In the June 17, 2014 Ask The Headhunter Newsletter, a reader says that not all jobs produce profit:
I have read this in your advice more than once:
If I can’t show you how I will boost the company’s profitability with my work, then you should not hire me.
There are many positions in “the company” that do not have a direct impact on profitability, and I would argue it could be difficult to prove they even have an indirect impact.
It seems to me much depends on the size of the company, the culture of the organization, the management structure, as well as the specific position and the ability and authority of that position to influence more significant factors (such as staffing levels or budgets) that could impact profitability.
If one is seeking one of these lower- to mid-level management positions (such as project manager, for example) exactly how would a candidate show how they will “boost the company’s profitability?” The concept is understandable, and I can see where at some level this might be valid, but the majority of job seekers are not operating at that level, are they? Is your advice targeted only at the highest-level positions?
Most of my columns are written for all levels of work – though some people have preconceived notions about what “profitable work” means. They are brainwashed, and I say that with a smile. Every job – every one – affects profit. Trouble is, few people (including employers) talk about it or even worry about it. That’s why we see layoffs and down-sizings.
I think it’s incumbent on every manager to have some sense of how each job in the department contributes to profit – either by boosting revenue or controlling costs. Both require work. There is no job that doesn’t affect one of those financial terms in a business, and – put very simply – PROFIT=REVENUE-COST.
Every job fits into one of the two terms on the right side. We can pretend it doesn’t, or we can avoid calculating it and thinking about it, but in the end, people lose their jobs and companies go out of business because one or more jobs aren’t contributing positively to the profit equation.
As an employee (many years ago) I sought out the CFO of my company to talk about how my job affected profit. The CFO was stunned that anyone would come in to discuss this – puzzled but pleased. I instantly made a new friend. (This experience was what prompted me to write How Can I Change Careers? and Fearless Job Hunting, Book 6, The Interview: Be The Profitable Hire.)
The profit from one job is a hard thing to calculate, as you point out, especially in larger companies. But go tell that to the board of directors and they’ll laugh at you. They’ll point to the P&L statement and ask you where your job is located – because it’s in there. Trouble is, management has learned not to talk about it. It’s long past time we fixed that and owned up.
I recommend this approach to job seekers because I know the effort to estimate a person’s role in profitability makes them stand out in job interviews. It makes them powerful candidates who show they care about the bottom line.
So please think twice about what you said:
There are many positions in “the company” that do not have a direct impact on profitability.
My response to that is, eliminate those positions, because they’re dangerous. And fire the managers who don’t know how jobs under their command impact profit directly. The people in those jobs may be great, but if management doesn’t know how they impact profitability, the jobs should be cut until management figures it out. It’s called a business plan – and no venture capitalist would put a dime into a new venture if the biz plan didn’t justify every single employee.
Why should a mature company be held to a lower standard? It shouldn’t — yet I know bigger companies are, with the excuse that they are “more complex.” So what? It’s okay for bigger enterprises to have sloppier profit metrics? Just look at the news — it’s why we see massive down-sizings. Management lost sight of profit for too long! (See Bloomberg: Profit-based job hunting and hiring.)
As for the “how,” if you do your homework as best you can prior to an interview, then open the profit topic for discussion in the interview, you’re head and shoulders above your competition. Estimate as best you can. Discuss the components that contribute to the calculation – even if you don’t have the numbers. Encourage the manager to get into it. The two of you may never come up with a fixed answer, but I guarantee you’ll have a discussion the manager will never forget, and you’ll learn more about the job than any other applicant.
If this were easy, everybody would be doing it. They’re not. And that’s the point – everyone isn’t because they’re not paying enough attention to why an employer pays anyone to work: profit. If you want to stand out from your competition, be ready to present the business plan for your job – as best you can. Be ready to assess the business plan with your boss. (See How do I prove I deserve a higher job offer?)
I know it’s not what you’re accustomed to – and it’s not what employers are accustomed to. I’ve had executives in Executive MBA classes at top biz schools ask me what you asked. When I explain it, light bulbs go off and they get it. They start laughing at themselves, and they get it. That “aha” moment is priceless. And that’s what I want the employer to experience when you complete your interview.
Rich Mok, a seasoned executive in Cornell’s Executive MBA program at the time, put it better than I can. He had just interviewed for a job after attending my workshop:
“The hiring manager more or less offered me the position on the spot and indicated a salary range that is roughly 40-50% more than I make now. Your two biggest lessons (at least for me) at work in the flesh: (1) Never divulge my current salary, and (2) Talk about what I will do, not what I’ve done. They oughta make you a Cornell professor! I can already see that the one hour you spent with us will have as much impact on my MBA ROI as any class that I have taken in the program, if not more so.”
Rich presented his plan for profit and surprised the employer. (See Don’t Get Hired, Get Acquired: Audio from Cornell workshop.)
I love questions from readers about topics like this. You’ve nailed a key underlying issue in Ask The Headhunter. Thanks! I hope my lengthy comments are helpful.
What’s the point of the job you want? Be ready to talk about it, because your resume is history. What you’ll get paid for is what you can do next. How do you talk about profit to an employer, and to your boss?
You might get a response to the “why an employer pays anyone to work: profit” regarding the non-profit world (I’ve spent a lot of time there over the years).
Believe me, they hire for “profit” also, but it’s defined differently. Instead of being couched in dollars and cents terms of the P&L, profit in the not for profit world relates more to the desired outcomes of the organization…which still comes down to the same discussion.
How can I (as the employee) contribute to the bottom line (more homeless fed, more money raised, lower cost for housing repairs, more people learning to read)?
Your principles work in lots of different environments; it’s just a matter of looking at how I can contribute to the desired organizational outcomes.
Even at the lowest level, staff employees have an impact on profitability. Take cafeteria employee, HR drone, or data entry clerk as examples.
If the cafeteria employee wastes less food and wastes less time of people in line, that improves costs and employee satisfaction.
If the HR drone can process an employee health insurance in five minutes not fifteen, that reduces costs by both the HR drone and the employee requesting help. Quicker processing is also going to reduce the gripe sessions about the morons in HR, both reducing costs ands improving morale. And, if actually done correctly the first time, drastically reduces wasted time and minimize gripe time.
A data entry clerk that is faster and more accurate should obviously be a benefit. One that also looks to reducing stupid data entry, such as both zip code and name of city & state, directly impacts profitability.
Positions that do not positively impact profitability, short term or long term, must be eliminated.
I find this a very interseting topic.
Where I work it is very often not about profitability. I interviewed with the “hook” that my expertise, KSAs and experience would make “life easier” (in so many words) for everyone on the interview panel.It worked.
I agree with you, I believe we should always remember to fine tune our interview “angle” to meet the circumstance of the job and job place.
@Doug, Tony: Excellent points. “Profit” can be defined in many ways, and you’ve just pointed that out. It’s “what the employer wants to come out of the job.” If more homeless fed and making life easier is what they want, show them how you’ll do it.
But in the end, if they don’t generate real profit dollars, your bosses will be out of jobs, too. Tho’ maybe they’d prefer to call it another kind of profit: An increase in free time!
Pay attention to the “money stream” theory. Every firm has an input and an output of where the money flows. If you are in accounting always take the accounts recievable and pass on the accounts payable. Take the new products position over the sustaining support position.
You don’t want to be near the money output area but near the money input area.
If you open an interview with “How I believe I can add value and profit to your company”, get every assumption wrong…you will still be ahead of 99% of the interviewees in my experience.
Don’t sweat the details thinking you need to know the internal company financials to do this. Its the mindset that is important, not the actual numbers.
The corollary to this is why you don’t answer
“Why do you want this job?”
“To pay my rent”
Nick, another example of “how to not be a cow”! Don’t be part of the herd. Grab the bull by the horns and ride the bull into the interview with answers to the managers problems! I have an internal position I will be applying for and I fully intend to stand out from the room of cows standing just outside the hiring managers door! I cannot thank you enough for the career advice you’ve given me over the years! Adhering to Nick’s advice is a profitable endeavor!
Dude, I love this. I TOTALLY agree with you 110% regarding there being jobs within a company that have a direct impact on the profitability. Get rid of the rest of them. I would NEVER interview for a company where I wouldn’t know where I stand from a necessity towards the bottom line standpoint. Excellent advice, yet again. Why would ANYone want to work ANYwhere that they don’t feel valued?? If someone is not making an effort to find out how their potential job would impact a company…move elsewhere. If that person doesn’t realize the importance of their potential position: 1. That job WILL be eliminated. and 2. They OBVIOUSLY don’t find value in the job themSELF!
Nick, great column, as usual.
Re NFP’s, Drucker nailed it decades ago when he was asked what the difference was between for-profits and NFPs. Essentially, he said, there’s zero difference. The task for a for-profit is to generate a profit, maxing revenues and minimizing costs. That the NFP’s task is to generate zero profit (by law) doesn’t relieve it of the challenge of maxing revs and minimizing costs. Years ago I worked with an NFP exec whose board members infuriated her because they said her job and the NFP’s was to lose money efficiently. The board’s silly notion is probably shared by many. It’s why there’s tons of carcasses littering the NFP landscape.
This applies not only to a job inside a company, but to a company in the wider economy. About the time I discovered ATH, I also discovered another great blog called “No Shortage of Work.” noshortageofwork.com
Brooke Allen’s philosophy is in the same vein as Nick’s: There’s lots of important work that needs doing, you just need to pay attention and find it. (Kinda like “Think and Grow Rich”)
As Sarah B pointed out above, if you, and especially your manager, cannot figure out how your position contributes to the bottom line, then you need to find another position, quick. If you cannot figure out how your company contributes to the bottom line of the economy, then you need to find another company, quick.
On a macro level this topic is ever present in corporations, especially those complex ones. That is organizations have to reckon justifying their existence in terms of the bottom line. Careers do well to pay heed to the old adage..”follow the money” That is Revenue generation is usually pretty obvious & the mindset is don’t mess with the money. For example, Sales organizations usually don’t lose sleep justifying themselves per se, they generate revenue on the revenue side of the formula..there only worry is do they generate enough of it or in a timely manner. But they spend money to do it, and can manage that so bad they negate income to the point of losing money..e.g. buying market share with suicidal discounting campaigns. As a sales person though, you have the ultimate metric…your sales. And the more that exceeds your pay, the more you justify your existence.
The people who run “cost centers” are the ones who squirm. By definition they are removed from the revenue stream. They definitely impact profit as they consume income and assets. And are charged with the challenge of proving they are worth the expense….constantly. If you work in a cost center your career hangs tight on your bosses abilities to justify the organization’s contribution. Life’s tough
Excellent advice, Nick.
I agree that part (a large part) of the problem is how people define profit. In too many cases, people tend to think of bringing profit to company in terms of sales, because sales equals money in and improvement in the company’s bottom line.
But as companies, agencies, job hunters, and managers and CEOs only think of profit in those terms, then they’re forgetting the people who work for them who don’t generate sales. The staff in the IT dept. typically don’t generate sales, so if a manager’s view of profit is so myopic (IT staff don’t bring in money), then he’d fire the entire dept. and congratulate himself on saving the company money spent on all those salaries. Many people don’t think about the IT dept. until they can’t access a database, can’t get into their email, can’t get stats for the report they have to write, or the website is down. So the IT staff aren’t out making sales and generating profit that way, but try going without your IT dept. when your computers are down, or infected with a virus, or the system is working but some aspect of it isn’t working, or you can’t get information/data you need, or email isn’t working….then they realize how important the IT folks are to the business.
Education is another area. Professors, teachers, librarians, and others in academia are not bringing in sales, yet draw salaries. This does not mean they are worthless and that the schools can function without them.
The key is in how you define profit. Maybe the job doesn’t bring in sales but is critical to the functioning of the company or agency. Maybe the jobs are support staff–once again, no sales but the jobs are critical–students cannot be cleared for graduation, transcripts cannot be issued, courses cannot be transferred towards degrees, advising students, checking their records, telling them what courses they still need to take, what they can do if they need help/need to drop classes/need to go on military leave of absence/medical leave of absence, students cannot be admitted with people to review files and documents. Librarians don’t bring in sales, but without librarians, faculty and students wouldn’t be able to find books and other materials to do research, wouldn’t be able to access databases, wouldn’t have someone to help them find materials. Having a clean workplace is important too–custodians typically don’t generate sales either, but go for a few weeks without trash being emptied or the bathrooms cleaned and see how important that function is.
Or better still, just see how long it takes without staff handling payroll and benefits before employees start complaining–no one will be there to make sure those generating the profits get paid, that taxes are paid, that deductions get claimed, etc.
Good points about the non-profit world too. Just because they’re non-profit doesn’t mean money isn’t important, it is just that the sole purpose of it isn’t to make money for the owners (the purpose of a business) but to bring in money for some other reason: to save the whales, to feed starving children in South Sudan, to educate people about and help treat people with diabetes in Mississippi, to provide books and computers to a poor, inner city library. The non-profits have to be just as concerned about money streams because without money, they can’t achieve their goals, fulfill their missions.
You make an important point about non-profits. Many people think that since they are not out to make profit in the traditional sense, they still are governed by the same economic principles – they still have costs to cover to carry out their missions and more revenue/reduced costs means that they can expand their mission. If you have more money, you can buy more soup to feed the homeless. Also, they will need to be efficient at making and serving soup so that their dollar can go father and they can serve more people.
Sorry I cut short my comment. Nick’s point is to the point…Everyone effects Profit, positively of negatively. Hence, even those intangible organizations and people within them or lone agents effect the bottom line. Problem is even giving them the benefit of the doubt best they can say is they influence it, rather than have a direct measurable impact. The more direct the effect the better for one’s career. The burden of having those intangible impacts is you are an endangered species in downsizing, or merger/acquisition scenarios, as well as trying to sell you’re worth on the open market.
Be that as it may this discussion wasn’t organizational, it was about individuals who by the nature of what they do..aren’t in a good position to say “I increase profit”. They rely on habit, best practices, good faith, someone’s belief in what you do..does help.
A big reason people, e.g. let’s say HR, or QA or that friend staff person have this problem is they are functionally focused, not business focused. There’s no rule that says you have to do your job oblivious of business metrics, budgets, particularly your bosses, & upward, the company P&L, some sense of where the company is bleeding money. Nick’s example of paying a visit to the CFO is great. Everyone views Finance as just beancounters and # jugglers. They have opinions and a good view of where opportunities to add value lie. Most CFO’s would fall off their chair if someone asked them how they could help improve the financial picture.
If you make yourself aware of the business #’s you are then positioned to translate your good work into those #’s…As I noted Sales people are conditioned to do this. They speak business-ese. Look at what I did, I brought in X revenue. If you are in a cost center. You want to position your self to say Look at what I did (or better my team), I SAVED X dollars, spending less goes right to the bottom line. And you want to say I saved way more than you paid me. which translates to adding value. Learn to speak $$$
Another very important point. Keep an eye on that other adage “Time is money”. Time is an even better metric than money. Everyone understands it. In business Time to Market is money. You can bet, if a product gets to market late…the company loses money..the later you are, the more you lose. You can also bet if you get to market on time, but it costs you twice as much as planned, it costs you money. and the combination is deadly.
A Project Manager influences directly and indirectly, production costs and the time to completion. If you can show that you pulled in a slipping schedule, negated wastes production time, found a cheaper, faster way in executing a project you effected profit very positively. That’s just one example. What most people do is fair to collect, keep, interpret business information relative to their jobs. A portfolio of business accomplishments which expands on their task accomplishments. They meet specs, do assignments, but don’t answer that one more question..and so what have you done for me lately (regarding the bottom line). So when they need it, they don’t have it, & neither does their boss.
Here’s a real example. In a prior life…I managed a team of writers, editors covering the whole publication cycle. you couldn’t ship without the user docs. the latter took time, added to the overall schedule. Long story short, the project was slipping, development needed more time, so my software doc manager found a way to halve the publication time, “giving back” 8 weeks to the development manager. He was most grateful! and I cited this accomplishment in her appraisal to get her an attention getting raise. We could probably have conjured up some cost savings, i.e. profit impact. But in the Software development world, everyone understood time means money. And getting to market on time, or better, sooner, impacted the bottom line. You didn’t need to do the math.
I work in the DoD, and this advice holds true for the Federal Government as well. Everyone should know how they help the organization achieve its mission and demonstrate good stewardship of taxpayer money. This is especially true in the age of budget cuts and GPRA.
Not quite profit, but I think it is analogous.
Nick, thank you so very much for your take on the business world. I just wish more companies would acquire the same mindset. Unfortunately this is still not the case.
I have been in IT for 25 years as a techie then as a Project Manager. As a techie I was ALWAYS considered on the cost side and was told so in no uncertain terms. I had tried several times throughout the years at different companies to come up with ways to do my job and other jobs looking at cost waste. Not one single person ever listened to what I had to say.
Giant 3 letter company has a division conference call for all PM’s (along with several high up decision makers). Subject : cost savings for the company. We came up with about 20-25 ideas for cutting costs, most of the ideas did not require any to very little money to apply. They were mostly basic common sense ideas (not too difficult to come up with when you know your job). Flash ahead 6 years: not one single idea was ever put into place. The only cost cutting that was done throughout the years for this very wasteful company was fire everyone.
THIS IS STILL HAPPENING EVERYWHERE! Companies do not want to utilize a great principle:
@Cynthia. There’s an old say, “A Camel Is A Horse Designed By A Committee” You ran into one of those high level committees. Be willing to bet not connected to a bean counter where any info like that is relevant. Been there done that.
In a phone interview with a hiring manager of a large consulting firm, I used the sentence
“As we’ve had a largely technical discussion up until this point, I would welcome the opportunity to meet you in person to show you how I can be the profitable hire and build your firm’s sector practice.”
I then briefly mentioned my experience winning grants and working with clients in that sector to give that statement some sense of legitimacy.
Nothing is guaranteed, but I think those were magic words, because he immediately suggested the possibility of flying me there to discuss.
Thanks again for the excellent advice here. Even if I stay freelance, keeping one’s eyes on adding profit and solving other people’s problems really works.
@Carl: It ain’t rocket science, is it? :-)
Thanks for posting your story.
@Nick, those magic words are paying for travel and accommodation to an interview. Time to take out my favorite suit, draw up some ideas/a plan, and stand out.