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Profitability Is Just a Byproduct

02 04 2021

Few people go into business without the expectation of making money, and that companies should focus on maximizing profits and growth. Often expenses are cut, and wages stay low to maintain profitability. But this approach often is responsible for unhappy employees, fewer customers, and reducing profits. Should profit be more important to companies than people? Both profit and people are equally important, as published in Association of MBAs:

“The traditional profit-focused business model must be turned on its head. For decades, organizations have been focused on maximizing profits and keeping shareholders happy. Many companies remain blinkered in this approach, with a laser focus on cutting more and more costs out of their businesses while keeping wages low, so that shareholders can enjoy an extra dividend or two. This profit-driven capitalist approach is relentless, leading to a glut of organizations with disillusioned employees, unhappy customers, and unsustainable processes. After all, stripping a company bare while trying to suck more productivity out of the workforce year-after-year, is not only counterintuitive but is self-destructive. So what’s the alternative?”

 Donald Moore, Why People and Planet (before profit) is best for business.

There is a link between people and profit that includes another component, the planet, through a movement called Global B Corporation (B Corp). B Corp. puts business as a force for good at its very heart, verifying and certifying companies that balance people and the planet with profit. The B Corp. ‘assessment’ determines how the company’s business model impacts workers, community, environment, and customers and keeps profit a secondary byproduct.

Profit enables your company to grow and move forward, and without it, your company won’t have the fuel to continue. Profit must be protected, and when deposited into the company’s bank account, it also deposits into the bank accounts of the people who helped make it.

“This brings to mind experiences with leaders of the most profitable organizations that I have observed. Almost to a person, they treat profit as a by-product of other things to which they devote most of their attention, things such as a focused strategy that delivers results to carefully-selected customers while pursuing policies and practices that leverage results over costs, hiring people with the right attitude (one that fits with the organization’s culture), and proper training and organization (often in teams). Financial targets are given no more or less emphasis than targets associated with employee and customer engagement, often by means of some kind of balanced scorecard. Rewards and recognition—whether based on the performance of the entire company, teams, or individuals—reflect this philosophy.”

 Jim Heskett, Is Profit as a “Direct Goal” Overrated? 

A company can produce many byproducts, but its immediate goal should be investing in its people. Here’s why:

Without employing the right people and taking care of them through fair wages and high-caliber benefits, profit cannot occur. Since every employee interacts with the company’s customers, a company is about people serving people. When companies focus on the ‘people side of the business,’ profitability is a direct byproduct:

    • Employees are more engaged when they feel the company has their best interests at heart. 
    • Talent retains through employees that are twice as satisfied with their jobs and three times as likely to stay (O.C. Tanner’s 2019 Global Culture Report).
    • Costs are saved on re-training expenses when replacing lost employees

At AspenHR, we are a PEO that helps companies invest in their people by offering high-quality benefits to their employees. Our specialty is HR strategies and sourcing retirement savings plans, health insurance, Medical, Dental, Vision, Life, Disability, and other services to ensure your company is known as a people-first, profits second company.