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. It’s not an “either/or” proposal… It’s “both/and.”

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, mostly 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?

Conscious Capitalism is simply a better approach to capitalism that 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 most importantly for business leaders and decision-makers today, Conscious Capitalism can give you significant competitive advantages in today’s ever-changing market.

Making the decision to prioritize anything in business requires compelling reasoning and an answer to the age-old “What’s in it for me?” question. Frankly speaking, adopting a conscious approach to business can deliver competitive advantages and position your company for long-term value creation.

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. 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, with information about companies’ business practices reported by countless sources on the internet. A company’s ethical practices and social responsibility resonate with customers and help them form positive brand perception. Continuing with the Costco example… 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 the community where we work and live?

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 learning and exploring ways to implement changes to 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.

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Becky Doemland, BAS, is a social-impact consultant, founder of Good Works Indy and president of the Indianapolis chapter of Conscious Capitalism. Based in Indianapolis, she partners with Central Indiana businesses to design strategic community involvement programs that drive executive leadership development and corporate purpose. Learn more about partnering with Becky at www.GoodWorksIndy.com.

This article was originally published as featured content by the Indianapolis Business Journal. (June 2024).

[1] Employee Retention Strategies: 13 Effective Tactics You Can Use (borderlesshr.com)

[2] Walmart vs Costco: different approach, same result? — Ada Insights

[3] Costco vs. Walmart: Revenue Comparison of Two Retail Giants (visserelevator.com)