The danger of focussing on profit alone

Profits are a good indicator of organisational performance, so why do businesses need to look beyond just the financial data?

With a drive to make money, the business community has historically measured its organisational performance by financial data alone. Your profits are up or they’re down but it is a one-dimensional view – and that’s one of the problems.

The human factors that determine the financial success of the business include:

•     The ‘leadership shadow’ (the influence of leaders’ attitudes, behaviours, values on the business).

•     Teams' abilities to communicate, innovate, contribute and take ownership of the success of an organisation.

These aspects fall within the remit – and the potential – of the HR department.

This raises another question - if these factors are so important, why do two thirds of HR Leaders feel undervalued by their CEO?

Profit-Related Behaviours

HR must make the first move by finding a common language with CEOs and develop, what we call, the ‘profit-related behaviours’ of their people. These are the behaviours of people within the organisation that link directly to the company’s financial health.

We have seen businesses who re-focus and develop ‘profit-related behaviours’ create a culture of innovation, communicate effectively and are able to transform ideas into reality. They master the basics and display a tenacious attitude to delivering results.

Change can only happen when: the leaders work with HR in order to be able to filter the behaviours down through the teams; HR also focuses on developing the management skills of the leaders; and both leaders and HR must together develop the people within the teams and encourage individuals to support each other to form an all-inclusive culture for innovation and excellence.

Development and measurement of profit-related behaviours:

1. Determine what the profit-related behaviours are for your business. This is a core piece of our development programmes – so if you are interested, please contact us.

2. HR and Leaders need to find a common language – and support each other. It is the leaders of an organisation who are ultimately responsible for the environment and culture, but it is often the HR department which can best gauge the climate created by the leaders and their style of management.

3. Create and develop innovative leaders to inspire and hold them accountable to demonstrating these behaviours on a daily basis. Many front-line managers, mid-level leaders, and senior executives have the attitude, aptitude and technical skills –but lack vital leadership or management skills, which must be developed and not ignored.

4. Demonstrate that HR driven activities can actually generate a significant return on investment. It usually falls to HR to deal with the ‘reality gap’ of a leader’s actual skill and ability to effectively develop people, and cope with low workforce morale, high turnover of staff, grievances, disciplinary action, high sickness absenteeism etc.

5. Measurement of ‘profit-related behaviours’ remains financial, but include additional supporting elements such as customer satisfaction ratings, mystery shopper results, staff skills development, meeting personal achievement targets as well as how effectively you are managing performance and creating a healthy and effective environment.

6. Invest in development – HR is not a dead cost. It can offer a significant return on investment. Leading facilities management company, Incentive FM Group committed to developing their people which contributed to a 400% increase in turnover in just 3 years. Read how they did it HERE.

If you want to discover and develop the "profit-related behaviours" required in your organisation, get in touch to arrange a call or meeting.

CALL US ON: +44 (0)1342 837 660