Businesses with a reputation for kindness are more likely to experience stronger growth, according to new analysis.
Research spanning the decade to 2022 concluded that ‘kind’ companies were 35% more likely to double their earnings before interest, tax and amortisation (EBITDA) than companies with a reputation for being unkind. Likewise unkind companies were 20% more likely to have seen their EBITDA shrink in the same period compared to their kind peers.
These results have implications for business strategy, says Baringa, the management consultancy behind the study. 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, asking 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% annual EBITDA growth, compounded over a decade, as being a desirable minimum for any firm: 55% of ‘kind’ businesses grew by this rate or more, compared to just 41% of companies considered ‘unkind’.
Anya Davis, a partner at Baringa, said, “Doing the right thing is too often dismissed as woolly, soft, or somehow not worthy of red-blooded capitalism. 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. 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 Environmental, Social and Governance (ESG) debate currently taking place on both sides of the Atlantic.
She added, “Doing the right thing by people and the planet is good for the world and good for business. 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% 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.
“76% of people sometimes or always consider the behaviour of a company or its leadership when making a purchase. 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.
