Walter Robb, the co-CEO of Whole Foods Market, was faced with a dilemma last year.
Rising health-care costs had put the Austin, Texas-based grocery chain in a tough position. Executives made the difficult decision to pass the increase on to employees.
The average worker was going to pay about 11 percent more for coverage.
But hours before Whole Foods was set to announce the cost increase to employees, Robb had crisis of confidence.
"I couldn't sleep," he said.
Robb sent out a few late night emails to other company executives who reported that they also were second guessing the decision.
By the time the sun rose, the company had scrapped the plan. Whole Foods decided to absorb the price increase rather than pass it on to employees.
"We just couldn't do that to our people," Robb said.
Companies like Whole Foods are part of a growing movement that believes businesses don't need to chose between doing the right thing — whether that's environmental stewardship or going the extra mile for employees — and the bottom line, despite mounting pressures to be competitive and keep expenses low.
The movement is called conscious capitalism.
Robb, like many other business owners, believe that conscious capitalism allows a company to grow and remain profitable while sticking to a core set of values.
"Great companies have a greater purpose," he said last week at the National Retail Federation's annual show here.
Doing the right thing can mean many things to many companies.
Locally, Elwood Thompson's Local Market strives to work with area farmers and vendors as a way to support small businesses in the community and to be environmentally friendly.
Goochland County-based CarMax Inc. was honored by Fortune magazine last week for how the automotive retailer treats its employees.
Illustrating that a company can do simple things to treat employees well, the magazine said one of the reasons it chose CarMax was because "CEO Tom Folliard shows up at sites that meet sales goals and serves up a steak dinner — sometimes twice to make sure both shifts are honored."
And Ten Thousand Villages, which has stores across the country including one in Carytown, supports poverty-stricken artisans around the globe by giving them a place to sell their wares.
Running a business with a core set of values is "a matter of focusing on your personal aims," said Rick Hood, Ellwood Thompson's owner.
"When I started this, I thought about where I wanted to spend my time and wanted to do something with deeper meaning," he said. "It's not just about making money. It's leaving a legacy for your community."
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Many other businesses give millions to charities annually, offer employees solid benefit packages and raise money for the underprivileged.
David Urban, a professor of marketing and executive assistant dean at Virginia Commonwealth University's business school, says companies that run values-based operations are making a good business decision.
"What companies are realizing now, and what may be the genesis of the term 'conscious capitalism,' is that consumers are becoming more and more interested in dealing with companies that are socially responsible," Urban said. "This is especially true for younger consumers, who are much more environmentally conscious, and much more comfortable with demographic, social and behavioral diversity. Therefore, they want to do business with companies that they perceive are out for more than the quick profit."
And there is nothing wrong with being profitable, Whole Foods' Robb said. In fact, a large number of business owners believe that running their businesses by a set of values helps them be profitable in the long run.
"We put our employees first," Kip Tindell, CEO of Dallas-based The Container Store, said about the benefits packages and other perks the company gives workers. "If you do that, (employees, because they feel ownership in the company,) take better care of the customers."
The key to conscious capitalism, and what separates a business that does good deeds from one that runs the company based on a set of values, is sacrificing profit in order to do what it believes is right, he said.
"We didn't lay anyone off during the great recession," even though it meant going to great lengths to continue operating the business, Tindell said.
At Ellwood Thompson's, Hood is giving up 600 square feet of prime retail real estate in one of the top commercial districts in the Richmond area to build a community meeting room.
In addition to providing the space available to local groups at no cost, he's taking on an additional salary to hire a manager to run the meeting room.
Hood is also replacing the lighting in the store with environmentally friendly LED lights.
"These things are expensive, but we're doing the right thing" for the community, environment, customers and employees, he said.
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That combination is the foundation of conscious capitalism, The Container Store's Tindell said.
"Business is really and truly not a zero sum game. Win-win does exist."
That's a major change in how companies operate, VCU's Urban said.
"When I took a basic microeconomics course as an undergraduate student 37 years ago, the fundamental assumption made about businesses is that they had a goal of profit maximization. But in my view, most businesses that are successful and are admired by consumers operate with a set of values and a corporate culture that comprise more than the simple assumption of maximizing profits," he said.
Tindell, like many executives who practice conscious capitalism, extends the concept into vendor and supplier dealings.
The Container Store purposefully places orders with its vendors during vendors' slowest times of the year. This helps vendors — particularly smaller ones — stay fiscally healthy during otherwise tough times.
While helping the vendors, it also helps The Container Store stay competitive.
Working with vendors has given the company "a huge competitive advantage against mass retailers and created long lasting relationships," Tindell said.
But for a company to successfully implement a conscious business plan, everyone must participate, said Yalmaz Siddiqui, director of environmental strategies for the Office Depot chain.
The Florida-based office supply retailer has undergone a shift in recent years to become more environmentally sustainable.
"You have to do more than just have a green team," Siddiqui said.
To truly affect change, a company must ensure that all its employees understand what is happening and what the stakes are, he said.
Siddiqui believes major companies can then harness their power and use it as leverage to push major substantial changes across industries.
"We are the bridge between the supplier and the customer. If we can influence customers to make greener choices, we are more powerful and can push suppliers," he said.
Speaking at last week's conference, former President Bill Clinton told a crowd of about 4,000 that retailers — who he credits as leaders in the economic recovery — have a responsibility to their communities beyond commerce.
"If you are leading the country out of the recession, you are doing something far more important than just putting people back to work and putting money in people's pockets."