Long time ago I was just an IC at some company, 5k employees.
Once a quarter or so the local director would buy pizza for our team. Maybe 12 pizzas altogether from a national chain pizza place. Later on "to save money" they said they wouldn't do that. Once a quarter... cost cutting.
So on the appointed day I just bought pizza and told the team to come on down to the break room and enjoy. Maybe $200 in pizza or such, we were going to have our little break as far as I was concerned.
Later some crappy manager complained that I did that, the director was reportedly not pleased. Fortunately nothing came of it, like bro of all the people to complain about ...
12 pizzas. Let’s say large. That’s 12 slices each? Average person eats let’s say 3 slices (some won’t eat, some have one, some have four, some, like me, have brains that are perpetually stuck on Grad School and will embezzle slices until there’s no leftovers). So 144 slices could do maybe 48 (let’s say 50 people). So that’s give or take $4 per person.
That’s one of those “a travel booking error worth of money brings a subjective amount of joy, and the only wrong move would be to stop unless the team wants it to stop” things.
Which is absolutely ripe for some Director of Couch Spelunking to earn their Golden Monocle award for making the spreadsheet show brackets around budgets and win a trip to Boise.
Since this was for a *team* within a 5,000-employee company — probably a local team (not the whole company) — the number of people was likely in the *25–40* range.
### Final Estimate:
*12 pizzas would reasonably feed about 30 to 40 people*, assuming average appetites.
Better than AI: ask someone who has ordered lots of piazza recently.
You need more than you think as not all pizzas will be the same flavour. The vegetarian ones will get eaten immediately by people who aren’t vegetarian. Then the complaints roll in.
Cheese pizza is acceptable to vegetarian and meat eaters alike. Barring a disproportionately vegetarian crowd, most groups would be perfectly happy with 50% cheese pizza and 25% each veggie or meat combo/pepperoni. The less sure you are about people's dietary preferences, the higher you crank the cheese %.
If it turns out there's a huge population of like gluten free, you say "Ah my bad" and correct the next time.
If you had to pay $200 for pizza for 12, then to buy pizza for 5,000 the cost is 200/12 x 5000.
You won’t get a bulk discount because you won’t be buying it for the entire company at the same time. Different teams have different team building events/times.
The point is to have a party for a team of 12, they were spending $200. It does not matter whether it was all eaten, they spent that amount for the team.
We can thus assume that if all teams did something similar (why would you only allow some teams and not others), the dollars add up and that is how you look at it from a company perspective. Not the one team’s spend, but the overall spend.
Almost every average to high performance employee captures less than the value they bring. Companies are not going to pay you 100% of your value as that is always seen as bad deal by the company. They want to feel like they're saving. Why else would you need to negotiate comp?
Isn't that the subtext? IMO 70%+ seems really really high, especially for larger firms which, by definition, provide a massive amount of leverage to senior leaderships' decision-making.
It’s interesting to do the calculation for one’s own work.
It’s obviously going to be flawed unless it’s a very basic job. The peripheral costs are the devil. Eg: Stationary, payroll costs, uniform, software licences, swipe cards, coffee, water, rent.
However mine is an awful lot higher than the CEOs (as a percentage, not in dollars).
I don't think the peripheral costs are even the bulk of it. The real value of the company is problem selection, brand recognition, coordination, hiring, and elimination of non-value add problems (e.g. an early stage CEO spends a huge amount of their time managing government registrations, which is later managed elsewhere in the company but not by 99.999% of employees)
Yeah as far as product (people that do/make the thing being sold) is concerned, marketing/sales is a cost center and they should be making most of the money, since they're providing the actual value. As far as marketing/sales is concerned, the product is fungible and is a cost center, and they should be making most of the money since they're the only thing differentiating their org from competitors and making actual money come in. As far as accounting is concerned, the company doesn't make any money until they actually invoice and chase down and collect invoices, and if they don't pay invoices neither marketing nor product will have the infrastructure they need to do their job.
Without HR/hiring, the other departments don't exist since they all need to be staffed. Without management, nobody knows what to do. Without facilities/IT/building manager, nobody has internet or water or desks or chairs.
And so on and so forth. Everyone is essential, and everyone also has an overinflated idea of their own importance and an underinflated idea of the importance of others.
It’s not just “seen as a bad deal by the company” - a business can’t give 100% of the value back to the employee because it has this pesky thing called “profits” it has to worry about :)
If at your ceramics firm, you make and sell a mug with a ten dollar margin, if you then require ten dollars of wages for that time, then why did the company bother putting the capital at risk?
This is from 2019. It is a very short excerpt from a 2019 book, which is mentioned at the end, but oddly the link is not to the book itself:
https://tylercowen.com/dd-product/big-business/
The two papers referenced appear to be:
Taylor 2013: https://www.sciencedirect.com/science/article/abs/pii/S03044...
Taylor 2013 (an appendix diving into the math): https://finance-faculty.wharton.upenn.edu/luket/wp-content/u...
Nguyen and Nielsen 2014: http://www.kaspermeisnernielsen.com/WDT_MS.pdf
I was not able to immediately identify the reference to the worker compensation statistic referred to as "Isen 2012".
I was not able to immediately identify the reference the worker compensation statistic referred to as "Isen 2012".
It's "Dying to Know: Are Workers Paid Their Marginal Product?" a working paper by Adam Isen.
Long time ago I was just an IC at some company, 5k employees.
Once a quarter or so the local director would buy pizza for our team. Maybe 12 pizzas altogether from a national chain pizza place. Later on "to save money" they said they wouldn't do that. Once a quarter... cost cutting.
So on the appointed day I just bought pizza and told the team to come on down to the break room and enjoy. Maybe $200 in pizza or such, we were going to have our little break as far as I was concerned.
Later some crappy manager complained that I did that, the director was reportedly not pleased. Fortunately nothing came of it, like bro of all the people to complain about ...
Cost cutting like that is purely performative, so buying the pizzas yourself just makes them look bad.
You disrupted part of the "I did <pointless thing> and accomplished <fudged metric>" (but he probably reported that anyway)
That amounts to just over $300,000 per year for all 5,000 employees. $200/12 x 5000 x 4 = $333,333.33
Depending on how long ago (inflation) and what other expenses got cut, the cost savings might actually be meaningful.
Your calculations are off unless it's assumed each employee eats an entire pizza. Not to mention bulk discount.
They said they spend $200 to throw a party for the team of 12. It doesn’t matter whether or not everyone ate it. They spent the money.
You can also further assume bulk discounts are irrelevant because not all teams will have parties at the same time.
Read the original comment slowly this time, and notice what the “12” refers to. There’s only one “12”, should be easy.
Napkin math to get a feel for scale:
12 pizzas. Let’s say large. That’s 12 slices each? Average person eats let’s say 3 slices (some won’t eat, some have one, some have four, some, like me, have brains that are perpetually stuck on Grad School and will embezzle slices until there’s no leftovers). So 144 slices could do maybe 48 (let’s say 50 people). So that’s give or take $4 per person.
That’s one of those “a travel booking error worth of money brings a subjective amount of joy, and the only wrong move would be to stop unless the team wants it to stop” things.
Which is absolutely ripe for some Director of Couch Spelunking to earn their Golden Monocle award for making the spreadsheet show brackets around budgets and win a trip to Boise.
ChatGPT (I gave no hints in my prompt):
To estimate how many people the *12 pizzas* were for, we can use a standard rule of thumb:
### General pizza math:
* A *large pizza* usually has *8 slices*. * Most people eat *2–3 slices*.
So:
* *12 pizzas × 8 slices = 96 slices total* * If people ate:
### Most likely case:Since this was for a *team* within a 5,000-employee company — probably a local team (not the whole company) — the number of people was likely in the *25–40* range.
### Final Estimate:
*12 pizzas would reasonably feed about 30 to 40 people*, assuming average appetites.
Better than AI: ask someone who has ordered lots of piazza recently.
You need more than you think as not all pizzas will be the same flavour. The vegetarian ones will get eaten immediately by people who aren’t vegetarian. Then the complaints roll in.
Apply this to various other pizza type.
Order 1 pizza for every two people.
Cheese pizza is acceptable to vegetarian and meat eaters alike. Barring a disproportionately vegetarian crowd, most groups would be perfectly happy with 50% cheese pizza and 25% each veggie or meat combo/pepperoni. The less sure you are about people's dietary preferences, the higher you crank the cheese %.
If it turns out there's a huge population of like gluten free, you say "Ah my bad" and correct the next time.
Haven't ordered any piazza recently. Last one I saw was Mike Piazza at a Mets game, so it's been a while.
Those calculations are off.
200/12 is the cost of a pizza.
Unless you are buying everyone a pizza divide a pizza by 6 or 7 and you end up at $50,000 plus this is a cost you can deduct.
You are buying that many pizzas you can get a huge discount.. probably get those costs down by half. $25,000...
If you had to pay $200 for pizza for 12, then to buy pizza for 5,000 the cost is 200/12 x 5000.
You won’t get a bulk discount because you won’t be buying it for the entire company at the same time. Different teams have different team building events/times.
You sure? OP says "Maybe 12 pizzas altogether from a national chain pizza place." and then says they spent $200 or so.
So about $16 per pizza.
There's no mention of how many team members were having pizza. Probably not one each though.
The point is to have a party for a team of 12, they were spending $200. It does not matter whether it was all eaten, they spent that amount for the team.
We can thus assume that if all teams did something similar (why would you only allow some teams and not others), the dollars add up and that is how you look at it from a company perspective. Not the one team’s spend, but the overall spend.
The point is to have a party for a team of 12
Nobody said that but you. Everyone else reads “12 pizzas”, not people. rkomorn even quoted it for you, and you apparently read right past it…again.
Maybe I'll try this as a question:
How do you know the team has 12 members? Are you basing that on the number of pizzas OP bought?
> The point is to have a party for a team of 12
Stop right there. This entire statement here is wrong.
> Maybe 12 pizzas altogether
It was just a local tradition with one team.
Other teams got a lot more actually, others none.
Cool. How big was your team?
@duxup - if you say 12, it’ll be funnier.
Almost every average to high performance employee captures less than the value they bring. Companies are not going to pay you 100% of your value as that is always seen as bad deal by the company. They want to feel like they're saving. Why else would you need to negotiate comp?
Isn't that the subtext? IMO 70%+ seems really really high, especially for larger firms which, by definition, provide a massive amount of leverage to senior leaderships' decision-making.
It’s interesting to do the calculation for one’s own work.
It’s obviously going to be flawed unless it’s a very basic job. The peripheral costs are the devil. Eg: Stationary, payroll costs, uniform, software licences, swipe cards, coffee, water, rent.
However mine is an awful lot higher than the CEOs (as a percentage, not in dollars).
I don't think the peripheral costs are even the bulk of it. The real value of the company is problem selection, brand recognition, coordination, hiring, and elimination of non-value add problems (e.g. an early stage CEO spends a huge amount of their time managing government registrations, which is later managed elsewhere in the company but not by 99.999% of employees)
Yeah as far as product (people that do/make the thing being sold) is concerned, marketing/sales is a cost center and they should be making most of the money, since they're providing the actual value. As far as marketing/sales is concerned, the product is fungible and is a cost center, and they should be making most of the money since they're the only thing differentiating their org from competitors and making actual money come in. As far as accounting is concerned, the company doesn't make any money until they actually invoice and chase down and collect invoices, and if they don't pay invoices neither marketing nor product will have the infrastructure they need to do their job.
Without HR/hiring, the other departments don't exist since they all need to be staffed. Without management, nobody knows what to do. Without facilities/IT/building manager, nobody has internet or water or desks or chairs.
And so on and so forth. Everyone is essential, and everyone also has an overinflated idea of their own importance and an underinflated idea of the importance of others.
It’s not just “seen as a bad deal by the company” - a business can’t give 100% of the value back to the employee because it has this pesky thing called “profits” it has to worry about :)
That’s exactly the point you’re replying to.
> Companies are not going to pay you 100% of your value
Tell us more…
If at your ceramics firm, you make and sell a mug with a ten dollar margin, if you then require ten dollars of wages for that time, then why did the company bother putting the capital at risk?
Not sure if I'm missing a facetious tone
By "value" this means a function of the stock value that is lost when a CEO dies.
Original report:
https://www.jstor.org/stable/24550350
Direct link to pdf h/t @chao-:
http://www.kaspermeisnernielsen.com/WDT_MS.pdf
Whoever can measure accurately how much value a CEO brings to their firm deserves a Nobel Prize.
Because it requires the invention of new techniques for measuring infinitesimally small quantities? (Sorry)
Mathematicians have your back.
Or if we're talking about long term impacts to society:Time to automate them with AI and dramatically boost profits!
Just like how WAymo is building the single best AI brain at driving, we need the same for CEOs. One CEO mind to run it all!
https://www.anthropic.com/research/project-vend-1
doubt
Yeah this is the sort of thing I'd want to read the primary studies of, and they'd better be rigorous. I doubt they are.
CEOs: the real victims of capitalism.
Can down voters explain?
The article states that workers take home a higher portion of the value they create.