The High Price of Being Nice - Why "Happy" Companies are Flushing Money

Have you ever wondered why your company or your relationships, are not flourishing? Wondered why they are stagnating or feel forced even when everything is amicable (maybe even pleasant)  at work or home? Even when everyone seems polite with each other and there is not a lot of conflict there seems to be an invisible force field preventing growth and connection. Smiles are on everyone’s faces yet authenticity seems to be waning. 

This is the high price of nice.

This story may help illustrate how nice comes at a cost and counterfeits the virtue of kindness.

Early in the morning, John, the CEO of a previously fast growing company, was sitting in his office looking at two conflicting charts. On the left of his screen was the employee satisfaction survey, and on the right was the financial statement for the organization. The Employee Satisfaction Index showed a score of 68%, the highest satisfaction the company had ever hit. The other side of the screen showed declining revenue and profits.

John was trying to understand how his company, with such a great culture, such a friendly place to work, and so many nice people who get along so well with each other, and support him as a leader, was not hitting the numbers they had in the recent past. How can we have such a great place to work without achieving the results we need? Isn't having a great happy culture the most important thing all the Harvard professors preach?

At this moment, John's business coach, Mike walks in, and he asks the question, how can both of these charts be accurate? One of these must be off. The consultant sits down across the desk and asks, "Can I share some hard truth with you?"

John agrees, and the consultant shares, "The problem is that you have a Nice culture." With a perplexed look on his face, John said, "Yes, I've worked very hard to create a harmonious work environment where people get along." 

"...and that's the problem." states the consultant compassionately. "Nice cultures kill companies. And safe environments sink ships." This was really stretching John's brain. Why was being “Nice” a bad thing? That's when Mike shared how Nice companies destroy themselves from the inside out. John protested, “I’ve been taught my whole life to be nice. I’ve built this company with the idea that this is a great place to work. Having a ‘Nice’ friendly environment is one of the core values.” Mike offered a perspective that started to help Mike see things in a different way, “Nice isn’t a virtue. It’s a defense mechanism to avoid conflict. Kindness is the virtue.”

“Now I’m even more confused. Aren’t Nice and Kind synonymous?” asked John.

“No. In fact, ‘Nice’ is the counterfeit of ‘Kind.’ Being Nice is not very nice at all. I know this is going to be hard to hear but, you hired me to share truth with you and help you see your short comings. The truth is that the ‘Nice Guy’ is one of the most despicable people on the planet.” John didn’t like hearing this at all because he wore his niceness as a badge of honor. If you asked anyone they would say John was one of the nicest people on the planet. Always courteous, smiled a lot, a great leader that created a “safe” space for everyone free from drama or conflict. A company where everyone got along. 

Mike asked, “When was the last time you had a meeting where someone had a truly dissenting opinion or someone challenged you and your ideas?” It took John a  minute to think. “I don’t know. It’s been so long.” This is the reason your profits and revenue are declining. You have built a company and culture full of Nice Guys and Girls like yourself.”

“But, I don’t want a company full of rude inconsiderate people who like to argue.” John stated emphatically. Who would want to work in a company full of ‘Ladder Climbers’ that are constantly arguing?” Mike had a lot of compassion for John by saying, “I get it. I am a  recovering nice guy myself. Nice guys view the world as a binary choice. I either need to be nice or mean. It turns out there is a third alternative - Kindness. Let me draw something for you.” Mike drew a picture of a pendulum with Nice on one side and mean on the other saying, “Most people see a pendulum with only two options for the ball.”

“Let me draw a more complete picture. In the middle where there are no emotional mood swings lies Kind.” Mike drew another line with a circle at the bottom. This one he labeled “Kind”. We think we need to swing between the Counterfeit and Opposite emotions but when we truly get centered we find the Authentic Emotion.

John liked the idea of adding kindness but wasn’t sure that just because people were being “Nice” that this could really be harming his company in such a negative way. This is when Mike pulled out the research. He shared three classical psychology studies done by Solomon Asch, Philip Zimbardo, and Stanley Milgram that really helped bring home the point that nice has significant financial impact on the business.

To give it more context here are some other names for nice:

• Nice Guy

• Doormat

• Social Compliance

• Acquiesence

Now let’s dig into the science of how nice is hurting companies and the actual amount of impact it’s having.

The economy today is entering areas that have never been charted before. CEOs are debating whether or not to work remotely or bring everyone back to the office. In such uncertainty one way company leaders try to make up the difference is to create harmony and an atmosphere of consensus. The trouble is that beneath the surface of polite emails and conflict‑free meetings lurks a troubling truth: “Nice” compliance—social acquiescence that masquerades as kindness—can undermine ethics, stifle innovation, and inflict staggering financial damage. Understanding the difference between “Nice” and “Kind”is crucial to spotting the costly issues in the company. Relinquishing responsibility to authority figures and peers isn’t simply good manners—it can be costly business, ethically perilous, and deeply unkind to the very people we want to serve and get along with.

Why “Nice” Costs Us More Than We Realize

By teams defaulting to “nice” compliance to avoid conflict or any tension, they sacrifice moral courage and critical thinking—undercutting the very purpose that brought them together. Brené Brown teaches that vulnerability is the birthplace of innovation; yet “nice” culture labels honest dissent as disruptive, leaving organizations brittle in the face of change. Adam Grant’s research confirms that when employees feel safe to challenge the status quo, performance soars—but only if we reward “kind” courage over “nice” conformity (Grant, 2019).

Classic Experiments: “Nice” as Compliance

Solomon Asch’s Conformity Experiment: A Story of Social “Niceness”
In the early 1950s, psychologist Solomon E. Asch set out to explore a deceptively simple question: under what circumstances will an individual abandon clear evidence of their own eyes in order to conform to a group? Framing his investigation as a “vision test,” Asch recruited male undergraduates and seated each real participant among seven accomplices (confederates). On each trial, the group was shown a clearly marked reference line and three comparison lines. Confederates all gave identical—but wrong—answers on 12 critical trials, naming a comparison line that did not match the reference (Asch, 1956).

Despite the obvious nature of the error, 35.7% of all participant responses conformed to the group’s incorrect choice, and 74% of individuals conformed at least once rather than “rock the boat” (Asch, 1956). Participants later reported feelings of discomfort, self‑doubt, and—even though they knew the group was wrong—an urge to be “nice,” to avoid standing out or causing conflict. In reality, their drive to preserve social harmony outweighed both their perception and their private convictions.

Can you imagine if all of your products had 35.7 - 74% of defects because no one wanted to rock the boat. What about marketing ideas or safety? These are very real and very critical pieces of the business that need direct feedback.

When “Nice” Costs the Company: The Corporate Conformity Trap
Asch’s findings aren’t confined to laboratory lines—they play out in boardrooms and project teams worldwide. When employees prioritize being “nice” (i.e., conforming to group norms or deferring to authority) over voicing concerns, organizations become vulnerable to:

• Groupthink Fiascoes: Janis (1972) showed that cohesive teams suppress dissent, rationalize poor decisions, and overlook warning signs—often with disastrous results.
  
  
• Stifled Innovation: Cialdini and Goldstein (2004) demonstrated how social proof and authority cues silence creative ideas, leading companies to miss market shifts and competitive threats.
  
  
• Ethical Blind Spots: Forbes Councils (2023) documents cases where teams failed to escalate compliance risks—such as safety violations or compliance breaches—because individuals feared being branded difficult or un‑nice.

In effect, the laboratory pressure to be “nice” morphs into a corporate culture where “no one wants to rock the boat.” Critical feedback evaporates, risks go unchallenged, and even clear dangers—like cybersecurity vulnerabilities or flawed product designs—can sail right past an anxious, “nice” organization.

Some other studies that illustrate the costly nature of “nice”

• Milgram (1963) found that 65% of participants were willing to administer a shock with of up to a maximum 450 V shock to trusted peers when told to do so—choosing “nice” obedience over personal ethics.
  
  
• Darley & Latané (1968) framed the Bystander Effect: in groups, individuals defer responsibility, remaining “nice” (inactive) when help is desperately needed.
  
  
• Kelman & Hamilton (1989) documented the Nurses’ Agentic State, where medical staff comply with harmful orders, believing authority absolves them of moral agency.
  
  

Each study reveals the hidden costs of “nice” compliance: poor decisions, emotional harm, and moral erosion.

From Experiments to Enterprise: Quantifying the Damage

Recent analyses translate these psychological dynamics into hard dollars. In a hypothetical 1,000‑person firm, the annual costs of “nice” compliance can exceed $30 million in high tech, $24 million in healthcare, and nearly $50 million in professional services (Built In, 2023; LinkedIn, 2024; CPP, 2008). Fortune 500 companies face over $1.2 billion in combined turnover, conflict‑driven productivity losses, innovation stagnation, data‑breach fallout, and legal expenses each year.

• Turnover: Losing talent due to unaddressed conflict costs 50–60% of an employee’s salary to replace (SHRM, 2024; Built In, 2023).
  
  
• Conflict: Employees spend 2.8 hours/week on unresolved issues they’re “nice” enough to ignore, costing U.S. businesses $359 billion annually in lost productivity (CPP, 2008).
  
  
• Innovation Loss: Groupthink and deference to hierarchy shave 3–6% off revenue growth—millions per company (Forbes Councils, 2023).
  
  
• Brand Damage: Diffused responsibility contributes to major data breaches, averaging $4.35 million per incident (IBM Security, 2024).
  
  
• Legal & Moral: Class action settlements linked to ethical lapses can run $160,000 per case, not including reputational fallout (Carlton Fields, 2023; Duane Morris, 2025).
  
  

From Nice to Kind: How to replace Niceness with Kind Courage

Kindness starts with healthy boundaries and kindness starts at the top. The leadersof the organization need to set the example of creating spaces where employees can be safely vulnerable to share ideas or call out potential pitfalls. The CEO needs to set the example for the  executive team and they in turn need to invite differing opinions and create environments of innovation. There is a specific Model for being Kind to individuals you can find through the corporate leadership training here at Cotunerfeit Emotions that walks you through having boundaried, healthy relationships. Here are some steps to foster a “Kind” culture of direct feedback, important conversations and avoiding critical pitfalls:

K I N D
Use this mnemonic as a way to swap hollow compliance for genuine ethical leadership:

1. Know Your Culture
   
   
• Diagnose with engagement surveys, exit interviews, and incident logs.
  
  
• Identify where “nice” behavior suppresses critical voices.
  
  
2. Invite Dissent and other perspective
   
   
• Rotate a “Devil’s Advocate” at every key meeting.
  
  
• Launch anonymous idea portals.
  
  
• Celebrate leaders who reward constructive challenges.
  
  
3. Nurture Open and Safe Conversations
   
   
• Institute “Safety Check‑Ins” before high‑stakes discussions.
  
  
• Recognize “Courageous Kindness” in performance reviews.
  
  
• Clarify escalation pathways for ethical concerns.
  
  
4. Drive Accountability
   
   
• Embed “Kind Metrics” (e.g., quality of dissent) into KPIs.
  
  
• Employ scenario‑based ethics training to rehearse tough calls.
  
  
• Publicly honor teams whose challenges avert costly failures.
  
  

Leading with Kindness

Embracing Kind over Nice doesn’t mean swinging the pendulum to mean or sowing chaos of any kind—it means harnessing the creativity, honesty and directness of all employees in an intellectual and empathetic way. By giving employees the psychological safety to speak up, organizations unlock creativity, strengthen ethics, and protect their bottom line. As Sinek reminds us, “Leadership is not about being in charge. It is about taking care of those in your charge” (Sinek, 2014). Brené Brown adds that “vulnerability is our most accurate measure of courage” (Brown, 2012), and Adam Grant’s data confirms that cultures of candor outperform those of compliance by every measure (Grant, 2019).

The choice is clear: we can either pay the hidden toll of Nice, or we can invest in Kind—and reap dividends in innovation, integrity, and impact.

If you want to change your culture from nice to kind, attend our exclusive event, CEO by Design

Register Here

https://lu.ma/ceobydesign

References

Asch, S. E. (1956). Studies of independence and conformity: I. A minority of one against a unanimous majority. Psychological Monographs, 70(9), 1–70.

Brown, B. (2012). Daring greatly: How the courage to be vulnerable transforms the way we live, love, parent, and lead. Gotham Books.

Built In. (2023). The true costs of employee turnover. Retrieved from https://builtin.com/recruiting/cost-of-turnover

Carlton Fields. (2023). 2024 Class Action Survey.

Center for Creative Leadership. (2008). The value of conflict training. CPP Global Human Capital Report.

Cialdini, R. B., & Goldstein, N. J. (2004). Social influence: Compliance and conformity. Annual Review of Psychology, 55, 591–621.

CPP. (2008). The cost of conflict in organizations.

Darley, J. M., & Latané, B. (1968). Bystander intervention in emergencies: Diffusion of responsibility. Journal of Personality and Social Psychology, 8(4), 377–383.

Duane Morris LLP. (2025). Class action settlements exceed $40 billion for third year in a row. Risk & Insurance.

Forbes Councils. (2023). How groupthink can sabotage your company’s innovation efforts. Forbes.

Grant, A. (2019). Think again: The power of knowing what you don’t know. Viking.

IBM Security. (2024). Cost of a data breach report.

Kelman, H. C., & Hamilton, V. L. (1989). Crimes of obedience: Toward a social psychology of authority and responsibility. Pergamon Press.

LinkedIn. (2024). Employee tenure and retention for tech leaders in 2024. Retrieved from https://linkedin.com

Milgram, S. (1963). Behavioral study of obedience. Journal of Abnormal and Social Psychology, 67(4), 371–378.

Sinek, S. (2014). Leaders eat last: Why some teams pull together and others don’t. Portfolio.

SHRM. (2024). Employee turnover and retention. Society for Human Resource Management.

Zimbardo, P. G. (1973). The Stanford prison experiment: A simulation study of the psychology of imprisonment. Naval Research Reviews.