Tying Profit to Performance: A Valuable Tool, But Use With Good Judgment
Abstract
One thing I enjoyed about working in industry was that everyone in the private sector understood the definition of success: It was profit. If something did not make a profit for a business, then it was not good. Profit is the fundamental reason that businesses exist: to make money for their owners shareholders. Without profit, businesses die. From industrys point of view, more profit is always better. Not being profitable makes a company unsustainable and will lead to bankruptcy. Declining profits make it harder for businesses to raise capital or to invest for their futures. These facts make profit the most powerful tool the Department of Defense (DoD) has to obtain better performance from industry. It is important, however, to recognize that this also implies that over-aggressive use of this tool can seriously damage the institutions we depend upon for products and services.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jun 01, 2015
- Accession Number
- AD1016061
Entities
People
- Frank Kendall