Small Business Lesson: The “Platinum Rule”©
Travis Bradberry wrote a piece recently entitled: “11 Secrets of Irresistible People”. In it he advised doing things like “smile”, “have integrity” and “ditch the small talk”. One thing he mentioned was what he called the Platinum Rule.
You all know the “Golden Rule”, don’t you? This is the rule of ethical reciprocity. That is to say: You should treat others, how you wish others to treat you. Bradberry calls a variation of the Golden Rule the Platinum Rule which he proposes: You should treat others as how they wish to be treated.
In business this may present some difficulties. Please consider:
• An employee requests a raise. Using the Platinum Rule, you know EXACTLY how they want to be treated: “Why yes, Sally, I agree and you will receive your raise in your next pay check!” Obviously, if you can neither afford the raise nor believe their performance is not deserving of the increase, this becomes a business problem. It could also create a morale issue if your employees do not also share when (or how much they receive) in increases. Awareness of Sally’s raise WILL get out because previously she was unhappy and now she is as happy as a pig in hog heaven, so they of course, will know that she received a raise.
• Your customer wants to buy your product but would love to purchase at a price which you cannot afford. Can you cut costs in some manner to sell at a discount? Can you encourage them to buy more, thus increasing your margin through the reduction of costs? The Platinum Rule can’t be followed here because what your customer wishes just cannot be met.
In each of these examples I would maintain that the better Rule to follow is the Golden Rule.
• If Sally wants a raise and you can absolutely not afford it or you believe her performance is not deserving of a raise, you need to communicate this to her.
o If affordability is the issue, be honest (as you should be with all your employees). Tell her that revenues are lower than expected and fixed costs are higher and a raise is not possible at this time. Offer to revisit this in (perhaps) six months. You might als o ask for her input on how revenue might be increased or expenses lowered.
o If the issue is related to her performance, you must tell her. Provide examples of areas within her responsibility area that need to improve. Set goals with her (this should be a mutual agreement and revisit her performance in six months. If she makes progress, acknowledge it. A raise could be awarded with continued progress towards on her goals.
• If your customer wants a lower price and you absolutely cannot afford it, communicate this with them. Offer them something you can afford, such as revised payment terms. If the customer has a pattern of paying in 45 to 60 days, tell them you can offer a discount that is equal to the Accounts Receivable float you wait for each of their sales (see CFO Fundamentals, Managing Receivables, Example 21.4). Perhaps a prepayment agreement that would save you on invoicing and re-invoicing and carrying the unpaid receivable on your books. Maybe a 3% discount would benefit both companies.
After consideration, I think it is almost impossible to follow the Platinum Rule in business. You are in business to make a profit and serious business decisions cannot be made on the wishes of others. Better to treat others as you wish to be treated: fairly, openly and with honest communication but I invite your discussion and feedback.
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