Go beyond profit | Manila weather
DECEMBER comes with all the hopes and joys of Christmas. In the Christian faith, it marks the time when the world reflects on, prepares to receive and celebrates God’s ultimate gift of love, the birth of the Savior, Jesus Christ.
Over time, the simple and solemn celebration of the love of God through the Mass of Christ (the etymology of Christmas) has become a tradition of bringing families together and sharing blessings and gifts. This tradition symbolizes the completion of the Holy Family and the ultimate gift of God.
As the world grew more complicated, attention became blurred and priorities distorted. Christmas has become a time when people eat, party and spend more than usual; when employees take time off for real days off; when retail businesses face increased demand and catch up with profits at the end of another fiscal year; and when the children are all eyes riveted on the presents under the Christmas tree and the “aguinaldos”, whether in electronic form or in the form of crispy invoices.
People who give may perceive Christmas as much more complicated than before. Complications include how to afford to spend more than usual, how to encourage employees to work while on vacation, how to negotiate and secure limited supplies, how to know what to give without breaking a recipient’s expectations and hurting their feelings – the list goes on.
They say that when the going gets tough, you have to get back to the fundamental objective because that will get you back on track. Christmas is about celebrating the love of God, so that should be the center of the celebration and nothing else.
Now, what can businesses gain from this? Let’s see.
Most business models have always assumed that the ultimate goal of a business is profit maximization. However, these models did not consider that a business is built from the passion of an entrepreneur, making profits a by-product. Profit is a result and not the goal of a business. Think of it this way: engineers make money but their goal is to build economical but safe infrastructure; doctors make money, but their goal is to cure; lawyers earn money but their mission is to serve justice; and accountants make money, but their role is to ensure the fair presentation of financial information and, in so doing, to protect the interests of the company’s stakeholders.
In these business models, the workforce (or employee compensation) is an important part of a company’s ability to supply and meet customer demand. In reality, finding a balance between these two stakeholders, employees and customers, goes beyond graphs and quantitative relationships as models are simplified descriptions of economic reality. Therefore, when the variables become complicated, the models may not produce the assumed maximization of benefits.
Again, when the going gets tough, come back to the basic goal: the “why”. The goal is a powerful tool for engaging and inspiring stakeholders. The goal is the direction of the business. Let’s look at this from two angles.
The objective is not only to recruit qualified people who need a job, it is also to integrate people who believe in the objective of the company. Hiring people just because they can do the job will likely result in employees who care and only work for money. When people are hired because they also believe in the purpose of the business, they will work with passion to achieve it.
Most employees know what they are doing and many know how they are doing what they are doing, but unfortunately few know the “why”. It is therefore essential for leaders to elevate the sense of purpose of the work so that employees are engaged and inspired. Once achieved, this translates into a better customer experience, which means higher profits.
Most businesses believe their most valuable assets are their employees. Only a few realize that the most valuable assets are not the employees per se, but their commitment and inspiration. Employees alone do not create value. Employee engagement and inspiration will translate into greater profits. As Gallup asserts, high employee engagement results in increases of 41%, 23%, and 10%, respectively, in quality, profitability, and customer loyalty or engagement.
In one of Simon Sinek’s TEDx talks, he explained that customers don’t buy what businesses do, they buy why businesses do. People don’t buy computers because a company “makes great computers”, they buy because they believe in “a product that challenges the status quo.” It turns out that the products are also great computers.
This can deeply transform a purchase into a customer experience, which gives more meaning to the customer because they do not treat them as a simple sale but as a partner who believes in the purpose and the brand of the company. Customers are empowered by valuing their comments / ideas and they are also seen as brand carriers. It is the next level of the simple sale of goods and services. This can significantly differentiate a business from its competitors.
Goal and profit are not opposing concepts. Profit is the by-product of a well-synthesized business goal. So, when profits decrease due to complications, go back to the basic purpose of the business. It will give you direction and probably push you beyond profit.
Seb Serrano is a senior management consultant at P&A Grant Thornton. P&A Grant Thornton is one of the leading audit, tax, consulting and outsourcing firms in the Philippines, with 24 partners and over 1,000 employees. Tweet us at @GrantThorntonPH, Like us on Facebook at P&A Grant Thornton, and email your comments to [email protected] For more information, visit our website at www.grantthornton.com.ph.