How should a for-profit corporation balance its business needs with the needs of its customers?
For-profit corporations exist in order to produce a profit and are always looking for ways to maximize profitability. Unfortunately, a corporation’s focus may slowly shift from satisfying customers and fulfilling the mission statement to increasing business profits. Corporations that allow this to happen may not realize that by focusing on short-term profitability, they will ultimately forgo long-term prosperity. Finding the balance between business needs and the needs of customers is essential for a profitable long-term business. It is important for corporations to not become so focused on profitability that they lose sight of the customer and the reason that the corporation was founded. The Bible talks about placing others needs above your own. This biblical principle is found in Philippians 2:3;4 and says: “Do nothing from rivalry or conceit, but in humility count others more significant than yourselves. Let each of you look not only to his own interests, but also to the interests of others.” (English Standard Version). Finding the balance between business needs and customer needs is essential to a corporation achieving business profits and long-term success. Business needs should not take precedence over customer needs as customer satisfaction is a primary indicator of a corporation’s overall success. Anderson, Fornell, & Rust (1997) indicate that it is widely known and demonstrated through a variety of studies, that the higher that customer satisfaction is, the greater the loyalty each customer has to the corporation. As loyalty increases, through customer satisfaction, so does the potential for future revenues (p. 130). Corporate management must create quality revenue growth. Lasting quality revenue growth is accomplished by attaining customers who are loyal and purchase frequently. However, corporations cannot solely focus on the needs of the customer and ignore the needs of the business. The focus of a corporation should be balanced and focused on both the consumer and the business. These focuses are naturally linked and are not mutually exclusive. Once a corporation attains frequent loyal customers, revenue will grow. In turn, the company shareholders will benefit from increased revenue through an increase in dividends. An increase in dividends leads to an increase in shareholder return on investment. Satisfied customers often tell others about their satisfied experience with the business and thus create free advertisement for the corporation. “Word-of-mouth (WOM) has been acknowledged for many years as a major influence on what people know, feel and do” (Groeger, & Buttle, 2014, p. 1).
Focusing on business needs by rewarding shareholders through dividends, paying competitive salaries, retaining employees, improving customer experience, and investing in product research and development will help keep the corporation valuable and competitive. Creation of intellectual property through research and development should immediately benefit the creator of the intellectual property and then benefit the customer. If creators of intellectual property had no incentive to work tirelessly to create intellectual property, no one would want to bother wasting their time for someone else to reap the sole benefits of their intellectual property. An investment into research and development will create a need for the corporation to protect its intellectual property. If another corporation copies intellectual property, it will damage the revenue and reputation of the founding corporation thus damaging the corporation’s shareholders and customers. Due to this, corporations have a responsibility to protect intellectual property through patents, lawsuits, and other legal means available. A valuable and competitive corporation is worth protecting and is sure to continue in existence and maintain profitability for many years.
Do companies whose mission is primarily to create products on which lives depend have a greater responsibility to tip the balance toward the consumer more than toward themselves?
A company whose mission is primarily to create products on which lives depend do have a greater responsibility to tip the balance toward the consumer more than toward themselves. The products that these companies are producing are focused on enhancing the lives of the customer who purchase their products. Since lives are dependent upon these products, these companies have a duty not only to their customers, but to themselves to produce the best possible products. Doing this will fulfill the mission statements of these companies who were founded on creating products that lives depend upon. An example of one such company is Transcend. This corporation, as discussed in an article by Amanda Gains (2008), employs medical language specialists and exists in order to provide transcribing and other documentation services to hospitals and other medical facilities. Lives depend on the accuracy and quality of these provided services. Transcend not only employs medical language specialists but actively works to develop technologies that assist their employees in providing the best possible services to their customers (para. 2). CFO Susan McGorgan indicated that Transcend’s commitment to the customer is what sets them apart in the industry of medical language specialists. They take pride in the unique service that they offer (Gaines, 2008, para. 3). It is clear that the strategy of tipping the balance towards the customer has paid off for Transcend. Transcend is one of the only publicly traded companies in the industry and over 2006 and 2007, the company’s stock has multiplied more than six times. In that time, Tanscend’s market value has grown from around $15 million to nearly $100 million (Gaines, 2008, para. 15). It is not only the responsibility of Transcend and other corporations that produce products that lives depend upon, to focus on the needs of the consumer but it is also immensely profitable. Treating the consumer with respect and working to provide the best product or service for the consumer is what sets corporations like Transcend apart from their competition. In Matthew 7:12 it states: “So whatever you wish that others would do to you, do also to them, for this is the Law and the Prophets” (English Standard Version). This biblical principle is known as the golden rule and upholds that individuals actively seek out ways to improve the lives of others and treat them with the same respect and decency that one would desire in return. Galatians 6:9-10 shows that: “And let us not grow weary of doing good, for in due season we will reap, if we do not give up. So then, as we have opportunity, let us do good to everyone, and especially to those who are of the household of faith” (English Standard Version).
If you were running such a company, looking through the lens of a Biblical worldview, how would you respond?
If I was running such a company, I would place the consumer first and constantly evaluate what my motivations are and what I am doing through the lens of a Biblical worldview. Doing so is important to not only honor God but to show love to those around me, particularly my consumers. Jesus demonstrated the importance of loving God and loving your neighbor in His response to the Pharisees shown in Matthew 22:36-40. This passage states:
“Teacher, which is the great commandment in the Law?” And He said to him, “You shall love the Lord your God with all your heart and with all your soul and with all your mind. This is the great and first commandment. And a second is like it: You shall love your neighbor as yourself. On these two commandments depend all the Law and the Prophets.”
If Jesus Himself emphasized that loving God is the greatest commandment and loving others is the second greatest commandment, as management in such a company, I would make it a top priority to love God by following His commandments and love others by treating customers with respect and putting their needs above my own. Not only is placing the customer’s needs in line with God’s commandments but it is also good for business.