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If you’ve heard anything about Conscious Capitalism, you probably already know that it’s a movement encouraging businesses and business leaders to achieve success by prioritizing higher purpose. It’s a focus on serving all stakeholders alongside making profits.
There are four tenets of Conscious Capitalism:
- Higher Purpose. Businesses should exist for reasons beyond just making a profit. Profit is a necessary means to achieving the purpose, but not the sole mission of a business.
- Stakeholder Orientation. The vitality of an organization depends on its commitment to creating value with and for all stakeholders (customers, employees, vendors, investors, communities, etc.)
- Conscious Leadership. A conscious leader is one who understands and embraces the organization’s higher purpose and focuses on creating value for all stakeholders.
- Conscious Culture. Culture is the social fabric of a business, connecting its people and processes with values and purpose.
The key point about Conscious Capitalism is in the name itself—capitalism. Let’s be honest: Capitalism has gotten a bad rap in recent years, because of an increased focus on short-term profits and shareholder primacy. But we believe that capitalism is good and noble. Capitalism as a philosophy is one of the most important advancements our society has known, helping lift people out of poverty and establish vibrant communities worldwide.
WIIFM, though?
Making the decision to prioritize anything in business requires compelling reasoning and an answer to the age-old “What’s in it for me?” (WIIFM) question. Conscious Capitalism is simply a better approach to capitalism because it prioritizes long-term value creation for all stakeholders. It’s a commitment to seek solutions that deliver profits and positive social and environmental impacts. And just as importantly, adopting a conscious approach to business can deliver competitive advantages and position your company for sustainable growth.
One such advantage is attraction and retention of top talent. Job seekers are choosy today, and they’re looking for more than compensation and benefits. According to Deloitte’s 2024 Gen Z and Millennial Report, 89% of millennials and 86% of GenZs surveyed said that “having a sense of purpose is very or somewhat important to their overall job satisfaction and well-being.” They value purpose-driven companies with cultures that emphasize positive social impact, and they’re more likely to stay when they find it.
That translates into real cost savings for a company: A recent study by Society for Human Resource Management (SHRM) found that replacing a salaried employee can cost up to six times their annual salary, including recruiting, hiring and training costs.1
Not only will employees stay when they’re treated well, but they’ll also be more productive. Consider widely popular retailer Costco, which regularly competes with Walmart for market share. Costco founder Jim Sinegal said, “If you hire good people, give them good jobs, and pay them good wages, generally something good is going to happen.” And indeed, it has. Costco pays its employees above-market wages, and those same employees generate +180% more revenue per employee than Walmart.2
Critical to your bottom line is the impact of conscious business on your customers. Consumers are more conscious than ever: A company’s ethical practices and social responsibility resonate with customers and help them form positive brand perception. Continuing with the previous example… Costco employs several conscious business tactics beyond employee compensation, including sustainable sourcing and use of recycled materials and offering high-quality products with lower margins, creating value for their members. Customers appreciate Costco’s conscious approach and reward them for it: In the warehouse club industry, Costco boasts more than 60% market share and a 90% membership renewal rate.3
Not to be overlooked is the effect of conscious business on investors and access to capital. Today’s investors are prioritizing environmental, social and governance (ESG) practices and social impact initiatives when they evaluate investment opportunities. Companies that subscribe to the tenets of Conscious Capitalism – particularly stakeholder orientation – are inevitably exercising a conscious approach toward these concerns by exploring:
- Is the company contributing negatively to the environment, and what steps can be taken to turn that around?
- How is the company contributing toward the betterment of our community?
By embracing Conscious Capitalism and prioritizing all stakeholders, companies can realize these competitive advantages (and more) and achieve long-term sustainable growth.
Getting started
Adopting a more conscious approach to business can seem daunting, but remarkable things can be achieved one step at a time. Start by identifying a conscious leader in your organization—ideally, it’s the CEO or President, but a conscious approach can grow from any level of the company. Then start exploring ways to implement changes that deliver positive outcomes for all stakeholders.
The best resource for learning more and finding a community of like-minded capitalists is the Indianapolis chapter of Conscious Capitalism. Visit us online and join us for upcoming events in Central Indiana.