How Leadership and Culture Impact Business Profit

Business Culture

Business exists solely to make a profit! Controversial? Possibly….

But this is worth investigating because I feel this point is critical to business and personal success. And it is in some ways counter-intuitive to what many of us have been led to believe.

It is also not my view.

The Purpose Of Business

A few months ago I read a quote that I understand was attributed to Bill Gates. It contained several points related to business and the context of how an employee should ‘feel’ about working for a business.

Essentially, the argument that business exists primarily to make a profit was the premise.

Now, whether this statement reflects on Bill Gates or Microsoft positively or negatively is not my point.

I  consider that business exists for other reasons. Whilst researching this blog I came across literally hundreds of sites and quotes arguing that business should exist for a higher purpose. Fair enough but not really my point either…well, not entirely.

Making a Profit

Since reading this initial statement, I have been uncomfortable with the proposition.  I see profit as an outcome of many decisions, culture, processes, engagement and other core elements influenced by business leaders every day.  Among other contributions,  leadership is most critical to engagement, effectiveness and ultimately a strong influence on profit.

So, how do you influence leadership effectiveness and how is it linked to profit?

To provide some context, I recently left full-time employment to start my own consulting and people development business. I have already made mistakes. I am sure there will be plenty more. But, one thing I am very clear about is the reasons my business exists and appeals to myself and others.

The reasons why I am confident of success remain the same as what has driven my achievements and satisfaction in the business world for the past 25 years.

I understand and live my values, care about others implicitly and am driven by a core need to make a difference.

Designing My Business

My teams and peers have recognised this in the past and my current and future clients recognise this now and will continue to in the future. It is clear that my business exists to assist others, as this is a personal passion and a company mantra. The two are not mutually exclusive.

Engaging your team members and providing the leadership to positively impact their performance is a great base to work from.

Profit first or as an outcome -it is a classic chicken and egg scenario. Or is it?

If you subscribe to my point that profit is an outcome then it implies that there are contributing elements influencing this as inputs. I may be naive and look back at statements such as this in years to come with unease or maybe even embarrassment, but I cannot help the overwhelming belief that business exists for more than simply making a profit.

Putting People First

In fact, my view is that business should exist for its people first, which has a direct and inherent implication on performance, engagement and effort delivered by your employees.

This is a benefit for business as it is something your customers feel also.

A culture built on this philosophy is self-replicating and self-fulfilling in that it builds confidence, certainty and direction both internally and externally….and impacts profit.

Your employees will not necessarily ‘buy- into’ the values and philosophies of your company just because they are presented. In fact, if your team member’s see these values, mission statements and similar as being incongruent with what they see and feel every day, these tools can prove more damaging than not creating them at all. You are setting up false standards and expectations.

Effective Leadership

Effective leaders, displaying the company values, primarily aligned to their own, provide significant power to your business. Unfortunately knowing this and taking appropriate action are not the same thing.

It is difficult to develop good leaders and managers.

It is even more difficult to have this positively impact all employees as a result of a strong leadership team. You are dealing with people and the related inconsistencies, beliefs, passions and many other attributes inherent in all of us.

Embrace this diversity! If you don’t, then leadership is not for you.

Emotional Intelligent

Emotional Intelligence traits, the desire to help others, assisting your team members to grow, aligning the work they do with their passions and portraying similar philosophies aid positive culture.

The willingness to acknowledge development areas and take appropriate action, whilst also building on individual and team strengths are key. Along with other inputs, these create effective leadership.

The benefits of getting leadership right flow onto so many other aspects of your business.

My original point related to whether business exists for profit-making only. If this is your key goal I believe your employees and customers will smell it a mile off. It is essential to provide a product, service and create a culture that maximizes the opportunities to make a profit. Without it the business will not survive. However, profit is not the only or even the primary focus of business – your people are!

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———————
Steve Riddle

Steve Riddle is the owner of CoachStation
He is making a difference by focusing on leadership & people development
Email | LinkedIn | Twitter | Facebook | Web | Skype: steve.riddle36

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9 Comments

  1. WOW, Steve!!! A-M-A-Z-I-N-G article!!! Thank you.

    I have just recently left full-time employment to start my own consulting business as well. I can SO relate to everything you mention in yor article, including and especially this statement:

    “I understand and live my values, care about others implicitly and am driven by a core need to make a difference.”

    Let’s get linked in, shall we?

    Wendy Walker
    Ottawa, ON Canada

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    1. Wendy – Thanks so much for your kind words. I appreciate you taking the time to read this blog and comment. There is no doubt the psychological and potentially financial challenges of leaving full-time employment to move into consulting are real. But as I have told many people in recent months, it may sound like a cliche’ but I am a firm believer in finding what you love doing the most and do more of it! It sounds like we are both on the same page in this. Enjoy your day and consider us ‘Linked’.

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  2. Steve,
    We certainly agree on the need for a culture that values the employee and the customer, but without a constant focus on creating a viable business model and value built on profits we put at risk the same employees and customers we care about. Profits are to business what blood pressure is to the human body. How we live our lives and lead our businesses will certainly affect both but my body needs blood and a business needs profit if it going to survive and contribute to society. It’s profit that generates tax revenue for our community, enables investment in plant and equipment, hires employees, provides employee benefits and more. I need both profits and blood pressure to survive. After that, as you point out, our choices center around the quality and longevity of life we get from each of them.

    Greg Gauthier
    Foxwood Associates Inc.
    Management Advisors
    Green Bay, WI.

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  3. Hi Greg – thanks for reading my blog and for your comments. I certainly agree that profit is important…no vital. A business without profitability is not a business for long. By writing along the lines I have, I am hoping to challenge the premise that profit is the only business outcome that matters. Too often I have seen the goal of profitability maintained at the expense of other important business contributors, including employees. Your analogy of profits and blood pressure is excellent – it is a combination of many factors that makes a business a successful one.

    Coincidentally, I am reading Simon Sinek’s book, Start With Why, at the moment and last night read the quote within it attributed to Herb Kelleher from Southwest Airlines: “Employees come first and if employees are treated right, they treat the outside world right, the outside world uses the company’s products again, and that makes the shareholders happy. That really is the way that it works and it’s not a conundrum at all.” Controversial, perhaps but a point that make sense to me. Thanks again and enjoy your day.

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  4. Steve, I always love reading your articles, they are very thought provoking and easy to read. It made me think about the word “profit” and in many ways, it is like the word “rich” – people may think they are rich if they have a lot of money or assets. But other people feel “rich” having health, a loving family, a secure job etc. In the same way, you could argue that the word profit could be. It’s the quality of their experience, not the quantity of their wealth. The same could be said for “profit” – is is just the dollar value, or is there great satisfaction in having staff who are happy, healthy and commitment to the employer and the organisation’s brand – interesting thoughts huh!!!

    Keep them coming.

    Carmel McKenna
    Rehabilitation Psychologist

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    1. Carmel – thanks for your generous and thought-provoking comments. It is a great point you make regarding extending the definition of profit to incorporate outcomes of a psychological / spiritual nature and alignment between business and individual success. People are who they are and the closer the alignment between who we are and what we do creates greater opportunity for success at all levels. Enjoy your day!

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  5. [...] Your employees will not necessarily ‘buy- into’ the values and philosophies of your company just because they are presented. In fact, if your team member’s see these values, mission statements and similar as being incongruent with what they see and feel every day, these tools can prove more damaging than not creating them at all. You are setting up false standards and expectations. Effective leaders, displaying the company values, primarily aligned to their own, provide significant power to your business. Unfortunately knowing this and taking appropriate action are not the same thing. Read More: How Leadership and Culture Impact Business Profit [...]

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