Albers School's Philosophy Echoed in New Business Roundtable Purpose Statement
Posted by Joseph M. Phillips on Thursday, September 12, 2019 at 4:44 PM PDT
Since its start in 1947, the Albers School of Business and Economics has taught its students that business is not just about pursuing profitability but also changing society for the better. In applying Jesuit values and ethics to our business education, we have always strived to shape the next generation of leaders who lead and manage for the good of their organizations, society, and the planet.
Recently the Business Roundtable introduced a revised statement on the purpose of corporations. The Roundtable consists of nearly 200 CEOs from many of the major corporations in the US, including local companies such as Amazon, Boeing, and Microsoft. The statement marks a significant shift in thinking, since it says that corporations are not just about maximizing profits for shareholders, but should also factor in the interests of customers, employees, business partners, and the community, or the Common Good.
The 1997 version of this statement first introduced the concept that business organizations should be all about maximizing returns for shareholders. This is a view popularized by Milton Friedman beginning in the 1960s. It’s a simple and thus alluring concept, made attractive by its measurability (profits). The best interests of customers, employees, partners, and the community are harder to measure and sometimes “messy.” It’s important to remember the focus on shareholder returns has not been around all that long, and while it became a conventional wisdom for many, it’s not necessarily a compelling view.
The Albers School of Business and Economics has long advocated that a business should consider its multiple stakeholders and not single-mindedly pursue profit maximization. The ultimate purpose of business is to meet human needs. It does that in two ways. First, to provide goods and services to customers and, second, to provide employment and opportunity to those involved in the enterprise. Giving primacy to shareholders does not align with that.
It’s inspiring to see the Business Roundtable reverse its thinking and adopt a view that is more in keeping with the Common Good. Let’s see how these business leaders and their organizations go about making this new statement a reality. In doing so, they will allow the business sector to play a more vital role in helping to solve the many challenges facing our society.
Joseph M. Phillips has served as Dean of the Albers School of Business and Economics at Seattle University since 2001. The school serves approximately 1,000 undergraduate and 700 undergraduate students. Albers is distinguished by its focus on student success, commitment to ethics and social responsibility, pursuit of academic excellence, strong ties with Seattle's business community, and emphasis on preparing values-driven leaders committed to contributing to the Common Good.