September 10, 2014

Profit Is Not a Dirty Word

Business owners, if you were away from your company for a month, would the company go under? Let’s say you installed a hidden camera while you were away. What would you see? Would they continue with your philosophy and vision for growth in your absence?

It all depends on your company’s attitude towards making money. That starts with you. Profit is not a dirty word. It allows us to take care of the customer the best we can. At The Applied Companies, we are students and practitioners of the Service-Profit Chain (Harvard Business Review March 1994). It establishes relationships between profitability, customer loyalty, and employee satisfaction, loyalty, and productivity. The gist of the SPC goes something like this:

  • Money comes from growing
  • Growing comes from really good service
  • Really good service means loyal customers
  • Loyalty comes from employee customer service
  • Employees are valued and trusted and want/are provided with a great place to work


The model demonstrates that making money is a good thing. Do your employees want to make money? If not, sell it and drive it. If money does not hit the top line, it will NEVER hit the bottom line. Make sales and gross revenue a part of the daily appetite. It is up to leadership to keep demonstrating the value of profit. Do you let them see quarterly earnings?

Now, we’re not saying only focus on the bottom line and forget the employees. You already know the bad reputation of companies who focus on that aspect and grind through their people. Here’s how it should flow: 1) The priority is growth through excellence; 2) concentrate on what you do best and your employees versus worrying constantly over the P&L; 3) take daily action on employee and customer feedback, retention and referrals; 4) develop loyal customers versus high new acquisition costs; 5) allow employees – not managers or directors – to  impress customers; 6) empower managers to experiment with the systems they control (hiring, training, rewards, job design) for the purpose of improving employees; and finally 7) get out of the way of good employees and let them do their jobs!

At the end of the day, it doesn’t matter what happens when you’re here. It matters what your employees do when you’re not. Good employees will allow you to make more money. Operate at a high level of excellence and employees will emulate that behavior. And you won’t need a camera to check up on them. They will do it naturally.

Written by Jim Annis, President/CEO of The Applied Companies, which provide HR solutions for today’s workplace. Celeste Johnson, Tom Miller, and Suzanne Chennault, Applied’s division directors, contributed to this article.

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