Why Kind Workplaces are More Successful

Almost a decade ago, I had an experience that really stuck with me. I was advising a newly hired chief financial officer with an oversight over a $3.1 billion budget and over 300 people reporting into her division.

I had asked her to prepare a nine-minute speech that would really rally people behind her. And there they were, all 300 souls gathered wide-eyed in the ballroom at their all-hands meeting.

Unfortunately, our new CFO was so busy chatting people up that she misplaced her purse and could not find the talking points for her opening speech. She had to wing it.

She jumped up on stage, and I’m telling you, after those nine minutes passed, just about every person in that room was ready to follow her, and some even had a tear in their eyes.

So, what did she say? Well, she didn’t talk about her long list of accomplishments, her finance philosophy, or her seven-step vision for the future.

She instead talked a bit about her life, her family, and began giving credit and appreciation to her employees for all the fantastic work they do and the impact that it has on the organization. She went on to lead with a lot of empathy and kindness, with an open-door policy that allowed anyone on the team to meet with her one on one, and a continued practice of giving all the credit to her team. She was a prosocial leader, and her people were energized.

Unfortunately, these days, the number of employees who say they feel engaged, satisfied, purpose-driven, and energized at work is at a historic low. People of all stripes are leaving the corporate rat race to pursue their own entrepreneurial ventures. Add to that the large surge in layoffs in 2024, and you’ve got a recipe for cynicism.

How can companies retain their top performers and keep their businesses thriving?

The good news is that a growing body of research finds that kindness reaps tangible rewards in the workplace. This suggests that friendly and generous leaders and employees who help out the organization beyond their job description significantly improve organizational performance and this is a culture that can be fostered.

The Generous CEO
Many of us know anecdotally that working for a “good boss” helps us have a happier life. And research is finding that it also affects the performance of the company.

A 2023 study led by researcher Mei Feng reveals that firms with prosocial CEOs fare much better. Prosociality is generally defined as positive social behavior intended to promote the welfare of others. In this case, researchers reviewed earnings calls and categorized certain CEOs as prosocial based on whether or not they gave their free time and money to charitable causes and whether or not they gave credit to their employees for good financial performance and took responsibility themselves during poor financial performance.
They found that companies with prosocial CEOs had lower turnover among executive subordinates, more employee-friendly policies, higher customer satisfaction ratings, and greater engagement in corporate social responsibility initiatives that care for the environment and society.

But what if you don’t have a kind and charitable CEO at the top? Do managers make a difference?

One study by researchers Agne Kajackaite and Dirk Sliwka of over 900 firms (in a wide range of industries, including manufacturing, services, technology, health care, and finance) reported that employees exert more effort under prosocial managers, inspired by their more empathic and thoughtful decisions.

Though these managers allocated more organizational dollars to charitable causes, reducing short-term profits, the increased employee motivation offset those losses, boosting overall shareholder value in the long run. Their results suggest that prosocial managers improve organizational efficiency, as more engaged employees accomplish more in less time.

Kind and Helpful Employees
So, we know that prosocial leaders and managers can make a difference, but what about how employees treat each other on an everyday basis?

Goodness seems to win here, as well, since several studies find that behaviors like helping colleagues, showing initiative, promoting a positive work environment, and going beyond basic job expectations have important benefits.

In a meta-analysis involving over 51,000 individuals, Nathan P. Podsakoff and his colleagues found that when employees engage in more organizational citizenship behaviors — helping the organization above and beyond their job description — organizations tend to have better performance evaluations, higher performance bonuses, and more engaged employees.

At the organizational level, these companies show higher productivity, efficiency, and customer satisfaction, and lower turnover. The cost of replacing employees can be high, so encouraging this type of behavior among employees can have many downstream benefits.

A 2023 study by Omid Haass and his colleagues of a knowledge-based organization looked at the five dimensions of organizational citizenship behaviors: conscientiousness, altruism, courtesy, sportsmanship, and civic virtue. They found that conscientiousness (going above and beyond) and altruism (helping others without expecting anything in return) seemed to have particularly strong effects on performance. Altruistic behaviors encouraged knowledge-sharing and collaboration, which fostered creative problem solving.

Caring From the Top Down

Companies also benefit when prosociality is built into the way they operate. In a 2013 study, researcher Lalin Anik and her colleagues explored the effects of different types of bonuses. Prosocial bonuses were ones where employees could allocate monetary rewards to charitable donations or as gifts to colleagues.

In two of their experiments, Belgian pharmaceutical sales teams and Canadian dodgeball teams were offered either “spend it on yourself” or “spend it on your teammates” bonuses. When participants received money to spend on teammates, the team performed better than teams given funds for personal use.

These findings suggest that even changes in bonus structures can yield measurable psychological and performance benefits for employees and organizations, particularly when bonuses foster connections with others.

Overall, these findings suggest that fostering a prosocial and wellbeing–oriented workplace is not only the right thing to do but also a strategic business decision, with clear financial returns. Whether or not you lose your talking points before your next speech, leading with kindness and crediting your employees might be a good way to go. In other words, nice companies finish first — and doing good for your colleagues and clients pays.