Companies associated with positive ESG performance and kindness stand a better chance of achieving success than their ‘unkind’ competitors, according to new research from Baringa.
The management consultancy discovered that, in the decade to 2022, organisations considered to be kind were 35% more likely to double their earnings before interest, tax and amortisation (EBITDA) when compared to firms with a reputation for being unkind.
Likewise, unkind organisations were 20% more likely to see their EBITDA shrink during the same period when compared to their kind peers.
The findings could have serious implications for business strategy given the strong indication that companies 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.
“Doing the right thing is too often dismissed as soft or somehow not worthy of red-blooded capitalism,” says Anya Davis, Partner at Baringa. “These figures prove 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.”
Tech and retail companies considered kindest, Baringa finds
In carrying out its research, Baringa polled more than 6,000 employed people in the US, the UK, Germany, the Netherlands, Switzerland, Singapore and Australia.
Each respondent was asked to name a company they considered ‘kind’ and a company they considered ‘unkind’, and the findings were convincing as businesses fitting into the former camp consistently fared better.
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’.
When Baringa examined the industries whose companies were most likely to be listed as kind or unkind, technology and retail received positive feedback, while ecommerce, food and beverages, and fashion were at the opposite end of the scale.
Such findings provide interesting food for thought given 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,” adds Davis, “so we shouldn’t ditch ESG as being anti-business, but embrace it because it’s pro-business.
“The issue of kindness in business is wider than a question of consumer purchasing choices, but looking at this 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% 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.”
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