Focusing on “Conscious Capitalism” Can Benefit Your Company. Here’s How
In the 1980s, the prevailing capitalistic wisdom was that “greed was good.” Fortunately, for the most part, we’ve evolved past that way of thinking and a new philosophy has emerged.
Conscious capitalism is founded on the idea that businesses can do good for society and the environment, their workers, and their shareholders, all at the same time.
Indeed, the Harvard Business Review has found that companies who practice conscious capitalism outperform the stock market by 10.5 times. They also do better than high-performing organizations like Fannie Mae and Walgreens by a staggering 300 percent.
The movement is founded on four basic pillars, as set forth by John Mackey (founder of Whole Foods) and Raj Sisodia in their book “Conscious Capitalism: Liberating the Heroic Spirit of Business”:
- Higher Purpose: Companies and organizations should have a purpose that is more important than just making money for shareholders of the business.
- Stakeholder Orientation: These companies need to create value for all of their stakeholders, whether they are employees, customers, suppliers, investors, or their community as a whole.
- Conscious Leadership: Leaders of these organizations need to inspire their workers to motivate them to work toward a greater goal.
- Conscious Culture: The values and practices that guide a company should aim to create an atmosphere in which everyone can succeed
So how can we employ these pillars in our own businesses?
Look at the Long View
We can begin by setting sustainability goals. As impact investment experts like Olympia De Castro say, there is a clear need for a growing convergence toward sustainability goals from different capital providers and stakeholders.
One way conscious capitalism seeks to achieve this is by minimizing the distinction between NGOs (Non-Government Organizations) and traditional business firms.
These types of entities are often considered opposing forces: one operates from a place of altruism while the other acts on greed. But a conscious business is competitive because it looks beyond that short-term, selfish point of view.
This combination of the motivation of an NGO with a sustainable business model is where Conscious Capitalism draws its power.
All Stakeholders Matter
We should also start shifting the focus away from investors. While those who invest capital into organizations certainly need to be considered, they can no longer be the ultimate metric by which we measure success.
By creating a company culture that aims to pay dividends to everyone involved, whether through cash, access to opportunities, or service, you can begin to cement your company’s values.
“A great way to become more intentional with your culture is to start with the idea that you’ll ‘do for one what you wish you could do for all,’” explains David O’Hara in this Forbes article.
As O’Hara says, try to think about how you could make each person’s life better or their job easier. For his part, his company was able to donate its training rooms as local community resources when they weren’t being used in the evenings.
Pay People What They’re Worth
If all stakeholders in your company matter, then it stands to reason that you should compensate your workers accordingly.
Take Costco as an example. Employees start with a base pay of $13 an hour, much more than other retail chains. After that, its cashiers can earn bonuses that can bring their total pay to $56,000 per year. Plus, the majority of their workers have healthcare benefits.
As a result of measures like these, Costco is routinely rated as one of the best retailers to work for. And the company enjoys a very low employee turnover rate at just 6 percent each year.
The process of hiring is expensive and it’s one that companies usually prefer to avoid. Costco mitigates this cost by compensating its employees fairly. These experienced workers are then able to help the company be more productive.
These are just a handful of ways that companies can use the tenets of Conscious Capitalism to improve their business. It’s never too late for an organization to start implementing these practices to not only make money, but also to build something you’re proud of. The result: A company that stands for something and makes a difference.
After all, it has been frequently shown that by working to improve their communities and the lives of their workers, businesses benefit. It’s evident in both their bottom line and the impact that they can make by improving society as a whole.