Conscious Capitalism: What Every Business Owner Should Know

In recent years, some businesses have expanded their social responsibility initiatives and are pushing for greater accountability to their stakeholders through embracing the values conscious capitalism. The creation of these concepts are attributed to Whole Foods co-founder John Mackey and marketing professor Raj Sisodia. Conscious capitalism involves firms taking a more holistic approach that does not concentrate on solely making profits but focuses on their principal stakeholders' emotional, ecological, and social wealth.

Historically, capitalism's most significant emphasis was on economic growth and innovations. This focus generated wealth and an increased standard of living for many, but also resulted in income inequality.

Contemporary business leaders are practicing conscious capitalism as a way to look at business more holistically and address negative side effects of pure profit seeking that has been the norm. These conscious capitalist leaders are equally concerned about people and the environment as they are about profits.

While conscious capitalism still pursues profits, it emphasizes doing so in ways that honestly hold the primary stakeholders' interests at heart. Apart from charitable programs and organizations, conscious capitalism promotes integrated social responsibilities, purposeful decision-making, and self-awareness.

What are the Guiding Principles of Conscious Capitalism?

Businesses that practice conscious capitalism observe four principles. These include:

1. Higher Purpose

While profits are vital for the sustainability of businesses, conscious capitalism focuses on purpose beyond profits. Higher purpose allows firms to focus on their mission and align more closely with the values of their customers. This approach also helps businesses to keep employees and stakeholders engaged.

2. Stakeholder Orientation

Conscious capitalism business leaders consider a broader range of values and priorities when making business decisions. They concentrate on optimizing equal value to all humans involved in their business. These could be customers, employees, investors, funders, the environment, and the community.

3. Conscious Leadership

Conscious capitalism business leaders guide others along a purposeful track. Their actions motivate other stakeholders and contribute to creating a culture that embodies the values of the company. They concentrate on creating harmony among stakeholders and welcome the contributions of each individual in the business.

4. Conscious Culture

Conscious capitalism thrives in businesses that want to create a work culture that involves trust, care, and cooperation among business leaders, stakeholders, employees, and customers.

How conscious capitalism plays a critical role in a company's success.

Businesses that participate in conscious capitalism enjoy a wide range of benefits. Conscious capitalism business leaders concentrate on finding a higher purpose for their business and ensure employees are engaged and satisfied in their jobs. Motivated employees are more likely to stay productive towards helping a company achieve its goals and stay with the company longer. They become promoters of the company's brand. In addition, engaged workers can be more innovative and help businesses exceed their targets.

The benefits of practicing conscious capitalism include but are not limited to:

• Increased harmony between employers and staff.

• Better customer and employee satisfaction.

• Improved stakeholder loyalty.

• Improvements in the surrounding communities and environment.

• Increased community engagement.

Do consumers care about a company's brand reputation?

Recent research shows consumers will only buy from brands they trust and whose values align with their own. Marketers should realize that a company's reputation emerges from all activities that a company takes part in and not just from what the company sells. Corporate reputation comprises different dimensions such as how consumers feel about your company, product quality, employees, work environment, financial performance, social responsibility, vision, and goals. Consumers want to support brands with positive business practices.

How can companies show they care about more than just profits?

Conscious capitalism business leaders focus on not just creating wealth through profits but also on positively impacting stakeholders, the environment, and the community. Here are ways how businesses can show they care more than profits:

Engaging in Philanthropy

Supporting charity is a great way companies can help communities. By making donations, companies can promote their brand reputation and show consumers they care about making a difference, not just making profits. Statistics show 80% of millennials are more likely to purchase products from companies that support charitable events. However, businesses should not participate in charity events just for publicity without providing genuine support to the community.

A good way for a company to show they care about the community is by investing money and time to support the community's improvement. They can participate in volunteering activities in the community. Apart from monetary donations, a company can give out in-kind donations to an organization that needs them.

Practicing Good Ethics

Ethical conduct is one of the most vital attributes a company should have. A business with good ethics does not only treat its direct employees and stakeholders fairly, but also every other individual in the supply chain. These include employees like drivers, factory workers, and farmers. An ethically responsible company produces products that will not harm people, the environment, or animals. They ensure their products are of high quality and value.

As a company practicing conscious capitalism, you should consider the environment and produce non-toxic products that are biodegradable, with reduced plastic packaging material. Also, pay your employees fair, market rate salaries and wages. Develop and maintain honest communication channels that contribute to a greater level of transparency.

Community Involvement

Companies should not limit their support to only well-known non-profit organizations. They should give back to the local communities. Apart from supporting charity events, conscious capitalist businesses can take part in supporting local communities through:

• Offering food or helping facilitate use of public transportation.

• Provide free training to the people in the community, such as offering work skills to the youths.

• Tree planting, visiting the elderly or contributing to community fundraisers.

• Offering gifts to local children during community events.

A company like Google has been providing low-income communities with educational materials for virtual learning.

Maintaining a Good Company Culture

A conscious capitalist company respects its employees just like it respects its customers. This means they give their employees appropriate time off, benefits, vacations, necessary working equipment, and a good work environment. A socially responsible company should have standardized practices and values that favor everyone in the company. A company should offer training to employees to prevent unethical behavior in the company and acknowledge positive contributions.

Bottom Line

Business leaders have a responsibility to make the best choices for their companies. Conscious capitalism is for business leaders who want to practice advanced social responsibility and positively change the community and environment. Practicing conscious capitalism will bring great value to your business. Your employees will be more engaged, and you will improve your relationship with clients and other stakeholders. Customers are more likely to buy from brands that practice conscious capitalism, supporting communities through charity events, producing environmentally friendly products, offering volunteer services.