Conscious leaders understand that aligning their business practices with ethical, sustainable principles not only benefits society but also drives financial success.
A study by Bain & Company and EcoVadis in 2023, covering thousands of businesses globally, found that businesses with the most satisfied employees saw three-year revenue growth up to 6% higher than those with the least satisfied employees. Additionally, firms with the highest employee satisfaction had net income margins of 16%, compared to just 10% at firms with the least satisfied staff.
Generating profit is essential to every business. It helps leaders serve their communities better, keeps their employees financially stable, and ensures the business remains sustainable for the long term.
However, when profit generation becomes the sole focus, neglecting the core principles of conscious leadership, stakeholder orientation, and higher purpose, we have a problem.
In our latest episode of The Conscious Capitalists podcast, Timothy Henry and Raj Sisodia speak to Christopher Marquis , Sinyi Professor of Chinese Management at Cambridge’s Judge Business School and author of The Profiteers, How Business Privatizes Profit and Socialize Costs’.
They discuss the concept of ‘hidden costs’ and all things ‘profit’ in a conscious business.
One of the concepts he spoke about was that of profit vs profiteering. According to him, while profit, as we discussed, isn’t inherently negative, profiteering is the real threat to conscious capitalism.
Profiteering exploits markets and systems so shareholders and owners can reap disproportionate monetary benefits. It’s unethical profit, created to satisfy greed, and puts the cost of this relentless pursuit of financial gain on the communities these businesses operate in.
So, if unethical profit exists, what does ‘ethical’ profit look like?
Based on our conversation with Christopher, here are three ways conscious businesses can make the distinction:
1 – The Importance of Externalities
Ethical profit creates a spectrum of positive externalities. Financially sound businesses achieve ethical profit by ensuring they do not harm the environment or the communities around them. This approach helps businesses give back to their communities by supporting local initiatives, enhancing educational opportunities, promoting environmental sustainability, and fostering economic development.
2 – Impact Within the Organization
Profit shouldn’t just serve owners and shareholders. In a conscious business, every employee should be able to reap the benefits of a good financial year. This means fair wages, opportunities for growth, and a supportive work environment that values and rewards their contributions. By investing in their employees, businesses can foster loyalty, increase productivity, and create a positive, inclusive company culture.
3 – Long-term sustainability
Conscious businesses who value ethical profit play the long game. Businesses that focus on ethical practices are more likely to build resilient, adaptable models that can withstand economic fluctuations. For them, slow, sustainable growth is more valuable than quick gains and scaling. That means letting go of short-term profits that come at the expense of ethical considerations, such as cutting corners, exploiting labor, or engaging in environmentally harmful practices.
For businesses to become conscious, they do not need to forgo profit completely. Instead, they need to align profit with purpose. This means ensuring that their profit generation methods are in harmony with their core values and the well-being of all their stakeholders.
For more insights into ethical profit, the impact of businesses on their communities, the new conversations Conscious Leaders should be having more, don’t forget to check out the full episode of The Conscious Capitalists podcast with Christopher Marquis here.
