Put People Before Profits

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Does your company put profits before people?

I bring this up because I’ve seen a particular phenomenon many times: executives decide to put their employee experience and customer experience improvement efforts on pause because sales figures are down. Clearly the blame is that the people focus has derailed them from business development and closing deals; there can be no other reason for this (she said with all the sarcasm in the world).

We know that the employee experience and customer experience transformations are a journey. Unfortunately, the immediate pressures of the business often drive out long-term goals and objectives.

So many executives today still live by the old management adage, companies are in business to maximize shareholder value. In doing so, they put profits before people, rather than the other way around. Ironically, in the 1970s, Jack Welch was a huge proponent of that adage, but within the last ten years he has renounced it, calling it “the dumbest idea in the world” and saying:

Shareholder value is a result, not a strategy. Your main constituencies are your employees, your customers, and your products. Managers and investors should not set share price increases as their overarching goal. Short-term profits should be allied with an increase in the long-term value of a company.

While creating and maximizing shareholder value is important to any public company, it is an outcome, not a means. There are means to achieving that outcome, and they including putting employees and customers first, ahead of profits. Companies succeed if and when employees want to work for them, customers must be willing to buy – and actually buy – their products, vendors and suppliers want to partner with them, people want them to locate in – and be a part of – their communities, and shareholders buy their stocks. Companies have more constituents than just shareholders and more responsibilities than delivering value for them. The rest of their constituents must receive value, as well.

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When companies (executives) put profits before people, they are driven by:

  • short-term thinking
  • short-sightedness
  • impatience
  • money, metrics, margins, numbers, revenue
  • shareholders

These are the things that cause executives to stop improvement efforts and shift focus and resources solely on closing deals and making the numbers.

When, in reality, focusing on the employee and focusing on the customer first are all about ensuring you can close deals and make your numbers.  Focus on the former, and the latter follows.

Peter Drucker says that the purpose of a business is to create a customer. You can’t create a customer if you don’t have the right people in place to deliver value to the customer, if you don’t understand who the customer is and what her needs are, and if you’re not designing and creating products that help them solve problems or get jobs done.

Seth Godin writes in his post, What are corporations for?

The purpose of a company is to serve its customers.

Its obligation is to not harm everyone else.

And its opportunity is to enrich the lives of its employees.

Somewhere along the way, people got the idea that maximizing investor return was the point. It shouldn’t be. That’s not what democracies ought to seek in chartering corporations to participate in our society.

The great corporations of a generation ago, the ones that built key elements of our culture, were run by individuals who had more on their mind than driving the value of their options up.

So how do companies do that? How do they drive up value for employees so that they can deliver value for customers?

  • Define and socialize your values and guiding principles.
  • Create a culture where people are first.
  • Hire the right people, particularly those that fit your culture.
  • Take care of employees, and they will take care of customers. Don’t just treat employees as cogs in the wheel. Trust, motivate, reward, and respect them.
  • Let employees know how their work matters and how it impacts the business. Be open to ideas and suggestions from employees and use them.
  • Listen to employees, learn from what you hear, and do something with the feedback. They want the business to succeed as much as you do. Value their input, and show them that you care by using it to make changes and improvements.
  • Invest in your employees. Coach, train, and develop them and ensure they are on a path to career success.
  • Treat people like people. See human. Be human.
  • Create a workplace where policies and processes don’t hinder an employee’s ability to do his job – and do it well. Or hinder his ability to deliver a great experience to his customers.
  • Live a life of servant leadership. Put the needs and interests of your people before your own.
  • Leaders must communicate, and be open and transparent. Develop a culture of transparency.

It’s a mindset shift. I can tell you all of those things have to happen, but your CEO and her executive team (the entire team, everyone on the same page) must choose to lead and to run the business differently. It begins with them. The choice is theirs.

But it doesn’t often happen on its own – and certainly not overnight! As always, if you can start to show some quick wins and ROI, you’ll build the business case for why the shift is necessary. And there’s a ton of data out there already to show the impact of focusing on employees and the employee experience. Don’t be afraid to use some of that to build your case.

Your employees come first. And if you treat your employees right, guess what? Your customers come back, and that makes your shareholders happy. Start with employees and the rest follows from that. -Herb Kelleher

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