Profit, on purpose. Can we make money and be true to our mission statement?

Citation

Bajer, J. (2013), "Profit, on purpose. Can we make money and be true to our mission statement?", Strategic HR Review, Vol. 12 No. 2. https://doi.org/10.1108/shr.2013.37212baa.002

Profit, on purpose. Can we make money and be true to our mission statement?

Article Type: Strategic commentary From: Strategic HR Review, Volume 12, Issue 2

Thought leaders share their views on the HR profession and its direction for the future

Javier BajerFounding CEO of The Talent Foundation.

If your business depends on people for its success, you might have a problem. Pleasing your shareholders while engaging your employees is often experienced as a conflict, where it is either about making money or about becoming a great employer.

In reality it is not complicated at all, but we often make it so when we disconnect Profit from Purpose and treat them like relatives who cannot sit around the same dinner table.

What’s the ideal?

The ideal is to make both profit and purpose work together, like interdependent cogs in a people and business system. Simply put, it is about doing business out of adding some sort of value to others (aka clients). It is about making money out of making a difference, whether you are selling loans (opportunity to grow), medicines (healthier lives), insurance policies (peace of mind) or computers (tools to do more with less).

But how can this be possible? When we go to a doctor, we do not seem bothered by the co-existence of profit and purpose. We do not mind that they get paid well and we do not question their commitment to heal us because they are making money with our condition. In our everyday lives we experience many situations where profit and purpose live happily together. Why is it then that we struggle so much when it comes to achieving this balance in our businesses?

A loss of focus

Over time, we become so focused on short-term results that we start to forget that at some point there was a purpose for our profit. Concerned that a focus on purpose might fiddle with our profit, we end up making a mental note to deal with this as soon as the time is right, but not now.

However, as long as we do not make this balance work in practice we end up losing both profit and purpose: we spend too much time and money compensating for people’s disengagement; we run companies where inward looking cultures see clients as remote and inconvenient parts of the equation; we measure quarterly performance and miss long term sustainability; we fight to recruit the best talent but we lose our best clients.

What’s your P&P model today?

Organizations that focus on both purpose and profit, consistently do better and feel better. However, most organizations find it hard to achieve a profit and purpose (P&P) balance. Some common pitfalls can be recognized in the following models.

1. Profit as the only purpose

This happens when the raison d’être for the business is to make money in order to make more money. It becomes the only purpose for everyone in the business, not just for investors.

Humans engage with work for a variety of reasons, including money – and there is nothing wrong with that. However, a trap we often fall into is to believe that profit is equally relevant to all employees, hoping that announcing a “good quarter” will motivate directors and call center employees alike. It will not.

But, cannot profit be our purpose? Of course it can. There are many examples of businesses and initiatives whose mission is simply to make money for the investors. The problem comes when we are not straight about this and, instead, we create a fictitious purpose designed to motivate people, shying away from our true intention. It is the incoherence that de-motivates, not the purpose itself.

2. Profit with a touch of purpose

This is the case where organizations resort to their corporate social responsibility initiatives when asked about what makes them proud (purpose). Because there is a need to make a difference, a separate unit is created to do so. We become proud of our impact on society and can continue to focus on profit as the main driver.

The problem with this approach is twofold. First, our impact (through CSR activities) is relatively small, as it is not our core product. Second, people are left feeling they could have done more with their jobs, and lives. Not a great motivator over time.

3. Purpose with a touch of profit

In this case organizations become so committed to their purpose and passionate with their ideas, that they can underestimate the need for profit. They see profit as the enemy, experiencing forecasts, business plans and performance cycles as intrusive. They end up running out of cash and winding down their great “initiatives.” Great ideas in business cannot work without profit. We need money to build, package, distribute, market and support our ideas. We need to give something back to our investors, so they will choose to support us next time. And we need to make some for ourselves, so we can continue to have great ideas.

An extreme example of this is when organizations become like clubs, where people experience a greater focus on themselves than on clients, products, markets and profit altogether. Corridors exhibit naval gazing banners announcing new gym facilities, yoga classes, bowls of fruits and specially negotiated discounts for travel. There are no pictures of how customers benefit from products, pie charts showing market-share or news about the challenges of the industry. The purpose becomes to please the employee, instead of the customer. The enemy is the organization, which can never give enough to compensate for the inconvenience of having to come to work. Listen to everyday conversations in your organization and check what percentage of those conversations look inwardly instead of pointing to the market.

Profiting on purpose

It is time we challenge how we connect profit with purpose in our organizations, bringing money and meaning together to create real value for investors, businesses, people and society. It is key to note how these two circles reinforce each other and become inter-dependent, creating value for all (see Figure 1).

Get the top team together and share examples in which the organization added value to others while producing profit in the past. Explore the details of what happened then and what made profit and purpose work well together before. Make sure that this does not start another tree-hugging initiative with endless conversations about what “everyone” thinks the purpose should be. Agreeing how to profit on purpose should be a short and straightforward conversation at the top.

The P&P in practice

Once the P&P equation is clear, the next step is to align the organization to make it happen. Look into your processes (from recruitment to outplacement) and identify those that might be focusing too much on either purpose or profit, then bring them into balance.

Avoid thinking that this is just another communication exercise where you “tell” people about purpose. This new mental model needs to be reinforced by restoring the coherence between processes, tools, organizational structures, metrics, management styles, careers, performance management, pay and rewards, and every other element that touches people. Make every “moment of truth” an opportunity to reinforce the P&P model. Find ways to believe in what you sell, because it will make a difference to someone. Make it be amazing and make good money with it.

Re-connecting profit and purpose is completely possible and many successful organizations do it – and that is their most visible secret. This reconnection might be a good blueprint for a sustainable world, where people and work live happily ever after.

About the author

Javier Bajer, PhD, works with boards of global organizations and city governments, helping them accelerate the change of their cultures. Javier Bajer can be contacted at: javier@possibilate.com