Ten commitments to profitability

Commitment isn’t as popular today as instant success. But without commitment, short-term success isn’t guaranteed and long-term success is impossible.

By:  Janet Boulter

To accomplish the strategic direction for a company while building value within the organization, there must be a consistent focus on the “shared vision” and an agreement on the company’s mission. Commitment helps produce the focus necessary to generate the resources and time to accomplish goals. Continually communicating to employees, vendors, clients and shareholders that the management team is committed to accomplishing the corporate goals creates energy, enthusiasm and a spirit of teamwork organized around measurable results. To create and sustain long-term profitability for a company, focus the organization on the 10 Commitments to Profitability.

1. Craft visionary strategies. Every organization has to have a road map to know where they are going and how they plan to get there. When conducting strategic planning, make sure to focus on the short term but plan for the long term. Too many companies focus solely on managing the efforts of the short term revenue goals and lose their focus on their long term targets. Strategies are created for the long term (5-10 years) and business plans are implemented for the short term (1-3 years).
2. Adhere to core values. Every organization should have well-defined core values which serve as their guiding light. These values should be woven into every aspect of the organization and all company policies, procedures, and programs should reflect them. Continually communicating these values with employees, customers, vendors, and consultants will help make sure everyone is committed to ethical business practices. Core values are the foundation for an organization and should be integrated into every business strategy.
3. Build a strong reputation. A company’s reputation is its most valuable asset. Reputations are dynamic and everyone in the organization is responsible for maintaining it to the standards that have been defined by the core values. One bad incident can destroy years of goodwill with customers and employees. On average, if a person has a bad experience with a company they will tell 10 people. With today’s technology of blogs and message boards that bad experience can reach millions of people in just minutes. The most profitable companies have the highest percentage of repeat customers and those loyal customers are cultivated through a strong reputation.
4. Focus the spirit of competition. Competition is an excellent motivator if it’s managed properly. The key is to use competition to drive excellence in the organization. It is always more profitable to focus on an organization’s strengths, products, differentiators, market share, branding, industry position, etc. than trying to react to competitors’ strategies or initiatives. Work with customers to define what they want from an organization, what they value, and what they perceive the organization could do to improve.                   
5. Integrate quality at every level. There never has been and there never will be a respectable business model that justifies compromising quality to reduce costs. There are a myriad of companies who have sacrificed the quality of their products and services to improve their short-term profitability, only to lose valuable and often irreplaceable market share. Today’s profitable industry leaders are growing their companies through their customer loyalty programs which are focused on their continuing commitment to improving the quality of their organizations on every level — at every opportunity.
6. Inspire innovation and creativity. These two factors are the key drivers of growth in an organization. Many organizations today still adhere to a very strict silo-type, vertical management structure which severely hampers the ability of employees to contribute their ideas, suggestions, process improvements, etc. By creating a culture that encourages and respects employee contributions you can continuously outpace your competition and reduce employee turnover. 
7. Cultivate client/customer relations. An organization would not exist without customers/clients, yet most companies treat this valuable asset so poorly it is a wonder they still have business. The word “cultivate” implies continuing to improve and the word “relations” implies building a connection. A commitment to developing long-term customer relations should always be a core value for an organization. Studies show people who have had a good experience with a business will become repeat customers 70 per cent of the time. People who experienced a problem with a business became repeat customers 90 per cent of the time when the problem was handled properly. Since an organization’s most profitable customer is a repeat customer, it needs to have policies in place to keep customers satisfied.
8. Emphasize the “human” in resources. Creating a culture where employees feel valued and feel they make a contribution is the number one reason people cite for staying with a company. One of the fastest and most effective ways to erode profitability is with high-employee turnover. The cost of replacing an employee is on average more than three times the exiting employee’s salary plus benefits. That figure does not include the value of the intellectual property and relationships that the employee took with them. A company loses valuable time in new-hire training. On average it is a minimum of six months before a new hire is fully engaged in their job and closer to a year before they are making measurable contributions. 
9. Manage technology and infrastructure productively. With all the new technologies available today, it is imperative that companies manage their resources more closely than ever before. When considering investments in technology and infrastructure, focus on the long-term productivity savings and benefits rather than the short-term expense. Too many companies lose business by not upgrading when appropriate and too many companies lose money by upgrading more often than necessary. 
10. Be proactive. Adopting a proactive strategy saves time, energy and creates “goodwill” with employees, customers/clients, vendors and the community. Nine times out of 10 being reactive is only prolonging the inevitable — and doing so will result in higher costs, lower productivity and lost valuable customer/client relations. Building your reputation on “doing right” rather than “being right” will always lead to increased profitability.

Being in business today is fun and challenging. When planning for the future, create five to six BHAGs (big, hairy, audacious goals) and then craft growth strategies around these goals. The key to long-term, sustainable profitability is to build in flexible milestones to allow for adjustments in the economy, your industry, and changing market conditions. If you align your business strategies based on the 10 commitments you will create a company “built to prosper.”

Janet Boulter (jboulter@centerconsultgroup.com) is with Center Consulting Group which specializes in working with businesses and organizations focused on improving their business practices. 

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