If you’ve been following CEO Exclusive or larger trends in business, you’ve heard about the burgeoning conscious business movement. Loosely defined, it’s business leaders focusing on making their companies purpose driven and developing a culture that reinforces that purpose and its associated values. When I spoke to David Wilkie, CEO of World 50, and his Chief Customer Officer, Jenn Cooper, our guests on this week’s show, they mentioned it right away as the trend they wanted to discuss. World50 is an invitation-only, peer organization for Global 2000 executives. If anyone knows what the world’s top business leaders are thinking, it’s them.
I’m very excited about this trend. I’ve been talking about it frequently on the show, even discussing a new show entirely devoted to conscious capitalism. Thought leaders in this movement have big plans: Every company in the world is doing something to elevate humanity. The middle market is going to create a sustaining job for everyone who wants one. All employees are going to be happy in every company on the planet… It may sound implausible, but in 1950, so did space travel.
I’ve been sharing about conscious business with everyone who will listen. So, two weeks ago, as a part of my personal crusade, I was gushing about it with a really smart friend who I trust. And, his response was, “Meh. We’ll see if it lasts past the next recession.” Tepid to say the least…Yikes. Since David and Jenn are purpose enthusiasts, like me, I took the opportunity to pose this question to them on the show: Will this purpose movement stand the test of time, or is it just a fad?
Show Me the Money
Undoubtedly, any lasting trend in business must have a financial impact. And, conscious capitalism checks the box three times. When I ask CEOs where exactly the money is, they say it shows up through recruiting and retention, discretionary effort, and employee productivity. In other words, when a company has a higher purpose and a supporting culture that employees get behind, people are easier to hire, work harder, and give more time than they’re being paid for.
Jenn explains the effect on recruiting, “Right now, you can’t talk to anybody in the C-Suite without talking a lot about the talent they’re having access to, that they’re trying to keep. And, I think the culture is a big part of [getting] the talent. So, the financial impact on a company is being able to get the good people.”
Discretionary effort is that little bit extra that employees give because they are moved to do so. It’s staying 10 minutes late. It’s sending that email on personal time. It’s calling a friend from outside the company to get advice. Sodexo’s guide to employee engagement found that 82% of employees will go above and beyond what’s expected when they are engaged.
This kind of work environment makes employees happier, which leads to increased productivity. One study quoted in Forbes Magazine found “happy employees are up to 20% more productive than unhappy employees. When it comes to salespeople, happiness has an even greater impact, raising sales by 37%.”
Improved recruiting saves money. Discretionary effort makes money. Productivity makes money. If having a higher purpose truly does these things, the financial imperative is clear.
Pay Attention to Demographics
Even if companies don’t see the dollar signs associated with conscious business principles, the younger generations of employees want it. Period. So, it’s likely the war for talent will force business leaders to be more purposeful, whether they’re believers or not. Kevin Scott, from ADDO Worldwide, on the show in March, explained, “Millennials: they choose companies to do business with the way that previous generations chose charities. Meaning, when they work for a company or they spend their dollars, they want it to say something about who they are and what they believe.”
While millennials have started the conversation in companies about balance and meaningful work, the next generation, Gen Z, those born after the late 1990’s, are making it an imperative. In the Huffington Post article, Think Millennials Are Purpose-Driven? Meet Generation Z, they assert, “One of the key work values of Generation Z is pride in the organization they work for. And research finds a key way to cultivate that pride is through a higher organizational purpose that is shared and aligned throughout the organization. Organizations must discover a purpose that is worth committing to – one that is socially responsible, human-centered, and ethical.”
Giving a pay check is no longer enough. If you don’t have a higher purpose, in a few years, the best employees won’t want to work for you.
Avoid Inauthentic Purpose-Washing
Just because every company may be forced to have a higher purpose, it doesn’t mean that every company will do it well. It doesn’t mean that every company will take it seriously. It doesn’t mean that being purposeful will penetrate the hearts and minds of business leaders and change their behaviors. There are many people who attend a church, synagogue or mosque, but don’t live by the associated principles.
There’s whitewashing to cover up wrongdoing or a scandal. There’s greenwashing to make a company look environmentally friendly when it’s really not. We could see “purpose-washing”—where companies plaster a higher purpose veneer over indifference and business as usual. If it’s just about looking good, it’s inauthentic.
At a talk sponsored by Conscious Capitalism of Atlanta and the Emory Center for Ethics in April 2018, John Mackey, CEO of WholeFoods, offered a litmus test of whether or not purpose activity is meaningful. “Check whether it’s being run through PR or through business operations,” he said. “That’s how you’ll know.” I actually believe this is true on a wholistic level, as well. If conscious capitalism or having a higher purpose devolves into good marketing or employee relations, this movement will die.
Corporate diversity and inclusion programs are a great cautionary example of good intentions gone awry. As much as we might hope and wish otherwise, the vast majority of diversity departments in larger corporations are useless appendages with no real influence on decision making. They were created as a defense against class action lawsuits. After two decades, they really aren’t fulfilling on making companies more diverse.
The Harvard Business Review, in its article Why Diversity Programs Fail says, “On balance, equality isn’t improving in financial services or elsewhere. Although the proportion of managers at U.S. commercial banks who were Hispanic rose from 4.7% in 2003 to 5.7% in 2014, white women’s representation dropped from 39% to 35%, and black men’s from 2.5% to 2.3%. The numbers were even worse in investment banks (though that industry is shrinking, which complicates the analysis). Among all U.S. companies with 100 or more employees, the proportion of black men in management increased just slightly—from 3% to 3.3%—from 1985 to 2014. White women saw bigger gains from 1985 to 2000—rising from 22% to 29% of managers—but their numbers haven’t budged since then. Even in Silicon Valley, where many leaders tout the need to increase diversity for both business and social justice reasons, bread-and-butter tech jobs remain dominated by white men.”
The fundamentals point to conscious capitalism and the movement toward purposeful business as an enduring mega-trend. When businesses “get it” and understand the positive financial implications, they naturally make the long-term commitment to this way of managing. However, there’s so much that can get lost in language. If leaders read a couple of books, do a workshop, hand it off to their marketing department, and then call themselves conscious capitalists, it won’t work. They won’t get good results. The next recession will come along; these efforts will get shoved to the back burner, and the purpose movement will likely get a bad rap as being ineffective or, worse, irrelevant.
I strongly believe the solution lies in having objective measures to guide business leaders’ adoption of these principles. For example, what’s a quantitative metric for having a higher purpose? How do you know the extent to which the core values on the break room wall are shared by a company’s employees? What are underlying behaviors that define purposeful leadership? If those of us who care about this movement don’t start defining these things, executives will start defining them for themselves. The result could be a wonderful, organic drift towards incorporating conscious business into most company operations. Or, the result could be faulty executions that corrupt the principles that lead the purpose movement to be shrugged off as “a nice idea”. Only time will tell.