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Compassionate Capitalism: Business for Good

  May 1, 2024  |    #Make Money

Compassionate capitalism and the LGBT community

Despite initial skepticism, compassionate capitalism is a tangible reality, coveted now more than ever. Join us as we spotlight companies embodying this ethos, redefining success to encompass compassion, profit, and purpose.

What’s compassionate capitalism?

Compassion is empathy for others. Capitalism, according to The Oxford Dictionary, is “an economic system in which a country’s businesses and industry are controlled and run for profit by private owners rather than by the government.”

According to The Management Study Guide, compassionate capitalism “means that corporations have to account for the costs that they impose on the environment, the communities that lie in the vicinity of their factories and plants as well as offices, their employees whom they have to treat with more kindness, and the consumers and other stakeholders to whom they must be accountable.”

It’s not often that we hear the words compassion and capitalism in the same sentence, and this may be why combining the two words seems oxymoronic. To many, the two are mutually exclusive.

To be true, as Gretchen Fox wrote on, “Men, women, companies and our education system have all perpetuated [a] version of heartless, soulless capitalism since the Industrial Revolution. Not only does it not have to be this way, it frankly cannot continue this way.”

Before writing The Wealth of Nations, the father of capitalism, Adam Smith, wrote The Theory of Moral Sentiment. Smith’s pursuit in this lesser-known, previously published book is “enlightened self-interest.” As Blain Bartlett shared in a January 2021 TEDx Talk, “Smith ends The Theory of Moral Sentiment by defining the character of his truly virtuous person as being someone who’s mindful of taking actions in their own self-interest, while at the same time considering the impact of those actions on the interests of a larger whole to which they felt connected.”

This is why compassionate capitalism is the antidote for today’s unsustainable “profit at all costs” business model.

Compassionate capitalism IRL

Companies need to ditch the “profit at all costs” business model. It hurts people, the planet, and businesses. For successful examples of compassionate capitalism, look to Nordic countries such as Sweden, Finland, Norway, and Denmark.

More acutely, an example of compassionate capitalism as it relates to wage equality is in 2015 when Gravity Payments’ CEO, Dan Price, cut his $1 million salary by 90% to raise his employees’ salaries to a minimum of $70,000 a year. Price recently shared on Twitter that since this bold and weirdly controversial move, Gravity Payments’ revenue has tripled and the number of employees who own a home increased 10 times.

An example of compassionate capitalism as it relates to the environment is how Subaru, an automobile company, has made protecting the environment a cornerstone of its corporate values. Subaru has long been known for authentically marketing too and supporting the LGBTQ community, especially the lesbian community. In fact, in 2004, the Subaru manufacturing plant in Lafayette IA became the first U.S. manufacturing facility to reach zero-landfill status. Continuing its efforts to “Leave No Trace Center for Outdoor Ethics,” Subaru Traveling Trainers have traveled the lower 48 states over the last 10 years teaching over eight million Subaru enthusiasts how to minimize their impact in natural areas.

Another example of compassionate capitalism that promotes the family is Netflix’s 52-week parental leave policy, which benefits both women and men and is available to parents of newborns and newly adopted children. The most recent indications are that not everyone’s taking advantage of the full 52 weeks, and men are less likely to use all of them than women. But it’s a start, and it’s needed, and it’s needed now.

Compassionate capitalism isn’t new to the U.S., either. Milton Hershey, the founder of The Hershey Chocolate Company, was a compassionate capitalist.

Hershey believed that his employees were his best asset and, therefore, treated them equitably because he felt his employees would reciprocate and do better work for his company. He created the town of Hershey with schools, a shopping center, a theme park, and more to ensure his employees had the best work-life balance possible, and he was right. Hershey went on to use the wealth that he acquired both from treating his employees well and having the best chocolate to found The Milton Hershey School for Boys, a home and school for orphaned boys. That’s since been expanded to include both boys and girls.

Why now is the time to pursue compassionate capitalism

That’s why it’s exciting to see an evolution taking shape in the business world over the last couple of decades. Workers, and thereby their employers, want social, political, and environmental progress; they want environmental protections and equitable pay, and they want their employer to push for that progress.

It’s worth noting this change correlates with Millennials entering the workforce and Millennials working their way up the corporate ladder. Gallup reported in its 2019 ‘How Millennials Want to Work and Live’ research that “millennials don’t just work for a paycheck – they want a purpose.”

Defining exactly what purpose means to Millennials is somewhat vague, but Cone Communications’ ‘2016 Cone Communications Millennial Employee Engagement Study’ offers insight. It found that “three-quarters of Millennials would take a pay cut to work for a socially responsible company.” Therefore, in its 2019 ‘Millennials in the Workforce: How Technology Shaped Them (and What to Do about It)” article, Fond Technologies suggests that “the highest-level purpose millennials seek has to do with contributing to something larger than themselves via their careers.”

Business leaders and managers would be wise to remember this, especially as Pew Research Center reported from U.S. Census Bureau data in 2018 that Millennials make up the largest part of the workforce by 35%, and now is as good a time as any.

In a post-COVID-19 world, workers are rethinking their work-life balance. A June 2021 Microsoft World Economic Forum Survey found that over 40% of employees are thinking of quitting their jobs. The 20-year record-high quit rate suggests that these aren’t empty threats.

The leading reason for this threat and willingness to quit “a secure job” is that the pandemic has challenged the balance of work-life balance, and people have formed new values. Companies that don’t put action behind their mission statements of fairness, equity and environmental protection will see more employees bounce.

And the disconnect between words and actions is no more prevalent today than between “capitalism” and the LGBTQ community.

The difference between rainbow capitalism and compassionate capitalism

Rightfully so, there’s a lot of talk in the queer community today about rainbow capitalism.

Rainbow capitalism, as defined by The Diversity Dictionary™ by The Other Box, is “when companies, organizations and institutions capitalize off Pride month by displaying superficial support for LGBTQIA+ rights.” In other words, rainbow capitalism is when businesses put rainbow logos on their social media profiles in June and don’t support the queer community the rest of the year and, in some cases, harm the queer community.

Because you can’t look anywhere this June without seeing a rainbow logo or flag outside a business or on its social media profile, the LGBT community is asking questions.

If you support us so much, why are so few of us on your boards and in your C—and E-suites?
Where’s the love, i.e., good-paying jobs, when the Williams Institute of UCLA shows that LGBTQ people are more likely to live in poverty than the general population?
How can you so publicly celebrate Pride month when you’re quietly donating to politicians actively fighting against us?

There’s a disconnect and everyone sees it.

We’re old enough to remember when Pride was underground, a celebratory protest. When companies first showed representation at Pride it was a unique and affirming experience. The LGBT people who worked for those companies were especially proud and studies would suggest that they were especially productive as a result.

It was a bold move by these companies that first showed up to Pride because backlash by the general public and threats of boycotts were greater than they are today.

While some companies seem comfortable with the contradiction of showing up for Pride today and not when the LGBT community needs them, it’s in part because of many companies that the LGBT community has made so much progress.

To attract and retain the best talent, companies led politicians by offering healthcare benefits to same-sex and domestic partners. Over 200 companies signed the amicus brief to overturn the Defense of Marriage Act (DOMA).

Corporate responses to North Carolina’s 2017 ‘Bathroom Bill’ risked the state losing up to $3.76 billion. The bill was later weakened, though progress is still needed.

Finally, while Amazon is being taken to task for celebrating Pride this year after also donating to politicians who voted last February against the Equality Act, we shouldn’t forget that in picking its location for its HQ2, it included in its request for proposal a community that “includes the presence and support of a diverse population.”

Conclusion on compassionate capitalism

As we navigate the intricate landscape of modern capitalism, the emergence of compassionate capitalism stands as a beacon of hope, challenging the notion that profit must come at the expense of compassion and societal well-being. In a world where the pursuit of profit often overshadows ethical considerations, the examples set forth by companies embracing compassionate capitalism illuminate a path toward a more equitable, sustainable future.

From Gravity Payments’ CEO Dan Price’s courageous salary sacrifice to ensure fair wages for employees, to Subaru’s unwavering commitment to environmental stewardship and support for the LGBTQ community, and Netflix’s pioneering parental leave policies, these instances underscore the transformative power of businesses driven not only by financial gain but also by a genuine concern for the welfare of their employees, communities, and the planet.

Yet, the journey toward compassionate capitalism is not without its challenges and contradictions. In the midst of Pride month celebrations, the specter of rainbow capitalism looms large, prompting critical questions about the authenticity of corporate support for the LGBTQ community beyond superficial gestures. The dissonance between public displays of solidarity and tangible action underscores the urgent need for companies to align their values with their practices, fostering inclusivity, equity, and genuine support year-round.

As we stand at the nexus of societal evolution and economic progress, now more than ever, the imperative to embrace compassionate capitalism resonates with renewed urgency. In a world where purpose-driven millennials comprise a significant portion of the workforce, and the seismic shifts wrought by the COVID-19 pandemic compel reevaluation of work-life balance, the demand for meaningful, socially responsible business practices has never been greater.

Ultimately, the convergence of capitalism and compassion is not only desirable but essential for fostering a more just, sustainable future for all. As we forge ahead, let us heed the lessons of compassionate capitalism, recognizing that true prosperity lies not solely in financial gain, but in the collective well-being of humanity and the planet we call home.

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