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When Frugal Is Costly


When Frugal Is Costly

There's no disputing the importance of controlling costs when running a business. However, many business owners actually waste their company's money because they focus on being frugal instead of using the company's money wisely.

In recent work sessions with clients, two examples of being "Penny wise and pound foolish" emerged:

  1. Having a friend develop and manage the company's website - free!

    • Wonderful. However, the friend isn't an experienced web-designer. He dabbles in designing websites in his free time. He doesn't understand website marketing strategies, nor does he have a good eye for design. As a result, he's created a site that is unappealing, is hard to navigate, and has several broken links. The site doesn't even clearly share the company's phone numbers or email addresses!
    • This frugal step is costing the company untold sales and creating a great deal of frustration for current and potential customers. When customers can't easily find information they need or can't easily place orders, they move on to another company that has made its website easy to use. Why risk alienating your customers and damaging your business' reputation by having a lousy website?
  2. Having the accounting department handle the recruiting advertising placements.

    They save money by placing ads in cost-effective media and they ensure the ads aren't too wordy and therefore more expensive!

    • This is the way ads for open positions has always been handled with this company. However, as a result of the ads generated by the accounting folks, the company's ads generate only a trickle of applicants. And the applicants aren't qualified for the positions being advertised! As a result, the company hires less-than-qualified employees (because they need SOMEONE to do the work), the operational department managers blame human resources for the weak hires, and the company has a high turnover rate (the unqualified employees leave after only a few months). Therefore, the company regularly places their "inexpensive" hiring ads.
    • This frugal step is costing the company money and causing inter-departmental conflicts. Writing smart recruiting ad copy will resonate with the right types of prospective employees. Experienced human resources folks know how to write recruiting ad copy. Smart ad copy may mean a larger and longer ad. Placing the ad in the right media to reach the desired candidate pool may also cost a bit more money. However, if that ad generates a pool of qualified candidates who can do the work and will stay with the company, how much money, time, and frustration will that save the company in the longer-term? Second, the department managers are blaming human resources for bad hires when the accounting department's ads are limiting the candidate pool! Why cause friction between departments when everyone wants the company to succeed?

To ensure you and your team's attempts at being frugal aren't, in fact, costing your company money, simply ask, "What do we do here that causes us and our customers frustration?" If the frugal process you put in place isn't generating the types of results you want, it's time to review the process.

It may be time to spend a bit of money to save your company a lot of money down the line.


Copyright MMXI - Liz Weber, CMC, CSP - Weber Business Services, LLC – +1.717.597.8890

Liz supports clients with strategic and succession planning, as well as leadership training and executive coaching. Learn more about me on LinkedIn!

Liz Weber CMCLiz Weber, CMC CSP

Liz Weber coaches, consults, and trains leadership teams. She specializes in strategic and succession planning, and leadership development.

Liz is one of fewer than 100 people in the U.S. to hold both the Certified Management Consultant (CMC) and Certified Speaking Professional (CSP) designations.

Contact Liz’s office at +1.717.597.8890 for more info on how Liz can help you, or click here to have Liz’s office contact you.

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4 thoughts on “When Frugal Is Costly”

  1. Liz,
    Your post is full of wisdom. When businesses - large or small -- think frugal, the results can be disastrous. They can also be long lasting and ripple throughout every aspect of the business.

    Great reminders. Bravo.

    1. Liz Weber says:

      Thanks for your comments Kate. You are dead-on in that the ripple effect of seemingly 'smart' frugal decisions can negatively impact numerous aspects of the business. Thanks again for taking time to comment. Best - L

  2. Absolutely Liz. So many companies mistake frugal for fiscal responsibility...definitely not the same. Great challenge for organizations and how they properly manage their resources.

    1. Liz Weber says:

      Frugal vs fiscal responsibility often lead to a clash of perspectives. Thanks for your comment & continue your great work on

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Posted by Liz Weber CMC on May 19, 2011 in Leadership Development and tagged , , , ,