Stop putting people first - put profit first

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Business tips
Friday, April 05, 2013

BY TOM COX | BUSINESS TIPS CONTRIBUTOR

04.05.13 Blog ProfitStrategic execution requires that you stop putting people first (in the wrong way). Profit must come first.

I will pause while you gasp in horror.

If you “put people first” in the wrong way, you’re harming them, yourself, the rest of the team, and the other stakeholders — including investors and customers.

What’s Profit?

The only way to make an honest profit is by giving to paying customers something they value more than money. If you stop doing that, your firm collapses and everybody loses their job.

Without profits, you have no business, and thus no jobs for anybody. Profit is oxygen. It’s life blood.

Yet bosses frequently fail to respect profits and mistakenly “put people first” in absolutely the wrong way.

I’m seeing this right now. Here’s the story.

Jack and Jill

Jack is a successful people-person. He’s bad with details, and great with clients. Jack has an assistant that is just as scatterbrained as he is. Jill is super smart, very pleasant and personable, and has “loads of potential.” And Jill has no follow-through, is not detail oriented, and lacks drive.

Jack is the boss — his strengths need to be accentuated, and his weak areas need to be bolstered by hiring staff who are strong where he is weak. That’s just Drucker 101. (When Jill becomes a boss, the exact same thing will be true for her.)

So not only has Jack created a dynamic where both he and his assistant are weak in the same area — guaranteeing that Jack’s customers and peers and boss will experience him as disorganized — Jack has also created a situation that’s unfair to Jill.

Consider Jill’s growth. If Jill is going to improve her organizational skills, it would likely be under a boss who was good at it. That’s not Jack.

And if Jill were going to make best use of her smarts, pleasantness and personality, it would be as a counterbalance to a boss who was weak in one or more of those areas.

And, Jill’s career will be better enhanced by being successful, not by struggling as she is now.

This makes Jack totally the wrong boss for Jill, and Jill the wrong assistant for Jack.

But Jack refuses to change anything. ”Oh, she’s got so much potential,” he’ll tell me. And, they’re very much alike, which Jack enjoys. And thus, the dysfunction continues.

How “Putting People First” Fails

“Putting people first” has at least three dysfunctional incarnations:

  1. In some firms is a trite and meaningless phrase, in which case, stop saying it.
  2. In others it’s an excuse for not holding people (including ourselves) accountable for results. Bosses coddle under-performers who infuriate the rest of the team. (Somehow the slacker counts as one of the ‘people’ to be ‘put first’ — but the rest of the team, and the customers, somehow are not ‘people’ and have to suck it up.)
  3. And in others it’s an excuse for a ‘cruise director’ approach to HR, with lots of picnics and paintball and Mandatory Corporate Fun, which gets reality backward: productivity does make people happy, but happiness doesn’t make people productive.

The key reason these approaches fail is, they don’t focus on the one-two punch of real Strategy Execution:

  • First, create value for clients
  • Second, reward all stakeholders fairly and competitively

So your first priority must be executing your strategy for creating value for customers. Without that, your business is not sustainable.

Yet I constantly see people — including smart CEOs and business owners — who having once hired someone, will put that person ahead of the company’s mission.

In fact such bosses may be putting their own personal discomfort ahead of the firm. It’s hard to admit you hired the wrong person, or to admit that someone failed and should be reassigned or let go.

Drucker says in The Effective Executive:

To let such a man stay on corrupts the others. It is grossly unfair to the whole organization. It is grossly unfair to his subordinates who are deprived by their superior’s inadequacy of opportunities for achievement and recognition. Above all, it is senseless cruelty to the man himself. He knows that he is inadequate whether he admits it to himself or not.

This softness — or lack of courage — is the third way people fail to execute strategy. (The other two are “Over Focus on the Core” and “Re-Inventing the Wheel.”)

I know this because I’ve done it. When I found myself trying to pick my business strategies based on what my then-assistant could and couldn’t handle, rather than on what my skills could deliver and what clients most needed, I finally realized I was hurting everybody involved. And I was doing it because I didn’t want to have a difficult conversation.

(Yes, in the short term, you may need to pursue the work that your people can deliver well. Long term, you need to grow or recruit people to deliver the work your ideal clients most need.)

Here’s how to tell if you’re putting people first in the wrong way:

  1. Do you see the same errors occur again and again, and nobody changes systems or reassigns personnel to create different outcomes?
  2. Do you see the same people struggle in the same way, and nobody holds them or their boss accountable for making changes?
  3. Do you see people obviously stuck in a role where they aren’t a good fit?
  4. Are you going after less-profitable work because that’s what your staff can handle — and have you been doing that for more than a year?

If you said “yes” to two or more of these, you have a systemic problem. Seek help. For everybody’s sake.

Tom Cox is a Portland area consultant and executive coach. He helps leaders exceed their business aspirations.

 

Comments   

 
Guest
0 #1 RE: Stop putting people first - put profit firstGuest 2013-04-16 14:11:45
This is an excellent article. If you give me the bit link, I will send it around to others.
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Guest
0 #2 Refreshing look at people vs. profitGuest 2013-04-17 00:30:25
It's refreshing to hear someone talk about how important it is for a business to make a profit! Doing so does not mean that you treat employees or contractors unfairly; quite the contrary: once you have the profit focus, you align your people with your clients. Great contrarian insight. Thanks, Tom!
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