If you have noticed subtle, almost subconscious, narratives being slowly and methodically spread through most things you watch, read, and hear, you are not alone.
While there are many messages being communicated, the one we are decoding today is how businesses and their owners and executive teams are portrayed as greedy, selfish, and anti-employee. For me, this ideology doesn’t make sense and is, on average, incorrect & quite flawed pseudo logic.
At this point in my career, I have had the privilege to work for, and with, a number of organizations ranging from small startups to Fortune 50 public companies. Through this work, I have come to personally know many of the owners and their executive teams. While the size of these companies, the industry, or the age of each firm may be different, they all wanted the same thing.
First and foremost, all businesses are created to generate value, value for the business owner and shareholders, value for the customers, value for the suppliers, value for the employees, and value for the community. While it may be Taboo these days to put business owners and shareholders first, I would like to paint a different picture for you, with a few perspectives of why value flows in this particular order.
To do so, let’s initially look at the reverse. If you were a business owner and could not make a profit, eventually you would run out of money and out of business. Any customers you had would no longer get the value from the products and/or services you provided.
Your suppliers wouldn’t be able to sell you the tools you needed to be successful, and any employees you supported would lose their jobs. This outcome then negatively falls back on the community, as there is less discretionary income and more dependence elsewhere, overall.
Now, let’s look at this from an entrepreneurial perspective. Imagine, you wanted to create a business to meet a need in the market. Next, you take out money from your savings or retirement accounts or possibly ask your friends and family to invest in you and your idea. Remember, all of these initial cash investments are made with the hopes and belief of making the invested amount back and that it will grow in value (i.e. you get your money back in the future, with interest).
Assuming your business becomes profitable, your customer list is growing, you will need to buy more tools or services from your suppliers, and you will need to either pay your employees overtime or hire additional employees to meet these growing needs. This growth positively impacts the community as there are new jobs being created and more discretionary income being spent at other local businesses (e.g., cafes, bakeries, local service companies), among other benefits.
Now, for the large enterprises, about which I notice the most blowback. For this breakdown, let’s assume we are talking about a multi-billion-dollar public company. Let’s say you are the owner or CEO, and your company was growing and generating a large profit. In order to serve more customers, you would need to buy more raw materials, build more buildings, buy more equipment, and hire more people to meet this demand.
All these things are great and, I argue, have an enormously positive impact on the community. More jobs are created, people receive raises, and bonuses are paid.
If you think about it, we should always want public companies to do well. If we are not excited for all the new jobs at the company or the additional jobs created at their suppliers, or the discretionary cash in our community, then we are definitely for the company to be extremely profitable. Profitable! Yes, lots of extra cash!
When a company generates excess cash, it can do many things with it. It can grow, hire new people, buy or upgrade buildings or equipment, pay down debt or pay out dividends. All of these growth outcomes are quite positive, but there is one benefit I haven’t mentioned, which impacts not just the community but almost 60% of the country.
A company’s stock price increases over time as the organization becomes more profitable. According to Gallup, in 2021, 56% of Americans own stock in some fashion, through 401(k)’s, 403(b)’s IRA’s, etc. Even pensions plans are invested about 60% in stocks according to NBC News.
So basically, almost 60% of the country’s retirement plans are tied to corporate profits. Therefore, the more profitable companies are, the more valuable everyone’s retirements, pensions and investments become. Talk to anyone approaching the end of their business career and they will likely tell you how important those investments have become to them.
We should want our businesses to be as wildly successful as possible, to grow in sales, to grow their employee base and infrastructure, to grow their community impact, and most of all, grow in value, because that is where all the other growth begins. What’s good for companies, is good for employees and our community.