Companies With A Conscience Are 10 Times More Profitable

AP Photo/Austin American-Statesman, Deborah CannonJohn Mackey, co-CEO of Whole Foods, speaks during a session titled "Conscious Capitalism: Liberating the Heroic Spirit of Business" at the SXSW Interactive Festival in Austin on Sunday, March 10, 2013.
If you had told me, when I was attending college during the height of the Vietnam War, and the heyday of the counterculture, that several of the most inspiring days of my life would someday be spent with a group of CEOs of large companies, I would have said you were nuts. But that's exactly what I experienced last week, at a small gathering sponsored by an organization called Conscious Capitalism Inc. and held at the Esalen Institute in Big Sur, Calif.

Even today, "conscious" and "capitalism" remain unlikely bedfellows. Both are freighted words that have come to stand for fundamentally different worldviews. Capitalism is associated with individualism, personal ambition, the accumulation of wealth and power, and an identity grounded in external accomplishment. The word conscious, or more specifically consciousness, is associated with self-awareness, personal development, the greater good, and a worldview that eschews competition, hierarchy and materialism. The thesis of conscious capitalism -- outlined in a new book of the same title by John Mackey, founder and co-CEO of Whole Foods, and his thought partner, Raj Sisodia, a business professor -- is that capitalism can be a force both for economic and social good. Or as Bill George, former CEO of Medtronics, puts it in the book's introduction: "Well run, values-centered businesses can contribute to humankind in more tangible ways than any other organization in society."
The sad truth: Most execs care little about employees. I don't kid myself about the unenlightened and even cruel ways capitalism has been practiced by many companies: accumulating wealth for a few while paying most employees subsistence wages; fighting regulation while blithely degrading the environment; avoiding taxes and ignoring responsibilities for the communities in which they're based. The truth is I meet few CEOs or senior executives at large companies who seem to have a vision much beyond the next quarter's earnings, or a sense of responsibility and commitment to their employees, customers, suppliers, and communities that equals their focus on their shareholders. But I did last week.

These CEOs are different. Even more than anything the eight CEOs I met had to say -- and much of it was inspiring -- I felt moved by them as people. They made no demands to be treated as "special" during the conference. We all stayed in simple quarters, with no access to cell phone service. They listened when others spoke. And they invested three days with one another for no other reason I could discern than to learn, and build a community of like-minded colleagues. At the most basic level, consciousness simply means being conscious of more.

That begins with self-awareness -- the willingness to look inside, to acknowledge our limitations, uncertainties and fears, and to take responsibility for our actions. Mackey has drawn some critical attention for his libertarian views, and I found myself debating with him frequently over the three days. But I also found him to be open, real, vulnerable, and deeply committed to growing and becoming more conscious. How many leaders would be willing to say, as Mackey does: "The company was unable to grow until I was able to evolve -- in other words I was holding the company back. My personal growth enabled the company also to evolve."

And put your money where your mouth is. I admire leaders who do this. The Container Store's CEO Kip Tindell explained why he pays full-time sales employees a minimum of nearly $50,000 a year -- approximately double the average for retail stores. Put simply, Tindell believes that the best and most motivated employees, which he says the store is consistently able to attract, are three times as productive as an average worker. One of the payoffs is a turnover rate under 20 percent -- a fraction of the turnover that most of his retail competitors endure.
Consciousness is also about being socially conscious -- recognizing and taking responsibility for the needs of the larger community. Blake Mycoskie, who founded Tom's Shoes at age 26, talked about the profitable business he's built on a model of giving a pair of shoes to a child in need for each pair of shoes the company sells. Shubhro Sen, who leads people development for Tata, the huge, privately-owned Indian conglomerate, described the founding tenet of the company that endures to this day: "We earn our profits from society and they should go back into society." Most of the company today is owned by philanthropic trusts.

Forget the false choices. I took away from these three days a very clear and inspiring message. It's not necessary to choose up sides between consciousness and capitalism, self-interest and the broader interest, or personal development and service to others. Rather, they're each inextricably connected, and they all serve one another.

Raj Sisodia looked at 28 companies that he identified as the most conscious -- "firms of endearment" as he terms them -- based on characteristics such as their stated purpose, generosity of compensation, quality of customer service, investment in their communities and impact on the environment.

The 18 publicly traded companies out of the 28 outperformed the S&P 500 index by a factor of 10.5 over the years 1996-2011. And why, in the end, should that be a surprise?
  • Conscious companies treat their stakeholders better. As a consequence, their suppliers are happier to do business with them.
  • Employees are more engaged, productive and likely to stay.
  • These companies are more welcome in their communities and their customers are more satisfied and loyal. The most conscious companies give more, and they get more in return.
The inescapable conclusion: it pays to care, widely and deeply.

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Lauren Smith

I so agree with the statement, "The sad truth: Most execs care little about employees. " I see it time and time again. It is a dog eat dog world. That is why I am always looking for ways to get ahead! I have found the most amazing book! It is called, "Stop Playing Safe: Rethink Risk. Unlock the Power of Courage. Achieve Outstanding Success," by author Margie Warrell. It is a motivating and exciting read. She teaches to, "Embrace a ‘Courage Mindset’ to speak up with confidence in every situation," and "Define your sense of purpose and pursue more inspiring goals." The book is full of information that will motivate you to succeed! http://margiewarrell.com/

April 09 2013 at 10:23 PM Report abuse rate up rate down Reply
lkd3712

I need a business loan, would LOVE to open a bookstore that works with local schools to help support literacy among students. I need about $250,000.00 to get started, that's for store rent, wages, insurance, and inventory. Email me if you can help!

April 09 2013 at 9:17 PM Report abuse rate up rate down Reply
maj4045

When Kohl's corporate decided to outsource IT jobs to India, they totally lost our favor. Thinking that a forward moving company, still growing and showing very positive results on the market, would be wonderful for employees . . . was evidently a big mistake. Job security and corporate integrity are priorities, of course. However, the anti-American practice of securing cheap labor at any cost, certainly undermines this company's employee-well-being. Corporate greed is killing America!

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