Our Economics of Kindness journey: the story so far

But why are we talking about kindness?

Kindness is important to Baringa. It’s core to how we conduct ourselves. By kind we mean giving everyone a voice, being honest, saying the hard truths and tackling the tough challenges head on. We don’t mean being nice and telling people what they want to hear. We mean thinking ‘big picture’, balancing the needs of all stakeholders and doing the right thing, even when it’s not necessarily the easy thing to do. We wanted to hear from our experts how kindness builds trust and creates a lasting, positive impact. Whilst we believe it pays, what do others think? And can we prove it? 

This is what we heard.

Kindness is expected of leaders 

People are demanding organisations to operate in more responsible ways. Stakeholders want leaders to manage a broad range of social and environmental risks. Focusing on the triple bottom line, where companies concentrate as much on social and environmental issues as they do on profits, makes sense. But being able to shift from short-term financial returns and KPIs to longer-term, more holistic and integrated ways that create sustained value is hard to achieve. Leaders need to walk the talk otherwise consumers will vote with their wallets, businesses will choose to partner with different suppliers, and employees will make different choices about who to work for. In this world of choice, kindness is the new currency. 

If kindness is expected, we wanted to understand the challenges of being kind.

Being a kind leader isn’t easy

Kindness is ambiguous. It means different things to different people. Different cultures consider kindness in different ways. A direct leadership style that might be considered honest, to-the-point and kind in the US may appear impolite and unkind in more deferential eastern cultures. There are also generational differences, with those entering the workforce having different expectations of how they want their employers to behave towards them. Kindness isn’t homogenous and leaders need to evolve their styles to meet the multi-generational and future-focused needs of the current workforces in different cultures.

Clearly being a kind leader involves balancing the needs of different individuals and making difficult decisions. We were curious to hear the practicality of this first-hand. Mike Lewis shared his experience of restructuring nPower from when he was CEO of energy firm E.ON. He told us that kindness isn’t about giving everyone everything they want, but about how a leader takes the tough decisions and manages the trade-offs to remain commercially viable. Ian Peters had a similar learning from his career. Trying to balance employee, customer, supplier, investor and societal needs is difficult – what might be kind to one stakeholder is anything but to another. Kindness is nuanced and not always that simple to achieve. 

We also heard how the Covid pandemic has changed the rules. Paul Rama of healthcare company Haleon told us how lockdowns have blurred the lines between work and life and how leaders need to care for the whole person and not just the professional one. Angelica Ibarra Romero of renewable energy company, Statkraft, agrees, believing that leaders now need to engage with people more than ever and lead by example to re-establish a culture of trust. 

Having looked at those challenges, we wanted to explore how leaders can become kinder.

Successful leaders practise being kind 

Kindness needs to be brought back to the top of the leadership agenda. Kind leaders generate lasting success for themselves, their clients and their businesses. Whilst being kind may come naturally to some leaders, others may find it more of a challenge. Either way kindness is a practice, not a personality trait and should be a critical skill for all leaders. That means it’s something that can be worked on and improved. One area to focus on is clarity and self-accountability. Only by being prepared for complete honesty and looking at yourself can leaders start to create kind, high-trust cultures. However, self-accountability and honesty are difficult and feel risky as they can take leaders out of their comfort zones.

Leaders should also work on their egos. Elsbeth Johnson, Professor at the Sloan School of Management at MIT told us that successful leaders enable kindness by regularly setting aside their own ego for the benefit of the other person, of the situation, or of the client. Low-ego leaders care more about getting to the right answer than in being the one who came up with it. They build better capabilities in their teams and create more enduring success and change.

Next, we wanted to find out how kind leadership impacts culture.

Kindness fuels performance and innovation and builds resilience

Today, the best employers look through a lens of humanity. Their leaders have honest, open conversations with their employees and they don’t micromanage. They are kind, not nice, and they drive employee performance through coaching. A good leader will challenge people to help them learn to improve, but a kind leader will support someone through the discomfort that may come from that challenge. Fellow B-Corp, Ella’s Kitchen, encourages their leaders and managers to put themselves in the shoes of others. In this way they have personal conversations with their teams and treat everyone as an individual.

Kind leaders also create psychological safety where people are not afraid to make mistakes. Trust and parity exist, diverse opinions are encouraged and collaboration flows. Combined with honesty, not niceness, and the right kind of critical friendship, business innovation can flourish. 

Kindness also builds resilient businesses. We heard that kindness is a reciprocal currency. Acts of kindness build goodwill and resilience. Organisations have banks of goodwill that they must pay into and draw-down against in challenging times. How does this work in reality? Andrew Reaney shared how being kind to their people had helped British Gas through a difficult restructuring process. He also shared that being kind through the Covid pandemic (by reassigning their people to help deliver food to their local communities) helped their people survive the lockdowns and build additional goodwill.

Anecdotally, kindness clearly helps, but it was important for us to prove this.

Kindness helps organisations grow 

Whilst there is ample evidence to suggest that ESG-focused corporations generally outperform their counterparts, we were looking for research that relates directly to kindness. This wasn’t readily available, so we decided to conduct our own research. We asked over 6,000 people worldwide what influences their purchasing behaviour. The results confirmed our thinking – kindness is now considered alongside more traditional concerns such as price. Furthermore, kindness is more than a matter of ethics – kind companies are more likely to have stronger growth compared to unkind companies with 47% of kind companies doubling their EBITDA growth over 10 years.

Our research chimed with what we heard from investors who told us they are now looking at kind cultures as a strong indicator of whether a business is worth investing in.

About the authors

Anya Davis

Anya Davis supports corporates and investors with their transition to a low-carbon world. Anya has 15+ years’ experience in the energy sector. She has helped established players transform, and new entrants invest and build businesses in this market. She has extensive experience across the investment lifecycle and value creation. She is also responsible for ensuring the Baringa culture evolves to continue to be a great place to work.

Learn more about Anya

Ellen Fraser

Ellen Fraser leads Baringa’s global Energy Retail, Networks and Water practice and has the responsibility for Baringa’s portfolios in the UK, Europe and Australia. She’s sat in boardrooms with the CEOs of every major UK energy supplier, and even informed policy with energy regulator Ofgem. She’s a familiar face commenting on the BBC, and quoted everywhere from the Financial Times to The Guardian.

Learn more about Ellen