IMPACT INVESTING IS PROFITABLE
We strongly believe that the best way to invest is in line with our values. Value-based entrepreneurs and small business owners have distinct advantages that can and do lead to great performance while producing significant impact on customers, employees, communities, suppliers, and society. High impact can be profitable, and that all great companies approach business with a stakeholder mentality that weighs each decision by how it will impact all stakeholders.
HERE ARE TWO EXAMPLES OF VALUES-BASED COMPANIES OUTPERFORMING:
Many professionals that have been in the financial sector for decades are aware that just focusing on squeezing out more profit is not a sustainable strategy. Caring for employees, customers, the community, and all stakeholders creates impact as well as financial returns. Here are a few ways that treating people the way we want to be treated contributes to the bottom line:
HOW: WIN THE TALENT BATTLE
According to an extensive U.S.-based employee survey conducted by HR consulting firm LRN, 82% of employees are willing to work for less pay if they are able to work for an ethical company. Managers often think most employee departures happen because of compensation or career progression, but that is not the case. To be more successful, companies need to refocus on the bigger picture – the overall impact - in order to be more successful. The same survey concluded that companies with a commitment to ethical conduct enjoy distinct competitive advantages.
HOW: HARNESS THE "VIRTUOUS CYCLE"
Investing in people has a dramatic impact on profit, as shown by the “Service Profit Chain," a concept developed by Harvard Business School’s James Hesketteither. The Service Profit Chain contends that how companies treat their people contributes to either a vicious cycle or a virtuous cycle:
HOW: INSPIRE CUSTOMERS AND EMPLOYEES WITH VISION
A values-based company with vision beyond profit to serve the people around them may inspire their customers to become missionaries for their ideas. Companies with vision may inspire their employees to change from task-oriented workers to passionate warriors for the companies purpose.
Values-based ventures may have a higher probability of success, but they still need to face the odds of failure, which is what our next post is about.