What Does “People Over Profit” Mean
As a core business value, people have to come first. At my business, our first core value is “People matter more than anything. Every person benefits from the growth of our company and the success of our clients. Every client benefits from the growth of our people and the success of our company.” One core issue is that every company seems to have a “people come first” (or “employees come first” or “customers come first”) mentality, but they really mean “profit comes first.”
I challenge business owners and leaders to put people first. Profit is still important and means that your business is sustainable. No unprofitable business is sustainable for more than a few months. Profit needs to be maintained. I encourage companies to explore the idea that they will recognize great profits by focusing on people. By giving employees great pay, benefits, respect, and a great work culture, they will be more engaged and productive. By giving customers great quality, authenticity, and respect, they will be more engaged and loyal. By giving communities care and consideration, they will be more supportive.
We are in a capitalist economy and your employees depend on you for the well-being. They give their blood, sweat, tears, and energy to you in trade for their health insurance, their pay, and their financial security. It is your responsibility as a corporation to generate a profit so that you can continue to put your employees first. It is your purpose to generate profit so that the people who work at your company can continue to deliver goods and services to your clients.
Choosing people over profit is important in those tough business decisions in those tough economic times. It is an intentional decision that also needs to become cultural. Is there anything you can change in how you hire, fire, compensate, and offer benefits to your employees that would underline this thought? Is there a process that you can change to make it easier and more enjoyable for your employees? Do you make your customers sign a contract (if so, why)? Are you taking steps to improve the lives of the people in your community? Are you taking steps to improve the lives of your employees’ children?
How do you make a cultural change in a company?
1. Take words that stand for what you are saying (like “people come first”).
2. Make it a mantra to your board, your client communications, your executive team, and your employees.
3. Tie executive team bonuses and compensation to these values.
4. Purposely frame every decision with questions like: Is this right for the community? Is this right for my clients? Is this right for my employees?
5. Practice being intentional about prioritizing your employees.
6. Revisit this value often and communicate it often.
Think “People Over Profits” On Purpose
The great economist Milton Friedman is against the idea. Capitalism’s natural bent is to exploit and abuse all resources to make a profit. Milton Friedman’s belief was that the purpose of any company, corporate leader, and employee is to make profit. He said “there is one and only one social responsibility of business to use its resources and engage in activities designed to increase its profits so long as it stays in the rules of the game, which is to say, engages in open and free competition, without deception or fraud” (Prevos, 2009).
Milton Friedman would be against the idea of people over profits. In fact, any corporate social responsibility (CSR) program which focuses on environment, charity, etc. would be frowned upon by Milton Friedman. He said “has been the claim that business should contribute to support charitable activities and especially to universities. Such giving by corporations is an inappropriate use of corporate funds in a free-enterprise society” (Prevos, 2009). In an economist’s mind, this may be true, but that thinking is also callous and ignorant of the market’s demand for civil and social engagement.
Right now, the market demands social responsibility. The market is quick to shun corporate abuses. Shareholders and consumers are investing in and purchasing from companies based on corporate ethics, when they have a choice. Companies that are doing good for their employees through the COVID-19 pandemic are being celebrated, while other corporations are wearing dunce caps (even though some are profiting off of the pandemic). In a time when there is a common shout of “eat the rich” and mentions of guillotines regarding the 1%, it would be wise to put people before profits.
COVID-19 Unemployment
The unemployment rate in the United States is currently 7.9%. 22 million people have lost their jobs since March as a result of the coronavirus pandemic (Leticia, 2020). Now, the pandemic is spiking with more new infections than ever before. America has given up on the idea of “flattening the curve.” Everyone is back at work, back at school, going to bars, restaurants, and sporting events. People are refusing to wear masks and social distance. Economically, this feels like a low, but based on the rate of infection, we are only on the way down.
In our discussion of People Over Profits, it is important to know that this article is being written by an America in November of 2020, at the height of the COVID-19 pandemic. As a business leader, I am having to make hard decisions about my company and my people. There will be a lot of dark days ahead, and I encourage all business leaders to put people first. Look at your all your stakeholders, not just your shareholders. Consider how your customers and employees are doing, not just your executive bonuses.
Employees Are Worked to Death
There is a stakeholder dichotomy at corporations: The shareholders and board of directors usually wants to maximize profits, often at the expense of the environment, their communities, and their employees. Cost-cutting gives a short-term burst of profit to the shareholders, while hurting other stakeholders. Companies say they care about their employees, but when choosing between increased dividends and offering a benefit to employees, they often choose to take care of their investors.
Companies often approach taking care of their employees the way that they approach sustainability and green marketing: do enough to look good. When faced with choices that have a significant cost to the company, corporations usually retreat from their community-invested, employee focused stance. Look for layoffs in the news, search for terms like “abusive companies” or “toxic workplace.”
One example has been Apple. In China, the Foxconn plant had to install suicide nets because 14 underpaid laborers assembling iPhones leapt to their deaths. Packed in prison-esque dorm rooms of eight employees, working 12 hours a day, and ratcheting up the stress levels and quota demands, Foxconn normalized depression and suicide. Groups like Students and Scholars Against Corporate Misbehavior (SACOM) exist to publicize the issue, and they coined the “Heartless Apple, Rotten Apple” mantra around the abuse (Merchant, 2017).
Abuses are not limited to China. According to Aaron Schat’s study, “41.4% of American workers reported exposure to workplace psychological aggression during the preceding 12 months” and 6% reported exposure to physical violence. On a weekly basis, 13% of workers in the United States are exposed to psychological aggression and 1.3% of workers in the United States are exposed to physical violence (Merchant, 2017). Why are U.S. companies abusing their labor force? There is such a pressure for profit and performance, meeting increasing quota goals, that the United States labor force is under more stress than ever, increasingly in toxic workplaces.
In my multicultural business classes, I have seen that Americans from the United States and Mexico have a cultural difference from the rest of the world. Americans work themselves to the bone, work longer hours, have higher work stress than European countries. 46% of Americans say they never have time to relax, 33% admit to working too hard, and 38% say they work too many hours (Valentic, 2019). As we’ve moved to a more remote, work-from-home footprint, people are working even more hours, as they can now work during time that was normally lost to their commit. Some Americans have begun working all the time since their homes are now their offices, there is no separation between the two. Americans companies are profiting from these gains in productivity from their remote labor force.
As the political and economic stresses reached a crescendo, and as unique situations with the pandemic begged for attention, I found myself reaffirming my top personal ethical value: people over profits.
Layoffs? Try Empathy
Especially with the pandemic, layoffs for most corporations have been unavoidable to an extent. Yes, there was a stimulus package which granted loans to small businesses for the Paycheck Protection Program, but many small businesses were not able to get it and large corporations did not qualify for it. When customers stop buying and income dries to a trickle, it is understandable that employees have to be laid off.
Here I would like to make a distinction that is often hard to identify: I absolutely disagree with layoffs in order to maintain some huge profit margin, executive bonuses, and dividends to shareholders. A layoff should occur when needed to ensure the survival of the organization, not an executive’s $10 million annual bonus. When that is the decision, that $10 million bonus and those profits should be used for the labor force, to feed families, to provide benefits, and to retrain.
Lack of empathy for your team and lack of loyalty to your employees is obvious when you trade their lives for your bonus. On the other hand, if your employees see your team forgoing their bonuses and communicating to shareholders that they are retaining the staff (even if it causes slightly lower stock prices), they will be your biggest fans. Employees that see their leaders fighting for them will fight for you.
People understand layoffs when the company has lost all cash flow and momentum, but seeing executives pat themselves on the back while thousands of families lose their homes and well-being, it is obvious that the executives are being bonused for creating this pain. Since people cost money, bonuses and dividends are higher when people are slashed. Try being more human for your employees, rather than living on pure greed and deception.
According to Dale Partridge, author of “People Over Profits,” the third stage in the evolution of a company is destroyed by greed. This era is characterized by greed, deception, and being unethical. This is where a good company starts to go sour by putting profits over people. This is when disproportionate wage gaps appear. When people start preaching about late stage capitalism, this is what they are talking about. I make a point to make sure that I am not a leader like that. I encourage you to intentionally put people first. See Dale Partridge’s TEDx Talk regarding the issue: https://www.youtube.com/watch?v=-o9mENH56I8
Being the decision-maker at my company, I make these decisions all the time. It hurts. It having to fire or do layoffs. The key when I have to do layoffs is not to robotically cut people, thinking of their payroll numbers. It is okay to feel that regret and acknowledge that you are laying off people that have families, bills, mortgages, lives, dreams, and needs. Being able to connect with your staff while giving them your best-wishes is an important ability.
People Over Profits: A Personal Ethical Value
I refuse to treat people like cogs in a machine to make a profit, because devaluing those people leads to abuse. Times come (like the COVID-19 pandemic) when companies need to make a decision to keep people employed, insured, and secure regardless of the effect on profit. As a leader in an organization, this will be difficult when shareholders, the board of directors, and even my own compensation plan’s structure may be based purely around market performance, but I intend to stay firm to this value.
Yes. This is unpopular as a leader. My job as an executive depends on my ability to make the hard decisions that deliver value to the business. I translate delivering value to the business as: My purpose is to build and invest in my team so that it can deliver value to the business.
Words Are No Longer Believable. Actions Are.
There are a lot of terms thrown around implying that companies care about people. Companies say they have a corporate social responsibility (CSR) program or that they are a social enterprise, focusing on people and social causes. Every corporation has a CSR program and sites touting how great they are to their customers, employees,
Act based on good morals. Good morals make for great business, especially in capitalism. You can still make a great profit and grow your company with a loyal team and a loyal customer base while putting people over profits.
References:
Merchant, Brian. (2017). Life and death in Apple’s forbidden city. Retrieved from https://www.theguardian.com/technology/2017/jun/18/foxconn-life-death-forbidden-city-longhua-suicide-apple-iphone-brian-merchant-one-device-extract
Miranda, Leticia. (2020). Economy added 638,000 jobs in October vs. 530,000 expected, unemployment rate falls to 6.9 percent. https://www.nbcnews.com/business/economy/economy-added-638-000-jobs-october-vs-530-000-expected-n1246743
Prevos, Peter. (2009). Milton Friedman on Corporate Social Responsibility. Retrieved from https://lucidmanager.org/management/milton-friedman-corporate-social-responsibility/
Schat, A., & Frone, M. R. (2011). Exposure to Psychological Aggression at Work and Job Performance: The Mediating Role of Job Attitudes and Personal Health. Work and stress, 25(1), 23–40. https://doi.org/10.1080/02678373.2011.563133
Valentic, Stefanie. (2019). More Than Half of Americans Have Unhealthy Work-Life Balance. Retrieved from https://www.ehstoday.com/health/article/21920133/more-than-half-of-americans-have-unhealthy-worklife-balance
Art Ocain is the President & Chief Operating Officer at MePush, Inc. a managed service provider that serves IT architecture, operations, and cybersecurity needs across all verticals. Art has been in IT for over 20 years and has been a tech in the trenches as well as a manager in web hosting, internet service providers, enterprise IT, as well as services for the SMB market. You can read more on his LinkedIn profile: https://www.linkedin.com/in/artocain/
