virus protection
You only download files from known sources, like from the office, right? Once every three minutes, on average, company servers download a known malware variant. Every 27 minutes, those same servers download a new, unknown malware variant. And once a day, a new study from security firm Checkpoint predicts, your business network likely becomes infected with a new bot. And guess what else? PDF files are the number one carrier for embedded viruses. Ever share a peer-to-peer file or ap? If so, do you really trust what’s riding atop that host file?
- A well-fitting professional suit
The average cost of a business suit ranges from about $250 to $500 as an entry point figure for an off-the-rack suit that can be tailored to your measurements. Tailoring adds another $65 – $100 for routine adjustments, on average. What is the cost, to your confidence and impression, of an ill-fitting, cheap or worn suit for a job interview, business introduction, or after-hours professional mixer? If you’ll need to wear it often, pick a neutral shade and accessorize with different ties, scarves, etc. to change the look.
- Hotel rooms
Upon arrival at a Chicago hotel for a few days of training, a new employee found he was expected to room with a stranger. This exposed him to both social and personal discomfort, particularly when his roommate had a very loud, personal call with his partner. It also meant a sleepless night listening to his new bunk-mate’s snores. The first exposure impression of the company that he was left with was that it was unprofessional, and perhaps facing financial difficulty. People have varying medical and personal needs; expecting adults to bunk together may save money, but there is a greater brand cost.
- The cost of offering (or attending) a company Duty of Care seminar
How would you answer the following questions? 1) Your company sponsors an after-hours party with complimentary bar. Employee John drinks over the legal limit and after the event, while driving home, is involved with another car in a drunk driving accident. Who is libel, and what two simple precautions would have protected the company from any liability? 2) You engage or work as contracted labor. What are the seven red flags for the IRS, and what is your liability if you fail to meet even one of those tests? 3) Someone confides a personal situation to a middle manager, who then repeats the information to his or her executive manager. When is that alright, and when it that grounds for a lawsuit? 4) You have a standard question on your job application forms about previous arrest records. In what U.S. states is that question illegal, and likely to expose your company to a lawsuit?
What would you add to this list of things not to scrimp on? Let us know by posting your comments below. You can also reach out to us on Facebook and Twitter.
Best suit I ever had was bought years ago, for when I finished college and went looking for a job (cough cough). It was not too pricey, looked good and was well made. It actually lasted for several years, even when I couldn’t fit into it anymore it was still was in good shape. Ended up donating it to Goodwill, I guess someone got a nice suit.