Put people first in your business and the profits will follow

The English dictionary defines business as “the activity of providing goods and services involving financial, commercial and industrial aspects”. My definition of business is slightly different and somewhat simpler: business is people serving people.

People have needs and wants and other people serve those needs and wants. Once you have grasped this concept, the rest is easy to follow. If you want to meet and exceed the needs of your customers, create a working environment that is conducive to delivering that service.

The logic runs like this: if you focus on your people and create a business culture in which everyone is aligned to the reason for being; a culture in which people have a sense of belonging and a common purpose; a culture in which people are treated with dignity, equality, respect, and fairness, then they will be inspired to motivate themselves to serve their customers with a positive attitude. 

This creates loyal customers who enjoy regular return visits to your business and love spending money on your products and services. Through word of mouth and social media, these loyal customers become your brand ambassadors and encourage others to do the same, which ultimately generates the necessary income to deliver good financial returns over a sustained period of time.

People before profits

“People before profits” does not mean that people are more important than profits. What it means is that in the natural sequence of events, people come first, and profits come after. Without the commitment of people to customer service, profits will be unsustainable.

During my time as a race relations consultant to large companies in the 1990s, I witnessed a few examples of business acquisitions where an entrepreneurial family business with a particular culture was purchased. In the aftermath of the acquisition, large-scale cost-cutting and retrenchments were implemented. In no time at all, positive quarterly earnings were delivered to the shareholders. 

As the culture of the acquired company disintegrated, expenses continued to be cut, people were forced to work harder and the constant fear of losing their jobs hung like a sword over their heads. Just as the company was on the verge of becoming a walking skeleton, another company was acquired, and the cycle repeated itself.

Too often, profitability depends on how much you can take out of the business rather than what you can put into it. The quest is to become “lean and mean”. This is an interesting description, especially when you look at the literal meanings of these words where lean is “skinny, scrawny or bony” and mean is “nasty, uncaring or malicious”. Is that what we are really striving for? A skinny, scrawny, bony business that has a nasty uncaring and malicious culture?

“Lean and mean” businesses might well produce short-term profits for shareholders but sooner or later, the culture will negatively affect productivity; there will be nothing to inspire exceptional performance; the culture of fear will start to debilitate the business; negativity will spread like a cancer; demotivation will set in and customer service will no longer take centre stage. 

When people are discontented and disillusioned in their working environment and unhappy about the way they are being treated, their anger and frustration are directed towards their managers. The internal conversations become nothing more than moaning and bitching sessions and the biggest casualty, by far, is always the customer, who is now just an interference in the ongoing battle between management and staff.

A short-term profit obsession can lead to some fundamental blunders, particularly when restructuring is overdone, and the staff complement becomes so thin that the business can no longer effectively serve its customers. The infrastructure collapses and the culture of survival looms large.

My good friend, Kevin Hedderwick, who was largely responsible for building the Famous Brands business into a huge conglomerate, once described this so powerfully when he walked into a business and experienced what he calls “the smell of death”. 

So instead of “lean and mean” we should rather be aiming to create a “caring and sharing” culture. I prefer a culture where care means to be “thoughtful, considerate, and compassionate” and sharing is “communicating, giving, and educating”.

In a “caring and sharing’” culture, people view their managers as leaders rather than dictators; they have a sense of belonging and share a common purpose; they strive to improve their customer service by growing their skills and knowledge; they feel inspired to motivate themselves; they develop positive attitudes towards their work; they contribute meaningfully to the creation of wealth and share in the fruits of their efforts. Most importantly, they are sharply focused on their customers instead of their managers.

Keep the powerful accountable

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Ian Fuhr
Ian Fuhr is the chief executive of The Hatch Institute, a personal and business leadership coaching company. He is known as a serial entrepreneur who founded the Sorbet beauty salon chain

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