Ruthless Tough Minded Management Of Employees And Profit In The New Economy

Ruthless Tough Minded Management Of Employees And Profit In The New Economy

NewspaperCut-RIOAxes350

WARNING and a DISCLAIMER! This blog is not written on the pretence of helping everyone. It’s written specifically for the business owner and entrepreneur who is particularly interested in building a profitable business.

And frankly, why else would you be in business?

In a world of economic uncertainty and insecurity, where cash flow shrivels, pain and anxiety prevail, it’s never been more important for the business owner and entrepreneur to become ruthless and tough minded when managing their business for profit.

Some of you will find parts of this blog hard to swallow. But if you do, suck it up any way. It’ll introduce you to a new and better model for creating wealth in these tough times that seem to not want to end.

As a business owner and entrepreneur, what is your entrepreneurial responsibility?

Well, from an employee point of you, it’s definitely not job security or retirement guarantee.

It’s certainly not to provide a fun and enjoyable, happy place for employees to work that is devoid of profit.

After all without a profit, we all go home including the employee.

Although, management theorists and academics who have never owned a business may disagree on this.

Recent front page headline in the West Australian newspaper read “RIO AXES 350”.

The article went on to say how… “350 construction workers were stood down because RIO and BHP are looking to trim excess fat from less successful commodities to instead focus on their successful Pilbara iron-ore operation. BHP announces this week up to 100 job losses at its Olympic Dam project in South Australia.”

It seems all of this came as a surprise to the workers who commented that… “it started off like any other day and the next thing we know, we’re on a plane back home.” and that… “At Perth Airport, workers said they were angry and disappointed at the cost-cutting move.”

I like anybody else is sad to read about the loss of jobs and the pressure it places on those affected by such decisions. But I’m also a business realist who knows that the primary responsibility of any business owner or manager is to the shareholders.
In the case of big business, shareholders are those with shares in the business. In the case of small business, it’s the owner, you and me, who are the shareholders.

So your primary responsibility is to you.

What the academic theorists and most politicians don’t get is that when taxes go up and electricity goes up, when rents go up and the superannuation goes up, when wages go up, we put up prices and cut costs and that often means job losses.

Bottom-line, businesses don’t pay for the taxes and the increases and loss of profit, clients do and sometimes, employees do by way of losing their jobs.

So I believe, your entrepreneurial responsibility as a business owner is to provide jobs, pay your taxes, only sell transformational products or services, improve your customers’ lives and more importantly,…

maximum profit and wealth to you and your shareholders without lying, cheating and stealing

So the only real purpose of a business is…

Maximum Productivity and Profit

As a business owner, your business is your life 24×7. On the other hand, an employee’s life is outside of their job. Here’s proof…

Fairly recently, I asked one of my all-time favourite, past employee, Michelle Spernick (can you believe she left me for another man? In fact, a client’s son, younger and better looking and moved to the Gold Coast) to rank her top 20 considerations, she had that day.

Here’s Michelle’s list…

  1. Will I knock off on time tonight
  2. Will I have enough time to go to the gym
  3. What am I having for dinner
  4. Will my wage cover my bills
  5. Do I have enough money for the weekend
  6. Can I buy those shoes
  7. Planning the weekend
  8. Grocery shopping
  9. Holding the relationship together
  10. Planning for an upcoming holiday
  11. Taking care of your partner
  12. Taking care of your pets

Look, we only got up to 12 but you get my drift. My business and profit didn’t crack a mention and as I said, Michelle is a stand-out employee who I’d have back in a heartbeat.

Am I saying, all employees don’t care the employer’s business? No, I’m not. And I have some fantastic employees after all they put up with me.

What I’m saying is there’s a difference in agenda and that’s a fact.

There’s a really plain and simple answer to all of this. A business owner’s agenda is in complete and utter conflict with an employee’s agenda as was so rightfully pointed out by Michelle’s list.

Our agenda is the business and profits, their agenda is outside of their job or the business.

That’s why in my opinion, those books on “Ownership Mentality” are a crock of crap. They’re great in a book but not in reality.

You see ownership mentality comes from being a business owner, employee mentality comes from being an employee in a business.
A business owner…

can’t afford their business to be an academic social experiment for the good of mankind

Your agenda is PROFIT and that agenda is in conflict with their agenda and you and your business are mostly a giant pain in the arse! Daisy, my much loved PA, indirectly tells me that literally every day!

And that’s just a fact that the entrepreneurial business owner needs to recognize and come to terms with.

All the Best,
Mal

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  1. Hi Mal

    I don’t know why we kid ourselves that business should be something else from your correct PROFIT MAKING CENTER it can only really be. Its like we are scared to face that fact “its only profits we are in business for” I made that mistake and paid a huge price loosing everything. But now I am following Mal path and climbing back up.

    Kind Regards

    John Dwyer
    http://www.bizibrush.com.au

  2. Hi Mal,

    You are certainly right about the differing agendas of employer and employee.

    Perhaps the key task for an employer or manager of people is to improve employee “engagement”.

    There is ample evidence that actively engaged employees drive business performance and profit. The opposite is also true for actively disengaged employees. In fact, a recent Gallup poll estimated that actively disengaged employees cost the U.S economy “upwards of $350 Billion”. (See Zenger Folkman – How Extraordinary Leaders Double Profits 2010)

    The fact is that many of us, including Entrepreneurs are not taught the skills of managing people effectively. We are either promoted into positions of management or we become managers/leaders by starting our own business and employing staff, often with only our life experience to guide us on how to get the best out of people.

    And unfortunately, this life experience is often framed with role models who are not ideal managers either.

    Entrepreneurs and Managers can have a HUGE POSITIVE IMPACT on their businesses bottom line if they invest in their own people management skills…

    1. learning where the money is at with their own management style (what they should do more of and what they should delegate)
    2. how to recruit like a pro
    3. how to send a clear message (amazing how few people can do this)
    4. how to develop-motivate-engage staff
    5. how to have critical conversations that deliver positive outcomes.

    If Entrepreneurs improve their own management skills in these areas, I guarantee they will be astounded at the results.

    Regards
    Cameron Burgess

  3. I have been sitting here this morning and have read your blog post through 3 times and totally agree with what you are saying Mal but……….

    My wife and I have just bought a country hotel that has existing employees and we are very aware that they are not the type of people that will stay once we start applying the way we would like the business to be run and managed (they have had it to good for to long with no owner manager to keep an eye on them).
    Our issue is staffing. Quality staff that want to at least give half a decent days work. To get staff to realise that if we are not making money then their jobs are in jeopardy is like pulling teeth………..

    So back to the beginning of my comment, I agree with your blog post but when so many businesses require labour that has a different agenda than that of the business owner and entrepreneur who is particularly interested in building a profitable business whats the answer?

    Looking forward to your reply
    Mark

  4. Well said Mal!! With the massive emphasis on relationships and social media, the real purpose of being in business is being buried in fluffy feel good intentions. Relationships are of course the life blood of business but as you so brilliantly put it, at the end of the day, it is about productivity and maximum profit and also the systems we have in place to achieve it. Thanks for another well timed pep talk!

  5. Great post, Mal.

    Did you ever read the book “Maverick” by Ricardo Semler?

    Ricardo completely turned the employee/ employer roles on their head. He let his employees set their own compensation, gave them control over their work environment, let them take days off whenever they wanted IF they were meeting their production goals, and much more.

    Essentially, he made them entrepreneurs inside his business.

    Seemed to work well. Probably because every employee could see the direct relationship between their effort, the success of the company, and their corresponding compensation.

    “Do better and you’ll get paid better” is the order of the day.

    Can every business do this?

    Can Mark Stevens (comment above) do this with his country hotel?

    I don’t know.

    But it’s worth thinking about.

    We do need a new employee model for these changing times.

    And since outsourcing to overseas companies is so cheap the competition in the job market will really heat up.

    Thanks again for the terrific post.

  6. “Your Business only agenda is Profit” …REALLY?!?
    Depends if your just in it for the money.

    Sorry to break it to some of you cold hard cash crazy biz man but some business’s although i agree profit is what drives the business forward so are many other factors also which are just if not more important but fail to mention.
    There are those in business because they are motivated in doing what they love & enjoy. Or helping to better humanity on the whole or just a small community.
    Surely its not just about ruthless profits!? Man take a look in & re-read what you wrote.

    I understand your approach but surly it’s not so cold hearted as you have just made it sound?!

    Come on add a bit of REAL GOLD ..HEART & SOUL! 😉

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