Is Profit The Ultimate Measure of Business Success?

April 25, 2012 by  Filed under: Management 

Many people still believe that the purpose of business is make a profit, that financial success is the ultimate measure of business success. But at what expense?

My eyes were opened to consequences beyond animal suffering when I read about the mass-production farming of chickens, in “The Ethics of What We Eat” by Peter Singer and Jim Mason. To maximise profits, these companies maximise the number of birds per square foot of space (in many operations, chickens get about the size of an A4 sheet of paper to live their lives in). Aside from the birds’ suffering, there are some very significant costs to local communities and ecologies.

The ammonia from the chickens’ waste products makes going outside unbearable when the wind blows in a specific direction. The ammonia causes irritation and health problems to people. When the waste products are flushed from the factory floor, they run off into nearby streams and waterways, and kill the aquatic life. These are the costs that don’t make it into the companies’ financial statements, costs that communities and the environment pay (now and in the future) to subsidise those profits.

There are still many companies that don’t take responsibility for the lifecycle of the products they make. Electronic appliances like toasters and video players and outdated laptop computers often aren’t able to be recyclabled. And no-one wants to reuse them when they can buy the latest and greatest for next to nothing. So they become land fill.

Even that habit of calling employees ‘our greatest asset’ smacks of a company that treats people like equipment or property: maximise the return on investment. Get as much productivity as possible for the least amount of financial reward. Child and slave labour in industries like coffee and diamonds are of course the extremes of this view, but it’s still an attitude that many familiar companies and organisations have of the people who contribute their time, skill and effort.

If human endeavours like business don’t exist to make the world a better place, can we really judge them as successful? How can people enjoy the rewards of high profits when others have had to suffer to make those profits possible?

We really need to move away from a singular focus and single measures of success. Surely a truly balanced scorecard is one where the perspectives of every stakeholder affected by a company define success, and guide what that company measures, monitors and manages to pursue that success?

TAKE ACTION: Is your strategy based on just one or two stakeholders’ values? Who or what else is affected by your business? As a starting point, think about shareholders, customers, employees, suppliers or partners, local communities and the environment.

Stacey Barr is a specialist in organisational performance measurement, helping corporate planners, business analysts and performance measurement officers confidently facilitate their organisation to create and use meaningful performance measures with lots of buy-in. Sign up for Stacey’s free email tips at http://www.staceybarr.com/202Tips.html and receive a complimentary copy of her renowned e-book “202 Tips for Performance Measurement”.

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