By: Darrell Crawford, Managing Partner

Profits are on the minds of every business leader right now, specifically, how to get businesses back to profitability post COVID-19.

As we discussed in our previous posts, while accumulating wealth and generating profits shouldn’t be the ultimate goal of any organization, the reality is finances are the fuel that propels companies forward. Without healthy profit margins, companies simply go out of business. However, companies that prioritize profits over maintaining their purpose or taking care of their people will also never experience long-term success.

When, employees are equipped, empowered and take on personal ownership of the company’s purpose, you unlock the most valuable commodity organizations have.

Within the Prioritized Leader framework, we have written about Purpose, People, Pace and Perception. Now we will look at Profit and address how well your organization cultivates an owner mentality with its employees. Does it have a robust financial system in place? Is there transparency throughout the organization? Is it efficient and productive, or does it suffer from chaos and apathetic employees?

Profit: the fifth priority

All of us want to be part of organizations that are profitable over the long-term. Yet, few companies carry this distinction year-in and year-out. What does it take to be one of them? Ownership and order make it possible for your company to sustain financial health over time. How well you do in relation to these two key-essentials determines the true mindset of your organization around profits.

The profit quadrants

If we were to plot ownership and order on a graph with “high ownership” on the top vertical axis and “high order” on the far-right side of the horizontal axis you would see four quadrants. Ownership is about employees having the mindset of an owner and taking responsibility for their jogs. Order is a robust financial system along with transparency throughout the organization with financial accountability in place for every member. Of course, only one of these four quadrants are ideal.

High Ownership, Low Order

(Entitled)

High Ownership, High Order

(Responsible)

Low Ownership, Low Order

(Apathetic)

Low Ownership, High Order

(Anxious)

High ownership, low Order (entitled)

The top-left quadrant of high ownership but low order generally means most employees and the majority of leaders believe in the purpose of the organization and take responsibility for their roles.

However, the company likely does not provide sufficient accountability or have robust financial systems in place. This opens the door to poorly aligned or wasteful spending. By diverting financial resources to things that aren’t aligned with the organization’s vision and values — or to things that are simply unnecessary — the company invariably weakens. In spite of the high level of ownership by key players, this organization will struggle and never reach its potential.

Low ownership, low order (apathetic)

These companies have employees that are largely “renters” and have little chance of succeeding in the long-term. In these organizations, employees don’t feel a sense of ownership or responsibility. Nor are finances structured and kept in good order, according to best practices.

When a sense of ownership among employees is lacking and a system to order finances and measure success doesn’t exist, sustained viability is impossible. The organization needs to make significant changes in both of these areas, often from the top down, to right the ship.

Low ownership, high order (anxious)

Organizations in this quadrant have employees that don’t engage with the company’s mission and purpose, but the company operates with robust financial systems and order. Even with a robust financial system, disengaged employees are unsure and anxious about the future of the company and will exit during the first sign of a downturn.

High ownership, high order (responsible)

These companies are full of purposefully engaged employees who see a clear connection between the organization’s mission and their role in its success. They’ve built and carried out healthy financial processes and procedures. This type of organization is profitable short-term and long-term.

Given every company’s desire to be in this quadrant, your next step is to assess your own leadership. Are you proactively influencing people toward taking ownership while assuming the responsibility to keep things in order? What would it be like if your organization had employees that acted like owners? What would it mean to the employees of your company if they could see a clear connection to how their job relates to both purpose and the overall results of the company?

If you need help in working through these questions, The Vantage Group can help.

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