Companies associated with kindness most likely to succeed – report

Companies considered kind are more likely to experience stronger growth, according to new analysis by management consultancy Baringa. Research by the firm concluded that, in the decade to 2022, businesses with a reputation for kindness were 35% more likely to have doubled 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.

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% 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.

Anya Davis said: “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.

Ends

Performance figures

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
   

For more information, contact:

Damian Kerr
damian.kerr@baringa.com
+44 203 327 4299

Methodology – overall

First Baringa commissioned a survey of 6,028 people in seven countries, in which respondents were asked, in a free text question, to name a company they considered kind and a company they considered unkind.

Baringa then searched for verifiable published EBITDA for every company named in either category. Finally Baringa compared available EBITDA from the cohort of “kind” companies with available EBITDA from the cohort of “unkind” companies in 2013, and then again a decade later in 2022.

Methodology – survey company

The research was conducted by an independent market research consultancy Censuswide. The survey was conducted online with 6,028 employed consumers who have either a pension or some kind of investments in the UK, US, Australia, Germany, Netherlands, Switzerland and Singapore, between 26.04.2023 - 04.05.2023. Censuswide abide by and employ members of the Market Research Society, which is based on the ESOMAR principles, and are members of the British Polling Council.

About Baringa

Baringa is a global management consultancy operating across sectors including energy, financial services, consumer products and services and government.

We set out to build the world’s most trusted consulting firm – creating lasting impact for clients and pioneering a positive, people-first way of working. We work with everyone from FTSE 100 names to bright new start-ups, in every sector. We have hubs in Europe, the US, Asia and Australia, and we can work all around the world – from a wind farm in Wyoming to a boardroom in Berlin. Find us wherever there’s a challenge to be tackled and an impact to be made.

Find out more at baringa.com or on LinkedIn and Twitter.