Just like mother always said, a little kindness goes a long way—for people, and also for businesses. Newly updated research from management consultancy Baringa finds that companies considered kind are more likely to experience stronger growth—throughout the 2020s, those with a reputation for kindness were 35 percent more likely to have doubled their earnings before interest, tax and amortization (EBITDA) than companies with a reputation for being unkind. Likewise unkind companies were 20 percent more likely to have seen their EBITDA shrink in the same period compared to their kind peers.
The results have implications for business strategy, indicating that firms perceived to take actions commonly associated with kindness—including treating their staff or suppliers well, or taking public stands on ethical issues—are more likely to succeed than those with a reputation for ruthlessness or self-interest.
Baringa polled 6,028 people in seven countries, and asked them to name a company they considered “kind”, and a company they considered “unkind”. It then compared this data to those companies’ EBITDA over the course of ten years. It found that, consistently, kind firms fared better than unkind businesses.
For instance, taking a benchmark of 5 percent annual EBITDA growth, compounded over a decade, as being a desirable minimum for any firm: 55 percent of “kind” businesses grew by this rate or more, compared to just 41 percent of companies considered “unkind”.
“Doing the right thing is too often dismissed as wooly, soft, or somehow not worthy of red-blooded capitalism,” said Anya Davis, a partner at Baringa, in a news release. “These figures prove that it is the opposite. If you are perceived as kind, you are also more likely to grow faster. This is a correlation that hints at a reassuring truth: kindness and business success are mutually-compatible, not mutually-exclusive.
“Kindness also provides a lens for businesses to plan and evaluate strategy,” Davis said. “Once you have decided on a course of action, take a step back and question whether it is kind. If it is not, consider amending it or scrapping it.”
Baringa argues the results have an impact on the ESG debate currently taking place on both sides of the Atlantic
“Doing the right thing by people and the planet is good for the world and good for business,” said Davis. “So we should not ditch ESG as being anti-business—we should embrace ESG because it’s pro-business.
“The issue of kindness in business is wider than a question of consumer purchasing choices, but looking at consumer purchasing choices is still instructive: Baringa’s research indicates that 61 percent of people across the globe have refused to buy a product or service in the past two years because they considered the vendor to be unkind. Seventy-six percent of people sometimes or always consider the behavior of a company or its leadership when making a purchase,” Davis added.
“The lesson here is people do not make purchases purely on price or function. Kindness and ethics are part of the intangible criteria weighed up by customers across business, and a firm who ignores these factors will be doing itself and its stakeholders a long-term disservice.”
When Baringa examined the industries whose companies are most likely to be listed as kind or unkind, technology was the most frequently cited as kind, followed by retail. By contrast e-commerce was most likely to be cited as unkind, followed by food and beverage, and fashion.
Performance criteria referenced in the above table were based on the following categories, which Baringa created for the purposes of simplicity:
- Greater than 80% EBITDA growth over the decade, the company is extremely well performing
- Between 60% and 80%, the company is well performing\
- Between 40% and 60%, the company is moderately well performing
- Between 20% and 40%, the company is fairly well performing
- Between 1% and 20%, the company is poorly performing – Below 1%, the company is underperforming