I don’t know who needs to hear this, but there’s more to running a company than making a profit.
Let me backpedal quickly to say of course, making money is the main reason people start a business, the main reason they wake up every day and run a business, and that those companies that don’t turn a profit don’t stay in business very long.
Profits are also an important metric of success and success is nothing to be ashamed of. Although, if you read Al Schwartz’s column this month there’s a sense among some people that it should be! That being a hardworking, successful businessperson equates to being a “greedy and oppressive member of some elite club.”
Part of that notion—business guy as bad guy—stems from a misunderstanding of how business works. There’s this idea that profits are just a pile of gold the owner sits on like a dragon, when in fact they’re the lifeblood of a company. They flow back into the economy in taxes, in capital and operating expenses.
And part of that notion comes from income inequality, which is a bigger problem than just the “have-nots” envying the “haves.” According to the Economic Policy Institute, in 2022 CEOs were paid 344 times as much as a typical worker. Now, I’ve seen plenty of CEOs, I’ve read a few of their books, I’ve even met one or two, and I can tell you this: they are none of them 344 times smarter or 344 times harder-working than any other human being. Because no one is. So I have trouble seeing how they are delivering (or deserving) 344 times the value.
(Chris, if you’re reading this? Please don’t fire me. Thanks.)
But when I say there’s more to running a company than making a profit… well, try a little thought experiment. Imagine a company that was only about making a profit. When you go into work each day there’s a big sign on the wall that says: “Company Value: Maximize Profits.”
It would be a company that paid its workers the bare minimum they could get away with. A company that never invested in training. (Workers, after all, are an expense to be controlled, not a resource to be developed.) It would invest in workplace safety only to the point where that investment matched its level of liability; not “zero” accidents but finding the “acceptable level” of accidents. Recycling program? Carbon emissions reduction? Well, those things cost money. Help with the local food pantry? Do free work at the shelter? Where’s the profit in that?
Ask yourself, is that the sort of company you would want to work for? Is that the sort of company you would want to do business with?
For this issue I was able to interview Denise Vaughn, the Vice President of Environmental, Social and Governance for Ferguson, and at one point she says ESG is, in essence, about being a “good corporate citizen.”
She went on to list several examples of what Ferguson does, but it got me thinking about regular citizenship. You vote. You show up for school board meetings. You pick up trash in the park on Earth Day. You return your grocery cart. You don’t have to do any of these things. You don’t make money for doing them, and you won’t get fined for not doing them. But the more people that do them, the better things are for everyone.
This is our annual Book of Giants issue. Read how some of the largest mechanical contractors in the nation are being good corporate citizens, and along the way delivering value that goes beyond profits.