I’m going to ask you some questions, some really tough questions. I want you to stop and answer those questions, which means you probably ought to have a pencil and paper in front of you, and you need to be ready to write some things down when I ask you. You may want to stop this as you go through and talk among yourselves about what it takes to be successful in business when I ask you this question.
First question is this, why does your business exist? You have an answer to that? You may say a variety of things. Let me break it down to one thing, because your business exists for one reason and one reason alone. It’s to make money.
It’s to be profitable. If your business ceases to be profitable, it goes out of business. It looks to me as I travel around and work with a variety of companies, and I’ve spoken to over 400 of the Fortune 500 companies every single week.
I’m on the road someplace in the world talking to different businesses and corporations and associations made up of business people, and I shop a lot. I’m out. I’m on the streets.
I’m in businesses every single day, and what I’ve noticed from going around and talking to people and shopping and being a customer is that businesses seem to have forgotten why they’re in business. They forget that they exist for one reason and one reason only, and that is to be profitable. Now let me tell you what it takes to be profitable.
Do you know? Well, you should know. You’re in business. What it takes to be profitable is that you’re able to sell your product or your service for more than it costs you.
The difference between what it costs you and what you offer it for, what you sell it for, is called your profit. Now, of course, that’s a very simplified approach, but I kind of like a simplified approach. I think we’ve complicated all this stuff way too hard.
It means that your product has to sell for more than it costs you to buy. It means that your service. You have to sell it for more than it costs you to provide.
It means that your people, your employees, they have to be worth more than they cost you. Are they? That’s a tough question. Are they worth more than they cost you? You have to figure that out.
And so today, as we go through the different aspects of business, I want it always to relate back to, is it making you money? If it doesn’t make you money, then it’s worthless. That’s right. It’s worthless.
Now, you may have some altruistic approach to business and say, no, I’m here to serve people. Well, serving people is important. Believe me, we all exist to serve others well.
The better you serve others, the better you are in turn served. The better you serve your customer, the better the customer serves you. I am all about service, but that service must be provided at a profit.
And if it’s not provided at a profit, you go out of business. Again, we get caught up in things that don’t make any sense, things that complicate the way we run our businesses, things that get us off track, and things that do not make us more profitable. Here’s one of the things we get caught up in that keep us from being profitable.
First of all, we don’t have clear priorities. Let me ask you right now, as an individual, not collectively, as an individual, what your priorities really are within your job? Now, if you’re the janitor, you may say, your priority is to keep the floor clean or to keep the restrooms clean. Okay.
If you’re in sales, you may say, well, my priority is to sell new customers. Okay. You might be in the customer service department.
You might be in the warehouse where your priority would be to make sure that the boxes get stacked. See, as individuals, that’s what we think our priorities are, and you’re right to a point. But overall, collectively, we also have priorities in running our business, and the problem is is that we haven’t, as leaders, communicated what the priorities of the business are to every single employee within the organization.
Overall, every single employee’s number one priority is to keep the business profitable. And profitability always comes down to two things, two things only. You have to reduce what things cost, or you have to increase how much you earn.
On a personal level, if you want to have more money, you spend less, earn more. Same thing applies to your business. Cost less, spend less, earn more.
That’s what it comes down to, revenue and expenses. So the problem is that we have people in their individual jobs that don’t understand that what they do, their priorities, every single day when they go to work, has to play into expenses and profitability. They don’t understand that.
We have not stopped and communicated to the janitor that what he does, keeping that floor clean, directly relates to how profitable the organization is, and it does relate. We haven’t told the guy in the warehouse how what he does, stacking boxes or getting things out the door or unloading trucks, we haven’t explained that what he does directly impacts how profitable we really are. Instead, we get caught up in a world of priorities that have nothing to do with profitability.
Let me tell you what, especially in terms of two different areas, we need to let everybody understand that what they do has an impact. Selling and customer service. I’ve talked to companies.
I made a phone call the other day. I was complaining. Gee, can you imagine that, me complaining about bad service? But this is what they said.
You know, you’re talking to the sales department. What you need to be doing is talking to customer service. You see, the problem is we’ve created a department that handles customer service.
Customer service is everyone’s priority. Again, we have not communicated that to all employees of the company. We think customer service is a department.
It’s over there. See, there’s a banner above. There’s a sign up there that says customer service department.
That’s where you go to get service. No, service comes from everybody. We have a sales department.
We haven’t communicated to everybody that selling is also the responsibility of every single person within the organization. Everybody is into selling. I mean, again, I’m going to take it back to the janitor, to the guy in the warehouse, to the receptionist.
It is everybody’s job to sell the company to that customer. So the overall priorities of everybody within your organization have to be selling, and I’m not talking about here’s our product. Would you please buy it? That’s not selling.
Selling is making sure that you’ve created an organization other people want to do business with. Eventually, somebody has to ask them to buy this product, this service, what you do, what you sell, what you offer, of course. But overall, selling, making yourself the kind of people, the kind of organization people want to do business with, that’s everybody’s job.
Serving the customer, that’s everybody’s job. Have you communicated that to every single person in your organization? If you haven’t, you’re messing up. They don’t understand.
They don’t see how selling and customer service is their job, and they don’t see how what they do directly ties to the profitability of the organization. If they did see that, they might get more interested in what they’re doing and see that it plays a part in the overall picture. Next, here’s one of the things that we do that stands in the way of our companies being more profitable.
We reward the wrong things. Stop right now and ask yourself this question. What do you reward within your company? I bet if you’re a manager or a leader, you reward people who come in early and stay late.
Let me tell you right now, that’s stupid. Yeah, I admire people who come in early and stay late. Yeah, right.
Here’s the problem with people who come in early and stay late. They probably weren’t working in the number of hours that you paid them to be working, so they have to come in early and they have to stay late to get the job done. Either that or kiss-ups, and they want your attention and they want you to believe that they’re working harder than they really are.
Let me tell you what. I’ve never seen a job that could not be done in the number of hours allotted to it. Never seen a job.
Really, I don’t believe one exists. There’s not a job out there that could not be done within the number of hours allotted to it if the person actually worked while they were there. The problem is people don’t work, and we end up rewarding them for not doing their job by saying, look at Sally over there.
She comes in early. She stays late. She skips her lunch hour.
Well, if sweet little Sally over there worked during the number of hours you paid her to work, she wouldn’t have to do those things. So chances are you are rewarding the wrong thing within your company. We reward workaholics.
That’s stupid. Don’t do that anymore. What about the guy who’s able to get his job done in two hours? He doesn’t need eight hours.
Let me tell you what. I’ve got an employee. His name’s Vic.
I have no idea when he works, how much he works. I don’t know. I really don’t.
I don’t have a clue. We don’t work in the same city. I’m very fortunate I work in a company where we don’t have to be in the same city.
Vic seems to me like Vic’s off more than he’s on. He takes vacations all the time. He’s never around when I call, but the work gets done.
Now, if it takes Vic two hours a day to get the work done, or if it takes Vic 20 hours a day to get the work done, I don’t care. You see, I pay for the job. I pay for results.
Now, how Vic and I do our business is different than the way most of the traditional businesses work, but the concept is the same. You have to ask yourself, what are you paying for? What are you paying for? Results. That’s it.
You want the job done. Now, chances are you’ve got some people who are able to achieve results very quickly, and because they’re able to achieve their results very quickly, they’re penalized. Yes, they are.
They’re penalized because they got the job done fast. Because we like to see people get real caught up and take a long time to do their job. Because if we see them working really hard, well, then they must be better employees.
In other words, pay attention to this. In other words, we reward activity, and we let accomplishment go unrewarded. Bottom line, what you always pay for is results, accomplishment.
Are they getting the job done? You need to stop and look at everybody who works for you. You need to stop and look at yourself. What are you doing? Are you focused on activity, or are you focused on accomplishment? The most important thing is always what’s getting done, not what people are doing.
I don’t care what you do as long as you’re getting the right things done. It’s a total shift in how we look at jobs. It’s a total shift in how we reward people on the job.
It’s a total shift in our thinking about what it takes to be successful. The people who are most successful are the people who get things done, not the people who stay busy. The companies who long-term survive and succeed the best are the companies who get things done, not the companies who stay busy.