How Conscious Capitalism Will Boost Your Business
When the Great Recession hit in 2007, I survived the first round of layoffs in my career in finance. I continued to fight the layoff wave, even making it through the worst of it in 2008. But finally, in 2009, I was “relieved” of my duties.
When that happened, I told my wife, “I think I’ll go work at Trader Joe’s. Everyone there is happy.”
Trader Joe’s has an excellent business model, great products, low price points, fantastic marketing, and the innovative idea to carry fewer items than the average store.
But what makes Trader Joe’s so welcoming is the way they treat their employees. Employees are happy, healthy, and committed to the vision of the company. It has created an atmosphere and culture that customers want to be a part of.
Trader Joe’s and companies like Starbucks, Whole Foods, and The Container Store are leaders in a growing movement toward Conscious Capitalism.
A company that practices Conscious Capitalism builds around individuals — employees, vendors, and customers — who are all driven and motivated by the same vision. The more closely aligned they are, the happier (and more effective) the organization is.
It’s a radical shift in philosophy, away from “shareholder value” as the central tenet of a business.
Books, conferences, and entire organizations are dedicated to supporting Conscious Capitalism, and it has taken the business world by storm in recent years. But many CEOs still feel like they can’t embrace it and stay in business at the same time.
However, these misconceptions about Conscious Capitalism obscure how practical the transition is.
- ‘We can’t afford to pay our employees more.’
For decades, analysts and consultants would look at industry “comps” and base salaries, assuming the average wage was a fair wage. Business leaders believed that if Competitor X could pay only $12 an hour, they should be able to do the same.
Instead, Conscious Capitalism asks, “What would happen if I paid substantially more and got a far happier employee who positively impacted all fellow employees, clients, and vendors?”
When employees know the company cares about their financial health, they are free to give more energy to the company as a whole. While there might not be an “Employee Happiness” column on any spreadsheet, happy employees increase the value of their companies.
We all probably can remember a “wow moment” where an employee went above and beyond. That small action positively influenced our experience and our loyalty, and we might have tweeted, posted, or shared the experience with others. That exposure is priceless. Furthermore, caring about your employees’ financial health, education, welfare, and growth is fundamentally sound. Just like you maintain your home or car, you must maintain your greatest asset: your people.
- ‘It’s a waste to spend all of this time and money training employees if they leave the company.’
Many businesses leaders consider it a waste to invest time and money on great training when employees could quit, be poached, or simply leave the company after benefiting from the training.
But consider this — what if you don’t invest that time and money, and the employees stay with the company?
An uninformed, poorly trained staff should scare leaders more than the risk of losing good employees.
Employees are the face of a company, and if they can’t do their jobs excellently, the whole organization suffers. If a company is trying to innovate and forge new paths, it can’t afford for employees not to have the best training. Greatness doesn’t come from mediocrity, and ill-prepared employees won’t be the ones dreaming up new approaches to anything.
- ‘We must get the best deal out of every vendor, squeezing savings for greater profitability.’
A shrewd businessperson gets the best deal most of the time, of course. But going for it on everything is inefficient.
In my company, we have to service many vehicles. I could take them to the “cheapest” mechanics, wait extra days for repairs, and return multiple times to get everything right. But the hidden costs there hurt my business more than the bank statements might reveal.
In the end, paying a premium for great vendors — and then treating them well — is more sustainable and costs less. It guarantees that your work is done well and on time.
When I was in finance, we used to say, “Our assets ride the elevator up and down daily,” and we meant it. In business, many companies mistakenly believe their products or services are their primary assets or competitive advantages. That thought process is short-sighted. If they lost all of their human capital, their products or services would become competitive disadvantages.
Conscious Capitalism isn’t just a fad — it’s an innovation. Businesses that practice it have clear purposes and make employees (those responsible for achieving those purposes) their most important constituents.
Focusing on employees and vendors seems like a big shift. However, by investing in those relationships, companies have greater probabilities of succeeding.
Richard Fertig, founder and president of Brilliant Transportation.