September 8; Is The Income Worth The Cost? MANAGEMENT BY THE BOOK: 365 Daily Bible Verse & One-Minute Management Lessons For The Busy Faithful
Chapter Nine: Finance; September 8
What good is it for someone to gain the whole world,
yet forfeit their soul?
|Is The Income Worth The Cost?|
“If a candy bar sells for a dollar, how much profit is earned?”
Your Business Professor has learned to treat this like a trick question to students; because undergraduates will always assume astronomic profits. The lowest guesses will be at 30% and go north from there. Not one student will guess the normal profit range of some 1 to 10%. “Razor thin” is the common adjective for “profit.”
The purpose of business is to create a customer. If a business does this well, it will make a profit. Management expert Peter Drucker reminds us that,
Management must always, in every decision and action, put economic performance first. It can only justify its existence and its authority by the economic results it produces.
There may be great non-economic results: the happiness of the members of the enterprise, the contribution to the welfare or culture of the community, etc. Yet management has failed if it fails to produce economic results. (Drucker 1954) p 7
Faith traditions generally agree. Andrew Abela, Ph.D., Provost of The Catholic University of America highlights Catholic Church teaching that “…acknowledges the legitimate role of profit as an indication that a business is functioning well.” A Catechism for Business: Tough Ethical Questions and Insights from Catholic Teaching, edited by Andrew V. Abela and Joseph E. Capizzi, The Catholic University of America Press, Washington, DC. Page 37, (Advance Copy)
But there is more. Dr. Abela continues, quoting Pope John Paul II,
The purpose of a business firm is not simply to make a profit, but is to be found in its existence as a community of persons who in various ways are endeavoring to satisfy their basic needs, and who form a particular group at the service for the whole of society. (Andrew Abela 2008) Page 37
Indeed, profit is a beautiful example of what today’s scientists and engineers mean when they talk of the feed-back that underlies all systems of automatic production: the self-regulation of a process by its own product. (Drucker 1954) P 46
David Packard, cofounder of Hewlett-Packard, pushes the pattern, “Profit is not the proper end and aim of management—it is what makes all of the proper ends and aims possible.” (Magretta 2002) Page 131. Peter Drucker didn’t even like the word “profit.” He believed a better word would have been “responsibility.” (Cohen 2013) Page 24
Profit is a part of the ‘control’ component of management, usually listed last after ‘plan, organize and lead.’ Just like any control measure that the manager uses, profit alerts the boss that the plan is, or is not being met. And how planning, organizing and leading should be corrected. It is part of the manager’s evaluation of her business plan.
Peter Drucker, to be more precise, also did not like the word “control.” It sounded to him too much like domination. The word he uses is “measurement” which has a much better connotation. (Drucker 1954)
To sum up, so to say, “Profits are necessary…They make possible the investments that ensure the future of a business and they guarantee employment.” (Andrew Abela 2014) Page 37
Profit and money are not in themselves evil; it is the love of lucre that is destructive. Instead, we are to appreciate the good profit can do for others.
The King James Bible says, For what shall it profit a man, if he shall gain the whole world, and lose his own soul? Mark 8:36.