Managerial thoughts

Profit = F(Customer level satisfaction, Employee satisfaction level, shareholder satisfaction level)

The profit depends on the satisfaction levels of the three main stakeholders in the company who are the customers, the employees and the shareholders . The role of the managers is to maximize the profit of the company by optimizing the satisfaction level of its three main stakeholders listed above..

The ferocity of the competition is currently such as the companies are pushed to a thinner profit margin since they don't set the price of their products or services. Rather, it is the market that does it for them. 

 So, what should the companies do to improve its efficiency and its profits? The companies should primarily control their costs that are themselves depending on their immediate environment.

The control of the company costs is a matter on which many experts have written by using an arithmetic approach which is, in my opinion, an accounting vision at short term and does not need to be further developed here. So, in this article I will outline a new approach which demonstrates that the best way for a company to make profits is to control its immediate environment whether internally or externally.

Banks and governments on the one hand and the market on the other hand are the main players of this environment that the management of the company should consider when facing competition.

The banks are privileged partners of the companies where the preservation of the interests of both parties premium. It’s also the key to their respective success.

The governments are organized to regulate the market, to encourage investment to stimulate the employment and to protect the population from outlaws companies. Relationships are formalized and the obligations of each other are generally respected.

From that environment, it remains only the market of which the managers of the company have to face. It is really the main metric to measure the efficiency of the company managers. 

To do this, the company needs shareholders, employees and customers to invest, develop, produce and sell its products or services. They are really the most influential players within a company that the management should put at the top of the list of their priority.

I am sure that you will agree with me by stating that the players mentioned above are complementary, but their goals are often opposed.

The customers want lower prices and higher quality of the products or service they buy. The employees want higher salaries and a perfect working environment. The shareholders want higher return on their investment in the company.

How should the managers reconcile and meet the needs of each of these players  without compromising at mid and long term the financial equilibrium of their company.

This is a three-dimensional equation. The profit depends on the satisfaction levels of the three main players in the company who are the customers, the employees and the shareholders. It is represented by the following formula:  P = F (x, y, z) 

• P = Profit

• x = level of customer satisfaction

• y = Level of shareholders satisfaction

• z = level of employee satisfaction

The role of the managers is to maximize the profit of the company by optimizing the satisfaction level of the three main players identified above