People vs. Profits

I attended the annual Inc 5000 conference October 1 at National Harbor, outside of Washington, D.C. It presented several business seminars and networking opportunities and for the nation’s fastest growing private companies and entrepreneurs. RightStar has made the list for three years in a row, which is an accomplishment to be proud of. There were a number of interesting sessions, but in my opinion the most intriguing of the conference was a debate over people vs. profits.

On one side was George Cloutier, who wrote Profits Aren’t Everything. They’re the Only Thing. Cloutier is a small business guru and regular commentator on national television. His book has a very simple premise: profits are all that matters. To a large extent he’s right—RightStar’s valuation as a company is primarily based on a multiple of earnings. That is, the higher the profit, the higher the valuation. Profit is required for us to grow and expand. Cash is strongly linked to profit and is critical, since it allows us to make payroll and pay our vendors.

Despite record revenues, RightStar is just slightly profitable so far this year. That’s because RightStar is investing in three areas that I think will be very important to our future: Service Assurance, Process Consulting and Training, and ITBM.

The other viewpoint was presented by Paul Spiegelman, author of Why is Everyone Smiling? Spiegelman is CEO of Beryl, a call center organization. He strongly believes in a corporate culture that promotes employee loyalty and satisfaction. Beryl treats its employees well and, as a result, has a happy workforce that in turn treats customers well. Spiegelman argues that this leads to improved customer satisfaction, repeat business, and greater profitability. It’s hard to underestimate the importance of intimate relationships with customers and suppliers, based on personal contact and mutual commitment to delivering on promises.

So who’s right? I think they both are. At RightStar we’re in business for the long haul so we have to focus on our people. At the same time, we need to invest and grow, so RightStar must be profitable. As of last month we have reorganized by department. Each department will track profit and loss and be measured on department profitability as well as overall company success.

Advertisements

About dick1stark

I am the President, CEO, and founder of RightStar Systems, a leading IT consultancy and BMC Software Solution Provider and Atlassian Expert Partner. My passion is customer success—whether it’s reducing the cost of service management, improving overall efficiency, or increasing end-user or employee satisfaction. Since founding RightStar in 2003, RightStar has made the INC 5000 list four times. In 2011, RightStar was awarded the prestigious National Capital Business Ethics Award (NCBEA) by the Society of Financial Service Professionals based upon RightStar’s foundation of honesty, ethics, and integrity. And in 2014, RightStar was selected by Forrester Research as one of 13 North American companies profiled in its ITSM Consultancy Wave Report. Finally, in 2016, BMC selected RightStar as its 2015 Supplier of the Year for its consulting partnership and excellence in service delivery. Dick is a graduate of Stanford University and a Project Management Professional (PMP).
This entry was posted in Business Management, RightStar. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s