I recently received an email from one of the forums that I read, where someone requested that the designers in the forum submit logo ideas to this company, so they could choose which logo they liked, and would then pay the selected designer for his work.
Even more interestingly, the person making this request was a doctor, and the company in question is a private clinic.
It's incredible how often proposals like this appear on the web. The worst part is that both sides, designers answering these requests and the clients posting them, are playing a terrible role.
I wonder what would be the answer from the medical community if a patient goes and says: "I want to have appointments with as many doctors as possible, have all of them give me their best knowledge and treatment, and at the end of the day, I will pay only the one whose treatment I enjoyed the most..." Note: This example is mentioning doctors; however, it would apply to anybody who finds it fair to make designers work for free.
When someone makes this type of request, their idea may be: "There are tons of students and beginning designers who would be more than happy to have their work selected and used by us, so, why not have them work hard, and we just select and pay for WHAT WE LIKE at the end".
The emphasis in the last paragraph is to remark that you are not getting WHAT IS BEST for your company, you are just selecting what looks the best among the available options.
As a client, the practice of spec work damages your company, because the designs that you receive will not be based on any professional research. In another of my posts I tried to explain that a logo is an investment, and this extends to any product of design. A designer or firm that creates a successful design for you (meaning more sales, more client recognition and loyalty) will need to thoroughly know your company's mission, goals and projections, among other things.
Although the option of requesting spec work from the design community may seems cheaper, at the end of the day you may be paying double or more, or having worse consequences, similar to choosing a bad clinic to treat your illness only because it is cheaper.
For more information about spec work visit this website.