Profit is not a Dirty Word – Until it is!

I recently attended a business seminar where one of the key speakers made the point loudly and frequently; Profit is not a dirty word!

We agree but would add a significant rider—Until it is!

The speaker went on to attest that the No. 1 reason to be in business is to make a profit and the most important thing for a business to do is make a profit. However, we see profit as a result, an important one, but not necessarily a reason. Profit may well be the reason that the owner stakeholder is in business for, but there are other stakeholders who have other reasons for the business to exist and to keep existing.

Those stakeholders include the customers, the suppliers, the employees and the community. So, for instance, the customers may want the business to exist in order to provide quality goods and services at a fair price. The suppliers may wish to have fair dealings and mutually beneficial ongoing relationships. The employees may wish to have meaningful work, a safe workplace, fair treatment and opportunities for learning, growth and development. The community may wish for no negative impact on the environment, the culture and safety of its citizens.

So when we see organisations being constantly hauled before regulatory bodies such a ASIC, APRA, EPA, WorkCover etc. and fined hundreds of millions of dollars because of breaches of laws and unconscionable conduct, purely in the pursuit of profit, then we easily understand there is more than one reason for an organisation to exist.

Let’s take a look at how some of these stakeholders, other than the owner, see certain businesses:

Customers of banks, insurance companies and casinos don’t want to be gouged with excessive fees,  especially if they are dead! or conned into buying products and services they can’t afford. They also don’t want these businesses to facilitate money laundering by organised crime. Suppliers of clothing at big retailers don’t want to be subject to slave like unsafe working conditions common in poorer third world countries. Employees don’t want to be subject to bullying or harassment, unfairly treated in unsafe and toxic workplaces. Communities don’t want to have polluted soils and water supplies or want tens of thousands of years of cultural heritage destroyed by mining companies and other industries.

All in the name of profit.

There is no doubt that 90% of businesses do the right thing by ALL of their stakeholders, not just the owners, but the 10% that pursue profit at all costs cause irreparable damage to people, organisations and society.

The really clever business owners know that to continue to exist and to thrive in the long term that they will balance the needs of all of their stakeholders.

Now that’s good business sense!

Image by Nattanan Kanchanaprat from Pixabay