‘More empathy means more profit': why the business world is getting emotional

25 January, 2018 / Articles
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When the chief executive of Microsoft writes a book about empathy, it’s no surprise that business leaders around the world pay attention. “It’s a value I have learned to deeply appreciate and is something I talk about a lot,” Satya Nadella said at an event to publicize his book, Hit Refresh. “I think of it as not just a nice-to-have, but core to the innovation agenda in the company.”

Belinda Parmar, founder of consultancy the Empathy Business, believes empathy can yield tangible benefits for entrepreneurs. She has published an empathy index in the Harvard Business Review for the past four years, based on an analysis of internal culture, ethics, leadership and brand perception of 170 of the world’s biggest companies. The top 10 – which included Facebook, Alphabet (Google), LinkedIn and Netflix in 2016 – typically increase their market value within a year, by more than twice as much as the bottom 10 companies, according to research conducted by the Empathy Business.

“More empathy means more profit, but also happier, more loyal staff,” says Parmar, adding that this is particularly true of the millennial generation. “The people driving the empathy revolution are millennials. They will sacrifice money for meaning, and want emotional recognition. They don’t want an annual performance review. They want a text message to say they rocked it in that presentation.”

Investors in People sets the standard for better people management – accreditation that’s recognised across the world. Its chief executive, Paul Devoy, agrees that employees being more open about their personal lives will have a transformational effect on the way businesses are run.

“I think there’s a tsunami coming for employers, with employees starting to be more honest about the issues they’re facing,” Devoy says. “I gave a talk at a health and wellbeing event at the House of Lords a few weeks ago and one of the doctors said that 80% of the prescriptions he was writing for stress-related conditions stemmed from issues in the workplace. He felt frustrated because he should have been writing prescriptions for better bosses.”

The creation of an empathy framework within an organization gives employees a sense of autonomy and control over their work, and an understanding of what is expected of them. At HubSpot, a marketing and sales software company, empathy has been part of the firm’s cultural code since 2013, but work to embed the policy began more recently. Along with producing a video, it worked on identifying what it means to be empathetic in the workplace, encouraging staff and the leadership team to share personal experiences, and rewrote its maternity and paternity guidelines to make it easier for parents transitioning back to work.

Katie Burke, chief people officer at HubSpot, says this approach has been key to making the company more successful. The firm has 2,000 staff across six countries and recently opened offices in Berlin and Tokyo. “Getting people to start by assuming the best intentions and coming from a place of empathy was one of the most important investments we could make in our team and culture,” she says. “With global expansion, cultural differences compound – and the reality is you just have less face-to-face time to gather context.”

Burke says the one bit of resistance they’ve had from employees is around questioning whether it’s a core business priority. “But people are starting to see and feel the impact of how it’s made them better leaders. And more and more people are seeing less of a divide between their work and life … that shift in the workplace requires a whole lot more empathy.”

Accidental managers

The Chartered Management Institute estimates that four out of five managers in the UK – 2.4 million people – are “accidental” and have not received training, a fact that has a knock-on effect on productivity. Organisations with effective management and leadership are, on average, 32% more productive.

“We would never let someone be an engineer or a doctor without formal training, but somehow, with leading and managing people, we seem to think anybody can just pick that up as they go – which isn’t true,” Devoy says.

Electricity cable company UK Power Networks, holds an Investors in People gold accreditation and has implemented methods to empathise with its customers. Working with Age UK and the Alzheimer’s Society, it has developed a number of initiatives to identify and protect customers perceived as vulnerable. These include establishing a priority services register, prioritising vulnerable people in the case of a power cut, and training the majority of its 6,000 staff to be dementia friends.

Sarah Porcelli, head of learning and development, UK Power Networks, says dementia training has been a real success. Her grandmother was recently diagnosed with the illness and she’s been able to apply what she learned. “We’ve had such engagement across the business, because people recognise how important it is and the value it has – not just in our ability to deal with the general public in our jobs, but also in our personal lives with family and friends,” she says. “It’s not just another training that the business is rolling out for compliance, it’s something that really gives back to everyone.”

The danger with introducing empathy training, Parmar says, is that it can be used as a large sticking plaster that ignores an underlying unempathetic culture. “It’s not the first thing you should do,” she says, adding that businesses also need to make a real assessment of where they are now. “Most people are empathetic … [but] it’s the environment, the culture, the processes, the policies. It’s real change in organizations that actually makes a difference for the people that work there.”

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