Every person in your organization must understand this one principle – what they do in their role contributes to the profitability of your company. Profitability isn’t simply a goal to be achieved, it’s the outcome of the work your people do every day:

How they serve your customers.
How they think about the problems that have to be solved.
How they pay attention to detail.
How they lead and follow.

It’s the direct result of your commitment to them and their commitment to you.

Reality Check

You can make a profit and still not maximize profitability. That’s because profit is an absolute number – revenue minus expenses. While profitability is a relative number – a percentage that expresses the ratio between profit and revenue.

If profit measures how much money a company is earning, profitability measures the impact of your people on your business.

When two companies make the same profit and one is significantly more profitable, go straight to the people as the reason why.

The How

Simon Sinek wrote a great book titled Start With Why. If you haven’t read it, let me encourage you to do so.  Interestingly enough the subtitle of the book is even more intriguing to me: How Great Leaders Inspire Everyone to Take Action. Did you catch that? For all of the emphasis on why, when it comes to maximizing profitability through people, the most important word is HOW.

How does every person in your organization contribute to the profitability of your company in their role? That’s a statement first and a question second by design.

It’s the responsibility of leaders to consistently and relentlessly communicate how what people do, day in and day out, directly contributes to the profitability of their company.

When people are developed with the awareness of their impact, they have a lens through which to consider their actions, choices and decisions.

When this occurs, they have the ability to affect outcomes. Why? Because they can then answer the question of how on their own.

Have the Conversation

Clarity comes from understanding. Defining someone’s contribution to success allows them to be sure that what they do matters. If you can’t, don’t or won’t establish the how, you’re likely left with an assumption.

Do you really want to treat profitability as an assumption? Do you want to assume that people know the impact of their choices, decisions and actions or would you rather know with certainty?

Clarity is the result of communication.

It’s concerning to me how often really strong leaders are simply willing to assume that communication about profitability is occurring. Have the conversation with people. Engage them in awareness and understanding. Pose the scenarios and require them to think it through and work it through.

People drive the performance of a company. From the entry-level to the C-Suite. If you disagree, then I’m going to ask you why that person has a job in your company. We all benefit when we’re challenged to think about how what we do contributes to the profitability of our company.

To begin the conversation just ask someone what they did really well today or how they could have done better today. The question leads to awareness which gives you insight and that insight allows you to make better choices and decisions to achieve better outcomes through people.

Thoughtstarter

Make a point over the next week to ask several of your employees, team members or associates how they contribute to the profitability of your company in their role. Do they have the answer? Do you see their awareness, or lack of awareness, reflected in their choices, decisions and problem-solving ability?

Have you made a conscious effort to consistently communicate how individual roles contribute to profitability? Have you created a culture in which your people can answer that question independently?

Final Thought

As a leader, never forget that every area of your business, including profitability, is about one thing.

People.

Here’s to communication, clarity and results,

Brent

P.S. Let me know your thoughts on this week’s blog in the comments.