Balancing Share Price, Profits, and Employee Well-being: The Ethical Imperative for Business Leaders

Balance profit and people

In corporate leadership, the pursuit of increased share price and profits often takes centre stage, driving many of the strategic decisions made by executives and board members. However, this relentless focus on financial metrics can sometimes come at the expense of the very employees who are instrumental in achieving these goals, not to mention shifting priorities that conflict with the organisational identity. It is imperative that we examine this issue critically and consider the ethical implications of prioritising share price over the well-being of employees.

Concerning Trends

In recent years, there has been a growing awareness of the impact that corporate decisions can have on employee morale, job satisfaction, and overall mental health. Studies have shown that companies with a strong emphasis on shareholder value tend to have higher turnover rates, lower employee engagement scores, and a greater likelihood of burnout among their workforce. This is not only detrimental to the individuals involved but can also have a negative impact on the company’s long-term performance and reputation.

Companies such as Gallup, renowned for their expertise in research and communication, annually publish influential reports like the “State of the Global Workplace,” focusing on workplace and employee engagement, while Edelman produces the widely respected “Trust Barometer Report.” These comprehensive analyses span regions and sectors, revealing trends that often echo headlines both domestically and internationally. Many interpret these trends as indicative of the prioritisation of profit over people, reflecting symptoms and consequences observed not just locally, but on a global scale.

Employees are the Lifeblood of an Organisation

It is important for executive leaders and board members to recognise that employees are not just a means to an end but are integral to the success and sustainability of the business. After all, employees touch every aspect of the business and are the ones who actual execute strategies through their day-to-day work. By prioritising the well-being of employees, companies can create a positive and supportive work environment that fosters loyalty, productivity, and innovation. If this is not your focus, then the implications and increased risks will have consequences to the performance, brand, and reputation of the business, and that will eventually affect both share price and shareholder return.

So how can business leaders strike a balance between driving share price and profits while also ensuring the well-being of their employees?

One approach is to adopt a more holistic view of business success that takes into account not only financial metrics but also social and environmental factors. This means considering the impact of corporate decisions on all stakeholders, including employees, customers, suppliers, and the broader community. By adopting a stakeholder-centric approach, companies can create value for all parties involved, rather than prioritising the interests of shareholders at the expense of others.

Another important step is to invest in employee development and well-being initiatives that go beyond traditional benefits and perks. Depending on the type of industry you are in, your business could offer flexible work arrangements, providing opportunities for professional growth and advancement, and promoting a culture of open communication and feedback. By investing in their employees, companies can create a more engaged and motivated workforce that is better equipped to drive long-term value for the business.

The Power of Connection

There are many examples of strong leaders who step forward and showed the power of ‘Connection Between Employee Trust and Financial Performance’, even decades ago. One leader, Douglas Conant, comes to mind that unequivocally demonstrated this decades ago when he turned Campbell Soup Company around by making his number one mission, “inspiring trust”, which started with the company’s people. Conant is not alone, there are many other leaders that have proven that by prioritising and looking after your people is great for business performance.

Ultimately, the pursuit of increased share price and profits should not come at the expense of the well-being of employees. After all, if you want to deliver a better performance and improved returns to your investors, it is only through the success and performance of your people that your business will truly rise to its potential.

You Choose

In conclusion, the pursuit of enhanced share price and profits should not come at the expense of the well-being of employees. As board members and executive leaders, it is our responsibility to challenge the status quo and advocate for a more ethical and sustainable approach to business leadership. By prioritising the well-being of employees, companies can create a more positive and inclusive work environment that benefits everyone involved.

People are our greatest asset; we need to make sure they know and feel that. Remember in business, we either all win together, or not. You choose.

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