Blog Article

Look beyond the balance sheet! It’s not all about the money

Posted by Graeme Yell

Graeme Yell

There are various forces at work in the world that people tend to take for granted: apples fall from trees; smoke rises; your boiler breaks down during a  cold snap (as I have recently been reminded to my dismay – brrrr!); toast falls  buttered side down; economies grow.

Ed. note: This blog originally appeared on the London Loves Business website, where Hay Group consultant Graeme Yell has a regular column.

There are various forces at work in the world that people tend to take for granted: apples fall from trees; smoke rises; your boiler breaks down during a cold snap (as I have recently been reminded to my dismay – brrrr!); toast falls buttered side down; economies grow.

You would think that we would have also got used to a flat economy: it has been with us for several years now and may be around for considerably longer. Yet our collective view of the world is shaped by the belief (whether conscious or not) that outputs grow all the time, with as much inevitability as gravity. We have to reconsider this assumption. Not only is it lazy thinking, it also drives a whole range of unintended (and often very unwanted) consequences in organisations, and society as a whole.

If as a CEO, I promise to deliver growth in profits to my investors, I have to find a way to deliver it. So when revenues are flat, that means cutting costs – or the more euphemistic “doing more with less”. I’m not against cutting costs for good reasons, but trying to force increased productivity down this route is a bit like making your car go faster by scraping off the paint and getting rid of more and more components. Sooner or later you will run out of bits to jettison, but long before you reach that point you will have made it pretty rubbish and unappealing to others. There is a serious point here about value, sustainability and legacy.

At the root of this is the insistence from so many organisations in setting purely financial goals – we will double profits, we will grow market share, we will reach £x revenues, and so on. This is unimaginative and uninspiring. Why will employees get excited about working for an organisation whose ambition is just about making money? And when did we get so cynical that we forgot that it is fun to be excited and engaged at work (even measuring this has become largely a tick-box exercise)? I believe that every organisation can, and should, express their purpose in terms that is beyond just money. (If you can’t work out how, ask me.)

Quite aside from the lack of inspiration, this financial fixation is unsustainable and deeply unwise. I’m going to take an example other than banks – who I think have had more than their share of stick recently – so let’s consider the rapidly emerging scandal of the use of horsemeat in ‘beef’ food products. The underlying motivation driving this is clearly “doing more with less”, which in this case means misleading consumers in order to make better margins.

As long as we persist in the lazy assumption that economies must grow, and consequently so must organisations, we create the conditions where unethical behaviour can flourish. These are amplified when organisations don’t stop to think about, or communicate to people, what they exist to do beyond maximising returns. Many clients are asking me about culture change at the moment, and indeed the C-word currently appears extensively in the media.

Changing culture is a complex undertaking which requires taking a wide perspective and co-ordinated actions on a broad range of fronts; organisations who recognise that they need to do this are taking a brave step towards transformation for the better. However, unless you have worked out what your organisation exists to deliver beyond pounds and pence, you won’t be able to get it right.

Although ‘flat economy thinking’ sounds a bit depressing, there is a very uplifting message here – the recognition that organisations cannot always be generating improving returns should lead us to think about what organisations really can do, for the benefit of consumers, employees and society.

 

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