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Is Our Focus on Quarterly Earnings Hurting the U.S. Economy?

By Pacific Standard

Two prominent business leaders point to the dangers of quarterly earnings guidance. Research suggests they're right to be concernedRead full story

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  • Christina Passarella
    Christina Passarella Project Manager

    This is so important. So much focus and energy is put on short term gains, that we’re losing the forest for the trees. I work for a healthcare system and while we focus closely on monthly financials and variances from our various budgeting tools, ultimately we’re looking at trends and evaluating big variances as they happen. If we were to look solely at short term benefits on our bottom line, we wouldn’t be able to plan for long term strategic investments in research and patient care. While this

    This is so important. So much focus and energy is put on short term gains, that we’re losing the forest for the trees. I work for a healthcare system and while we focus closely on monthly financials and variances from our various budgeting tools, ultimately we’re looking at trends and evaluating big variances as they happen. If we were to look solely at short term benefits on our bottom line, we wouldn’t be able to plan for long term strategic investments in research and patient care. While this example is much smaller in terms of the amount of profit in play, it seems that if these companies don’t start looking at the big picture, we’re doomed to continuously repeat the history that brought us to this moment.

  • This is so important, and yet we continue to allow behavior that focuses on short-term results over long term thinking.

  • Susie L
    Susie Lmom/grandmom at my family

    I don't deal with stocks and bonds or anything like that. But I've worked in hospitals a good portion of my life. They tend to have the same type of focus. I can imagine it's worse when you're trying to sell a product. making a profit is every businesses goal. But, instead of focusing on the things that matter and trying to improve their brand or customer service, or other things like that. A lot of companies are focusing more on their earnings for the quarter instead of asking the big questions

    I don't deal with stocks and bonds or anything like that. But I've worked in hospitals a good portion of my life. They tend to have the same type of focus. I can imagine it's worse when you're trying to sell a product. making a profit is every businesses goal. But, instead of focusing on the things that matter and trying to improve their brand or customer service, or other things like that. A lot of companies are focusing more on their earnings for the quarter instead of asking the big questions. what can we do to ensure that we continue to grow, and improve not worrying about how the quarterly earnings look. however, there are a lot of companies that don't look at it that way and I think that is a detriment to them.

  • Patricia Lincourt
    Patricia LincourtSocial Worker

    Tracking metrics is important because you have immediate feedback to make adjustments and drive toward longer term goals. When each quarter becomes the goal, I think you can begin to lose sight of the game. It is a major concern in healthcare as long term gains, in both dollars and health outcomes, often require investment that hurts the quarterly bottom line.

  • When I first heard this last week on NPR, I automatically thought of it in terms of teaching and grades. More specifically, I thought of learning and grades. As a teacher I have to give grades. Why? It helps parents to see the short term gains of their child. It doesn’t really say much about the future, but it makes parents and kids more comfortable knowing what is going on at any moment of the day...as long as we teachers update our grade posts. Recently I attempted to go Gradeless. The goal was

    When I first heard this last week on NPR, I automatically thought of it in terms of teaching and grades. More specifically, I thought of learning and grades. As a teacher I have to give grades. Why? It helps parents to see the short term gains of their child. It doesn’t really say much about the future, but it makes parents and kids more comfortable knowing what is going on at any moment of the day...as long as we teachers update our grade posts. Recently I attempted to go Gradeless. The goal was to use self-assessment rather than grades so that students could better explain to parents what was going on with their learning. It was a tough sell. But in the end, parents were okay with less information and students reflected less anxiety in general. To me quarterly reports are the same thing. They focus on short term and overlook what should be a better perspective for the investor. But, like parents and students, it will take some selling and patience to get the boards, CEOs, CFOs and investors to let go of something that they have consistently used as an indicator to alleviate anxiety. It will be even more difficult in this time where everyone demands and gets instant gratification through technology.

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