The Connection Between Parenting and Profit
By Steve McKee
Profit isn’t an option. Not only is it management’s obligation to shareholders, it’s what enables reinvestment, retooling and continued growth. And some say it’s the ultimate scorecard of how well a company pleases its customers. The trick, of course, is “parenting” that profit. Like an unruly child, profit isn’t easy to raise.
Believe it or not, the key to parenting — companies as well as kids — is by focusing on the heart.
That’s an insight I picked up years ago from Ted Tripp, author of Shepherding a Child’s Heart. At the time my children were small and my wife and I were doing our best not to screw them up. (I’m happy to report that for the most part we succeeded, although I’m sure they could point to plenty of exceptions.)
Tripp’s thesis is that parenting is not about creating obedient automatons, but raising wise, considerate human beings who can thrive on their own. A child’s behavior — good or bad — isn’t the issue, only the manifestation of it. Behavior comes from the heart, and that’s where we should focus our attention.
I was reminded of this when I read about a recent study that demonstrated how companies with positive internal cultures tend to be more profitable over the long term than those that focus solely on financial performance. The study tracked nearly 100 auto dealerships over a six-year period, benchmarking employee engagement and sense of mission and tracking profitability over time.
The results demonstrated, in the words of one of the study’s authors, that “culture causes performance, not vice versa.” And an important corollary was that it took a while for the performance differences to become apparent. Those companies that had positive corporate cultures tended to become more profitable over time, while the profit performance of their less-enlightened peers tended to degrade over time.
That’s a key concept: “over time.” The “culture of the now” in which we live permeates both our personal and professional lives. The average tenure of a S&P 500 CEO is only 7.4 years, while the average CMO lasts just 44 months. The pressure to demonstrate immediate results is immense, and that pressure flows downhill, from the c-suite to the management team to the rank and file.
In the short term, pressure can be motivating. Companies, like parents, can focus on performance and almost certainly prompt initial, outward compliance. But the extent to which they ignore the principle that behavior comes from the heart is the extent to which they can expect trouble down the road.
Employees, like children, ultimately make their own decisions, and sooner or later will gravitate towards people who treat them well and environments in which they can thrive. Wise leaders recognize this and, while not neglecting performance metrics, focus on the heart. As John Dijulius, author of The Customer Service Revolution, puts it, “What employees experience, customers will. The best marketing is happy, engaged employees. Your customers will never be any happier than your employees.”
Most of the struggling companies with which my firm consults have internal issues that are at least as significant as the external threats they’re facing. We have found through our research and hard-knocks experience that a focus on achieving business objectives isn’t enough; creating a healthy environment in which those objectives are to be accomplished is just as important.
Companies that thrive long term understand that taking care of business means taking care of their own. They understand the wise words of another parenting expert, Josh McDowell: “Rules without relationship lead to rebellion.” It’s as true at work as it is at home.
Co-founder and author, Steve specializes in addressing the most meaningful problems. Call Steve when you want to change the world. He’ll have a thought (and some research) on that.
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