The ROI of kindness
By Nathan Froese
I think I’ve told this story a hundred times now. Maybe a thousand.
The rule of kindness
When I started working at Community Natural Foods over 18 years ago, I never imagined it would be a career. It was temporary work while I figured out what to do with the rest of my life
But after the first few months of working there, I recognized there was something special about the place. There was a pervasive kindness and sense of community (no pun intended) that I had not previously experienced.
Admittedly, there is a tint of rose-coloured nostalgia to this hindsight, but I am cautious not to paint it as some blissful utopia. Not everyone was nice and not every day was a good one. Not every customer left happy. I recall a few of them who would blow through the doors like a tornado of negativity and spin us all around in it before storming out the door empty-handed.
But the overwhelming majority of people I worked with treated me with such warmth, respect, and openness that I found myself feeling something new and unusual about my job, something I hadn’t felt about work before: I actually looked forward to going to it. I wanted to show up and I wanted to be around these people with whom I shared a common interest in organic agriculture, environmentalism, and natural remedies. And, most importantly, I enjoyed serving the customers, most of whom were there for the exact same reasons.
And through the years as I’ve grown with the company, I have often marvelled at the magical mix of genuinely wonderful people and intentional kindness in our senior leadership. I have also come to recognize that this industry is incredibly unique in the sense that this kindness appears to be the rule, rather than the exception.
Compassion counts
We are fortunate to be in such a nurturing and caring industry, but even kindness requires some discipline and planning and is easily dropped off the agenda when it’s time to get serious. Business strategy meetings are often focused on the cold, hard facts. Budgets. Expenses. Rising costs and plunging customer counts. It’s all a bit grim sometimes, and it can be very easy to slip into a cortisol-fuelled mindset where being nice to one another and those around us seems like kid’s stuff. After all, there is no line on a balance sheet to show where our kindness paid off.
But perhaps thinking a bit more like kids is not a terrible idea? Or rather, maybe thinking of those around us through the lens of the gentle and nurturing methods that are the hallmark of great parenting could also be good business sense?
In Leaders Eat Last: Why Some Teams Pull Together and Others Don’t, Simon Sinek suggests that if we thought of our employees as we did our children, we would surely make different decisions, such as not immediately relying on layoffs as a strategy to combat poor financial performance.
Emotional nourishment
Framed this way, some traditionally accepted business practices would reflect very poorly on our parenting skills. Let’s consider the analogy of managing one of the world’s most notoriously difficult and irrational beings: the dreaded hangry child.
We would not send our children to school hungry right? We all know that under-nourished children experience a variety of problems including delayed mental development, poor school performance, and reduced intellectual capacity. At the very least, we know hungry kids throw the most spectacular tantrums, and we would be cautious to put them in a situation where patience, kindness, and understanding are required on an empty stomach.
If we then think about the emotional nourishment (or lack thereof) we provide to our employees, we can draw similar parallels. Employees who are treated poorly have a low sense of psychological safety, have a lack of loyalty, and are not going to treat customers well and provide them with exceptional service. In many cases, this can be a direct reason why an employee performs poorly, seems uninspired, or even leaves their job.
And right there are your two tangible, data-supported financial metrics: employee and customer retention. Very real and tangible issues with very real and tangible price tags.
Turnover cost
Just google “cost of employee turnover” and you’ll be served with a wide range of very similar statistics: the average cost of employee turnover is 30 to 50 percent of their annual salary. This encompasses a variety of costs from recruitment, interviews, onboarding, a period of learning and inefficiency in new hires, and so on.
In Alberta, where the minimum wage is $15/hour, that means the cost to replace one full-time, entry-level employee making minimum wage could be between $9,360 and $15,600! Makes you want to run to the sales floor to see if your cashiers need a round of coffees or new anti-fatigue mats, doesn’t it?
Now let’s think about your customers. Let’s give your customer an average transaction of $50 and let’s assume they shop with you monthly for the next 20 years. That single loyal, completely fictional, and predictable customer with a relatively modest transaction value and a semi-frequent store visit has a lifetime value of $12,000. Do they spend $100 each visit? Well, make that $24,000 then. Starts to sound like a big deal, no?
Again, this is only one customer. We all better hope we have more than just one of them. We also better hope we’re doing a fantastic job of keeping them happy, because there is no shortage of stores and websites out there with their sneaky marketing campaigns luring them from your parking lot with their siren-song of low prices and fancy lighting. Or fancy search bars, or whatever.
Closing the gap
So, if the cost of hiring new employees is thousands of dollars at minimum and the lifetime value of a customer is also tens of thousands, maybe suddenly it doesn’t seem like a bad idea to learn names, make eye contact, and say good morning to your employees and customers. Or invest in learning about your employees’ personal lives and find other ways to recognize the time and effort they give.
In times of high stress and inevitable hardship, supporting them and ensuring they know that their day-to-day efforts are highly valued is an impactful way to retain employees. Create an environment where an employee feels safe and valued, and you stand a better chance of retaining them. The employees, in turn, create a space where your customers feel respected, welcomed, and appreciated. That is the ROI of your kindness.
I don’t hear this intentional practice of doing the right thing and being a good person discussed enough. It’s often not the first idea trotted out in the boardroom when the Big Boss is asking for the big idea to save the company. It gets overlooked for its sheer simplicity. Even worse, it is sometimes painted as unnecessary or even superfluous and weak.
“You must maintain a professional distance from your employees.” “You’re being too nice; it’s a sign of weakness and they’ll take advantage of it.”
Just imagine someone saying these things to you, but instead of talking about your employees, they were giving you parenting advice. How insane would that sound? And would you listen?
Ripple effect
As retailers in the Canadian natural health industry, we must recognize there is a competitive advantage inherent in where we come from, in the history of environmentalism, in organic agriculture, in natural remedies.
The desire to make the world a better place and to improve the health and wellness of those around us is inextricably connected to an instinctual desire to protect and nurture. And it is easily translated into a business strategy if we give it energy and frame it in the right light.
Just like setting a line of dominoes in motion, there is a kinetic transfer when people are empathetic and compassionate toward one another; one kindness topples forward and knocks into another, transferring that energy down the line as long as there is something—or someone—to pass it along to.
Nathan Froese is the Grocery and Bulk Category Manager for Community Natural Foods in Calgary, Alberta, where he lives with his wife, two sons, and a small herd of cats. From time to time, he reads a book or strums a guitar.