The MBA Class of 2002 at the Rotterdam School of Management gave short shrift to Rafael Comenge’s plan to pursue a career beyond profit maximization. On graduation, he returned to B&S Europe, a consultancy in Brussels that takes on global projects with a social and financial purpose, including sustainability, promoting democracy, governance and the rule of law.
“[Peers] mentioned that I would never make money,” says Comenge. “I was considered the NGO guy, even though I never worked for one.”
Two years ago he attended an alumni reunion where RSM presented a new strategy to attract like-minded students. In their MBA application, prospects now answer the question, “how will I be a force for positive change?” Admitted students post on public social media their “I will” statements for how to achieve these aims.
“It is extremely encouraging to see that we now share a goal to make a difference,” says Comenge, of RSM.
The biggest and most meaningful challenges of our time
Business education is undergoing a shift away from teaching traditional skills for maximizing shareholder value. Instead there is a healthy appetite among students for classes on issues such as climate change, resource efficiency and poverty mitigation.
“Students know that these are some of the biggest and most meaningful challenges of our time,” says Erin Worsham, executive director of the Center for the Advancement of Social Entrepreneurship (CASE) at the Fuqua School of Business at Duke University.
CASE and Fuqua’s Center for Energy, Development, and the Global Environment (EDGE) provide opportunities for students to consult companies, such as renewable energy firms and environmental, social and governance (ESG) investment funds. EDGE also conceptualized a pan-business-schools event called ClimateCAP, a global summit on the business implications of climate change, in response to student demand.
The event drew speakers from across industries, including Goldman Sachs and Statoil. Business has placed pressure on schools to rethink their purpose in society, just as they are. A recent statement by the Business Roundtable group of US chief executives called for a cultural shift from shareholder primacy to a broader focus on all stakeholders: customers, employees, suppliers and communities.
“In order to meet these goals, companies need MBA graduates who, in addition to core functional and technical skills, are adaptive and innovative leaders, able to manage complex challenges and meet the needs of a variety of stakeholders,” says Worsham.
Marrying profit and purpose
A growing number of business school graduates are looking for careers outside the private sector, including in government or nonprofits. Some are also keen to work for businesses that marry profit and purpose, or want to establish their own social enterprise.
This was reflected in the establishment of the Business Graduates Association (BGA) this year, which accredits business schools and champions responsible management and positive impact. BGA is a sister brand to the Association of MBAs (AMBA), which found in a survey that two-thirds of recent MBA graduates are likely to consider the wider societal implications of their decisions. Improving the lives of people in poverty was also a priority.
Governments and global development organizations, too, are championing change in business education. UN Global Compact’s Principles for Responsible Management Education, for example, has seen scores of schools pledge to focus on teaching and research around sustainable social, environmental and economic value, and report on their progress.
The most prestigious business school accreditation bodies and MBA rankings agencies are also driving the shift to sustainable management education. This year, the Financial Times introduced a corporate social responsibility (CSR) criterion for inclusion to its Global MBA ranking, based on schools including a substantial amount of teaching on the subject in their core curriculum.
Meanwhile, the European Foundation for Management Development (EFMD) stresses that ethical behavior, social responsibility and sustainability should be embedded in policies, operations, teaching and research of business schools seeking its EQUIS accreditation.
EFMD was a founding member of the Principles for Responsible Management Education (PRME) initiative in 2006, by which schools commit to six principles around providing students with the skills needed to balance economic aims with social ones. Today many are the United Nations’ Sustainable Development Goals (SDGs), spanning education, the environment, reduced inequality and other goals.
The PRME scheme has since grown to have 750 management institutes as members from over 82 countries globally.
John North, executive director of the Globally Responsible Leadership Initiative (GRLI), another schools network, stresses the need for better alignment of networks, so as to shift the needle towards responsible management education.
While not discounting their valiant efforts, he says schools will be the first to admit they are frustrated by the lack of progress. “There is a lot of talk about sustainability and responsibility, there are many bolt-on changes to curricula and the occasional attempts at systemic interventions, but on the whole nowhere near enough is being done,” he says.
The challenge is creating meaningful, measurable and consistent initiatives across schools. North calls for a fundamental restructure of teaching, including the introduction of more experiential learning opportunities for students to create positive impact for communities.
Research also requires reform, he says. Currently, research published in prestigious journals is prioritized, even though it is often too academic with not enough practical application or a wide enough readership to make a significant impact on business.
Are business schools becoming part of the solution?
Brandon Kirby, director of marketing and admissions at RSM, says it could be argued that business schools helped perpetuate the corporate profiteering associated with the 1980s and 1990s, through their focus on maximizing shareholder value.
However, he says that schools — which train tomorrow’s business leaders and entrepreneurs — are doing a much better job on being part of the solution instead of the problem. “Whether via curriculum updates or graduate placement, schools have the opportunity to rewrite the narrative of our collective role in the business world,” says Kirby.
Worsham at Fuqua adds: “We deeply believe that the private sector can play a powerful and positive role in helping create solutions and it is our responsibility to equip our students with the skills to lead that change.” These skills include stakeholder analysis, change management, an entrepreneurial mindset and ability to lead diverse teams towards a common purpose.
But Worsham recognizes the need to also provide students with traditional skills such as finance, so as to ensure graduates can get hired, perform well and secure a return on their investment in a pricey MBA. What’s more, there is no guarantee that students will uphold responsible management principles after graduating.
But current evidence suggests more of them will than ever before.
Back at B&S, Comenge is a case in point. He’s now managing director of the consultancy firm and has grown it into a €30m business that employs over 70 people. He’s also helped to improve governance policies in developing countries all over the world, including Honduras, Montenegro and Guatemala.
For MBAs, profit and purpose are definitely no longer mutually exclusive.