“Painting in watercolor is like walking a tight rope; one must achieve a perfect balance between what the paint wants to do and what the artist wants to do, or all is lost.” -Mary C. Taylor
It can‘t just be about the money. That‘s the conclusion reached by Professor Jerry Osteryoung from the college of business at Florida State University.
Over the many years of a career teaching a wide variety of business courses, he‘s come to believe that business owners cannot just focus on making money to the exclusion of everything else; that, in his mind, is a recipe for eventual disaster.
Osteryoung isn‘t out on the fringe on this one, either, as any recent glance at the business community in this country can tell you. Enron? WorldCom? Countrywide? Bear Sterns? All undone by pure naked greed - an all-consuming desire to generate hefty profits at the expense of just about everything and everyone else.
Of course, as many have told me more than once (usually with a wry laugh), you can‘t focus exclusively on making money in trucking because there IS no money to be made it trucking. I mean, an industry with a profit margin hovering around 5% - if you‘re lucky - doesn‘t attract the kind of speculators now making hash out of the petroleum markets.
Yet trucking is a vital cog in out nation‘s economy, carrying 70% of all U.S. freight tonnage. Despite that critical profile, most drivers in this industry - especially on the long haul, for-hire side of the ledger - must work long hours (a 14 hour day) for an overage five figure annual pay that fluctuates depending on mileage and keeps them away from home for days if not weeks at a time. Not exactly a winning combination.
Yet most drivers and others involved in trucking don‘t do it for the money - they work in this business because they love it on some level. And successful carriers - small and large - stay afloat in this business by treating drivers and the rest of their employees justly - irrespective of the money. That‘s the key, Professor Osteryoung believes, for a business to sustain itself for the long haul. Here‘s why, in his own words:
“When I was in classes getting my Ph.D. in finance, my professors told me over and over, ‘the purpose of a business is to make money for its owners.‘ Unfortunately, I cannot tell you how many times I repeated this mantra to my students over the years. Now, however, I have a very different opinion on the subject.
A firm cannot stay in business just to make money for its owners at the exclusion of everything or everyone else. If an entrepreneur takes the attitude that he or she deserves to make all of the money, the business will suffer and will most likely crash and burn. Just consider who stands to lose the most when a business fails.
Some folks - my former professors included - would argue that the owners lose the most since they have the most at risk. There is no question in my mind that entrepreneurs lose a bunch as they generally have the most invested in terms of dollar amount. They are not; however, the ones hurt the most by a business failure. A business closing is devastating to the employees.
Employees are one of the many entities that have a vested interest in a business‘ success. In addition to owners, stakeholders such as employees, vendors, banks and customers have so much tied up in a business. They are vitally concerned with the firm‘s well being and will put forth much effort to ensure its success. However, success is impossible unless all of the stakeholders are taken care of.
When a business fails all of the stakeholders suffer. Take for example a financial institution. A financial institution risks much of its depositors‘ funds to support a business, and if the company fails, its own financial performance suffers.
If employees are not treated reasonably, the whole business will suffer as both the quality and quantity of work declines. So many entrepreneurs forget how important each and every employee is to the success of the business, and they often fail to treat employees well. If the business should fail, these employees are the ones that are going to pay a very high cost.
My colleague and I recently assisted an entrepreneur who had been operating a business with over 50 employees for a very long time. The business was losing hundreds of thousands of dollars each month, and we tried to give the entrepreneur the resources he needed to turn things around. When the situation failed to improve, we realized that there was only one alternative left: he had to close the business and file for bankruptcy.
Telling this entrepreneur that closing the business‘ doors was the best course of action was, by far, one of the hardest things I ever had to do in this job. What made it so hard was not that we had to give the entrepreneur this bad news, but because we knew what a loss it would be for all of the stakeholders, particularly the employees. Through no fault of their own, the staff would lose their jobs.
In my opinion, the purpose of a business is to serve the stakeholders. Businesses must earn money to acquire additional funds and assets, but its staff and other stakeholders are vital contributors to this endeavor. The key is to balance and deliver on the needs of all the stakeholders.”
As usual, Professor Osteryoung puts some interesting thoughts on he table for consideration. You can always reach him by e-mail at [email protected] or by phone at 850-644-3372.