While many businesses say they put people before profits, in reality it’s a statement that challenges the conventional business paradigm, which states that in order to run a successful business, you need to focus on the bottom line.

Business leadership teams who ascribe to this model also tend to believe that there is no other way. Without a focus on the numbers, the business will surely fail. It’s the way things are, the way things have always been and the way things will always be.

Rewards follow purpose

I do not, for one moment, believe that profits are unimportant. Without profits, the business cannot survive, which means it can no longer employ people or deliver value to customers. Profits are critical to the sustainability and growth of any business and they provide a return on shareholder investment.

I am suggesting however, that we understand the order of our priorities and how we can gain the greatest value from our businesses for all parties involved, from employees to customers.

Let’s begin with this question: what comes first and what follows naturally? It’s like the age-old question of which came first, the chicken or the egg?

In business, I believe the question is, what comes first, the purpose or the reward?

You’ll find the answer is much simpler than we are led to believe: purpose is paramount and the reward is a natural result. This is the foundation of our Cultureneering philosophy and business framework.

Where service meets reward

If you focus on your people and create a working environment where they feel nurtured, cared for, content and inspired, they will be motivated to serve their customers in a powerful way.

This creates loyal clients who feel good about themselves and enjoy visiting your business on a regular basis, spending money on products and/or services.

Through word of mouth and social media, these loyal customers encourage others to do the same which, in turn, generates the necessary income over a sustained period of time to allow the business to create wealth and grow exponentially.

The cycle of service and reward is simple:

First, focus on people. By touching the lives of your employees, you create a conducive working environment that inspires people to motivate themselves.

Next, grow customer service with a positive attitude. Build a culture that is based on touching the lives of your customers and enjoy the natural result of happy customers spreading the word.

Loyal customers become ambassadors of the business and the increase in sales lead to growth in profits. This creates a sustainable business model, and you can go back to focusing on people – and the cycle continues.

Profit income statement

Sales

xxxx

Cost of Sales

xxxx

Gross profit

xxxx

 

Expenses (examples)

Stationary

xxxx

Rent

xxxx

Staff

xxxx

Others

xxxx

Total

xxxx

Gross Profit

xxxx

Expenses

xxxx

Net Profit

xxxx

Wealth creation statement

Sales

xxxx

Cost of Sales

xxxx

Gross profit

xxxx

 

Outside expenses (examples)

 

Stationary

xxxx

Rent

xxxx

Transport

xxxx

Others

xxxx

Total

xxxx

 Wealth Created

xxxx

 

Wealth Shared

 

Staff

xxxx

Owners

xxxx

State (Tax)

xxxx

People versus pencils

The profit income statement shows people placed under an ‘expenses’ column. In this very basic example, people find themselves listed below stationary, implying there is no real difference between a person and a pencil.

People are viewed as items of expense or cost burdens. In fact, in most companies, a person’s full remuneration package is known as ‘cost to company’. When business is tough and expenses need to be cut, people are the first to be considered for the unkindest cut of all.

Are people who are seen as stationary inspired to motivate themselves and to go out and serve to the very best of their ability?

Of course, no one sees the income statement – but the overriding mindset permeates the entire business.

People as wealth creators

The wealth creation statement shows that people have been removed from the ‘expenses’ column. Outside expenses refer to all expenses paid outside the organisation, and as such people do not fall under that criteria.

Instead, people are considered to be assets or wealth creators and are shown under the wealth shared column.

Because they have generated the wealth through their service to customers, they deserve to be sharing in the wealth alongside the owners and government. Salaries are considered a way of sharing the wealth created rather than as expenses.

Reporting the financial performance of a business this way allows people to be recognised as important contributors and gives them a far greater sense of reward for achieving the higher purpose.

Again, the wealth creation statement might not be shared with the entire business – although it should be – but its affects will be felt by everyone, particularly as they experience their own wealth growing.

The practical drivers of people before profits

If you want to build a business that places people before profits, there are 7 specific steps that need to be followed:

  1. Create a specific financial reporting model
  2. Create your own language that highlights the importance of people and call yourself a community of citizens
  3. Foster a culture of transparency to build trust
  4. Implement an induction programme that gets everyone onto the same page as they join the business
  5. Support a culture that places others before ourselves
  6. Ensure ongoing training and development
  7. Create jobs as the business florishes

Remember this: a view that ‘lower salaries mean high profits and higher salaries mean lower profits’ is not the way to go. That’s just a race to the bottom where no one wins. Its adversarial and does not reward the people who are essentially making the money in your business.

Instead, build an environment where everyone wins together, and the rewards (and profits) will naturally follow.

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