Right, which is more indicative of how yearly budgets which don’t factor in continual employment of staff lead to the morale decline I mentioned. Perhaps the manager isn’t actually capable of doing much about it, and can only spend or not spend their budget. But that indicates a failure in the company as a whole; at least if keeping employee morale high is a goal (which it definitely isn’t at many companies.)
Even then, the mismanagement of funds just communicates a level of incompetence that is more demotivating than cuts from an actual lack of funds, IMO.
“Sorry, the market has shifted and we can’t afford this,” is at least somewhat understandable when you have trust in management’s ability. When you don’t, it comes unpredictable and chaotic - never a recipe for getting good work done.
Playing devil's advocate: Firing people has a huge financial impact - around $100,000 per person per year. The event only cost $50,000 once. So it might not be that significant, and at least the staff gets to enjoy a nice event. Why eliminate both when the event's cost is equivalent to just half a position?
This one's easy. Because you value your people more than the parties they can throw. The cost/benefit are not just monetary. If they were, the event would have no reason to happen under any circumstance.
You fire someone because they are hurting the company? That feels like a company that cares about doing well. Event seems more okay, and there's no reason to question the financial cost if the org seems to be doing well. You layoff someone off because you're tight on cash? Tell everyone you only hire top performers but had to let a top performer go because of budgetary reasons? Feels gross to throw more money away when you're already making "hard" decisions about letting quality people go.
I think it has more to do with the psychological effect than with money itself.
We're used to think that in difficult situations you cut the useless "fun" expenses.
When that doesn't happen in a company, people blame it on management that already "moved on".
It has to do with how people perceive a company and with all that culture that has been pushed down our throats for years, with "We're a family" and things like that. It has also to do somehow with showing some respect...
Even then, the mismanagement of funds just communicates a level of incompetence that is more demotivating than cuts from an actual lack of funds, IMO.
“Sorry, the market has shifted and we can’t afford this,” is at least somewhat understandable when you have trust in management’s ability. When you don’t, it comes unpredictable and chaotic - never a recipe for getting good work done.