In 1996, I walked away from my first million-dollar client. Anyone looking at my company’s profit and loss statements would have questioned my sanity. We were less than a year old at the time, and this was by far our highest-profile customer.
I made this seemingly crazy decision because I value my company’s reputation over its revenue.
On Practical Decision-Making
Many leaders rely on Excel spreadsheets to drive their decision-making. They think something is only worth doing if the numbers add up and the price is right. My company, on the other hand, uses a set of five core principles to gauge every business decision it makes:
So, What Comes First?
Our big client didn’t share any of these values with us. Further, he was overly harsh with my team members and set unrealistic expectations. Our weekly status meetings with him became sources of dread because it didn’t matter how well the previous week went; it was never good enough.
The entire office’s morale suffered, and I had to make a decision: Do I put my principles first, or do I put my revenue first? I quickly realized that if I put revenue first, there didn’t seem to be much of a point in having principles. If I sacrificed our core values in the name of profit, how could my team ever respect me or our values again? The decision became easy — we walked away.
Money Is Fleeting; Reputation Is Forever
As leaders, we’re often tempted to compromise things — be it ethics, principles, or happiness — to maximize short-term profits. While compromise might immediately boost our portfolios, it doesn’t necessarily help build our reputations.I’d argue that a company’s reputation is all that really matters, and having a good one is the only way to ensure long-term success. It’s the reason my company has so many great clients today, and it’s the reason they constantly refer new business to us.
This is a philosophy that was instilled in me during my youth in the Midwest. We had a folksier way to sum it up, though: “Pigs get fat, and hogs get slaughtered.” Everyone has a right to a living, but greed yields guaranteed downfalls — and I’m not interested in being a hog.
Thinking in the Long Term
The benefits of this approach aren’t just lasting. By removing immediate profits as sole drivers of business decisions, you’ll no longer be tempted to veer your company off course to accommodate difficult clients with deep pockets.This will solidify your brand as a stable, upstanding, and moral institution — and that reputation alone will drive your growth today and tomorrow.
The great corporate scandals of the world (think Enron) typically involve companies that value short-term revenues over all other considerations. And what does that earn them? Bankruptcy, bad press, and possibly prison time.
Putting Principles Into Practice
Having personal principles is one thing, but having company-wide shared principles that guide every level of decision-making — from the corner office to the reception desk — is something that requires practice, patience, and communication. Here are a few tips to help you instill this reputation-centric mindset into your company:
Look for opportunities to mentor, coach, and train your employees to make sure they have clear understandings of your company’s core values. Show them what it looks like, and feels like, to do the best quality work in your industry while maximizing your company’s reputation.
There’s a management style called “inspect what you expect” that involves asking your employees quality questions to ensure the things you want completed are, in fact, being completed. It’s a low-impact form of oversight that’s more trusting and less stressful than full-on micromanagement — and it will help you determine what’s going on outside the walls of your office.
Meet with every employee and client to make sure they understand what your company is all about and how you got to where you are. Also provide them with a list of your core values, as well as specific examples of those values in action. This will give everyone a clear understanding of what to expect, and it will also show employees how to exceed expectations.
Don’t look at your bottom line to assess whether your company had a good year. Instead, look at the quality of your work, the happiness of your employees, the contentment of your clients, and the state of your recurring revenue.
Don’t let that one difficult, deep-pocketed client turn your business into something it isn’t. If you stay true to the values near and dear to your heart, the right clients will find you.
By Steve Randazzo
From August through October 2022, BCG and The Network, a global alliance of recruitment websites, undertook the world’s largest survey dedicated to exploring job seekers’ recruitment preferences—more than 90,000 people participated. This article reports and interprets additional survey findings and offers recruitment recommendations for employers.
Author believes that a more precise understanding of what exactly gives someone good judgment may make it possible for people to learn and improve on it. He interviewed CEOs at a range of companies, along with leaders in various professions. As a result, he has identified six key elements that collectively constitute good judgment: learning, trust, experience, detachment, options, and delivery.
Hiring has exceeded pre-pandemic levels in many markets and the shortage of skilled executives has put pressure in the increasing competition for top talents. If you have specialized and high-demand skills, for example on ESG, sustainability or bio-research, and a solid record of experience, you are well positioned to negotiate your salary.