Traditionally, business leaders had one responsibility – providing value to shareholders – which often meant prioritizing profitability above all else. However, this mentality of maximizing the bottom line is fading. These days, business leaders must focus on multiple bottom lines because shareholders expect companies to prioritize people and the planet in addition to profits. For upcoming business leaders, this societal shift presents a significant opportunity.
Executives with decades of experience are likely familiar with the “profit over everything” mentality. Meanwhile, those pursuing a Master of Business Administration (MBA) will advance in the business world with a foundation built on these new ideologies. These updated methods could give rising leaders a slight edge over their more established colleagues.
Can Better Business Ethics Improve Business Operations?
Many business leaders will tell you that “doing the right thing” and “making the most money” rarely go hand in hand. But, in today’s world, making the most ethical choice could earn you the most money in the long term, mainly due to a change in consumer behavior.
Thanks to the advent of the internet, today’s consumers are more empowered than ever. At the click of a button, shoppers can instantly share information, read reviews, and get feedback on different products or companies. Shoppers who enjoy a company’s products will go out of their way to recommend them to their friends. But, if a shopper learns that a company exhibits unethical business practices, they might encourage others to avoid shopping with that company.
Corporations that care solely about maximizing profits at the expense of society or the environment can expect to be quickly scrutinized by customers. Customers strongly prefer shopping at companies with values that align with their personal interests. Jeff Bartel of the Forbes Finance Council considers this phenomenon ethical consumerism.
Focusing on profits may work in the short term, but ignoring your societal or environmental impact will inevitably turn customers against you. Company silence on social issues can impact customers’ opinions of a company. Customers will avoid supporting companies that go against their values, and this reduces a corporation’s long-term profitability.
Given recent trends toward ethical consumerism, companies must adjust their corporate culture to adapt to this new type of consumer.
How Leaders Can Contribute to a Safer, More Ethical Culture
According to CEO Magazine, agility is an essential trait for a business. In today’s market, a business must adapt quickly to new products, social initiatives, environmental regulations, and much more. For the company to be agile, it must have flexible leaders who encourage inclusivity and a culture of psychological safety.
Psychological safety means having a corporate culture where everyone feels comfortable voicing their thoughts, ideas, and emotions. After all, good ideas can come from anywhere in your organization. Effective business leaders realize they cannot be responsible for solving every single problem. Instead, they must create a work environment where everyone is encouraged to participate.
If done correctly, the Harvard Business Review states that a culture of psychological safety will ultimately drive business continuity, competitiveness, and growth.
Learning to Thrive in a New Work Environment
Business leaders have more responsibilities than ever. Managers were once tasked solely with boosting profitability, which is no longer the case. In addition to profits, today’s managers must prioritize their communities (both internal and external) and the environment around them. For aspiring business leaders, this should be an exciting challenge. Thanks to this societal shift, their potential role in the business world has quickly grown. However, this also means they’ll have to triple their preparation to step up and fill this larger role.
Aspiring leaders should pursue an advanced degree specializing in these topics to help prepare for the evolving responsibilities of management. For example, the College of Mount Saint Vincent’s online MBA general program has specific courses addressing these management and business trends, including Social Entrepreneurship and Sustainability and The Law and Governance of Nonprofit Organizations, which explores ethics in labor discussions, management issues, and other relevant topics. Students can complete this advanced degree online in as few as 12 months and begin working to influence their company’s ethical and financial credibility.
Learn more about the College of Mount Saint Vincent’s online MBA program.