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Management development – focussing on profit


This feature was contributed by Anthony Feely.

Management development programmes are misguided unless they deal with the core purpose of management.

The core purpose of management is to manage resources to make a profit - and that goes for the so called public sector as well as private. Everything other than profit is secondary to that end. This, however, assumes managers understand what profit is.

I truly believe that too many people, often in the training sector, have a misguided perception of profit. To some, there is a widely held belief that profit is bad and cannot be reconciled with common ownership. To others, profit is a way of amassing a stash of cash. This polarised confusion spoils true debate.

For the record, profit is having more resources at the end of a year than you started with. You can only do two things with profit – keep it or spend it. Private sector businesses in the UK typically spend 50% of profits to pay dividends to their owners (the shareholders) – the rest is left to help the business, and all its stakeholders, grow.

Everyone should be developed as profit-makers, even in the public sector – only the private sector has profit-takers. One small little letter change would bring much greater clarity to understanding business.

It is my contention that unless management development programmes specifically include modules dealing with profit (What makes an investment project profitable? How do we recognise profit when we see it? Are we performing profitably? How do we manage profitably?)

Sounds like a job for the financial boys and girls? Forget it. Most trainers in finance delivering tired old formats under the title "Finance for Non-Financial Managers" use old watered down accountancy student training courses for management training. We don't want to turn managers into bookkeepers or accountants. We need management development courses more sharply focussed on managers' core purpose of profit.


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