Profits: scarce for many and in need of PR for most

Dave Kinnear1-On Leadership

It seems to me that “profit” has become a dirty word. Even in our for-profit companies, we seem to be worried about the image of wanting to be paid a fair price for the services or products we provide.

Yet we all know that in order for our organizations to continue the development and innovation of products and services requires that we make a profit and reinvest that profit in the product and/or service. The more pragmatic people in our communities seem to understand that the balance is not to focus solely on profit; but instead to balance the need for profit with the requirement of being a good employer and a good corporate citizen while providing a return to all the stakeholders of the corporation.

Perhaps the most compelling example of the single minded emphasis on profit creating a disaster for a company is the demise of Arthur Andersen. In her book Final Accounting (Final Accounting, Barbara Ley Toffler, 2003, ISBN 0-7679-1382-5), Barbara Ley Toffler clearly defines how the constant pursuit of profits for the partners derailed the whole culture of a stellar corporation. “In my years of consulting, one important thing I’ve learned is that most people do not want to do unethical things. Usually, unethical or illegal behavior happens when decent people are put under unbearable pressure to do their jobs and meet ambitious goals without the resources to get the job done right.” Today, with continuous downsizing of our corporations and the pressure on increasing revenues and profits, our employees are overworked, lack the time and tools, and are forced to be internally focused on what it takes to keep the company solvent. This situation is just begging for abuse. If we add in the temptation of greed for our own well being, there is little reason to wonder at the discovery of “white collar crime” throughout all levels of corporate America and the world.

Yet, we cannot expect an organization to continue to exist if it doesn’t provide value to the consumer of the goods and services as well as those who invest in the company. Public, private, and not-for-profit organizations must meet expenses and re-invest in the continued growth of the organization.

Even the not-for-profit organization must generate what would normally be called a profit to provide the benefit for which they claim to be raising funds. When the American Cancer Society (for example) is raising funds, they first cover expenses of the organization required to manage the program, and then give the “profit” to various cancer research projects. And we know that even the not-for-profit organizations are not immune from misusing funds, excessive expenses generated for paying the managers, and furthering individual agendas at the expense of the organization.

A balance between the value of keeping the organization healthy (which necessarily means earning a profit) and providing goods or services that delight the customer is always difficult. The only way to resolve the issues facing us in this competitive world with reduced revenue is to make sure that we do not ignore or hide the fact that profits is what makes it possible to continue to provide those goods and services. We demonize the reasonable pursuit of profit at our own peril. To demonize the pursuit of profit to the exclusion or expense of other corporate and community values is a message whose time has come. But we have to start with ourselves. There is no real entity to blame, only our own moral values and ethics process — for we are the organization.