Empathy Is the Key to Better Company Performance

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Many things impact company performance. Externally, things like supply chains, seasonal sales cycles, and customer trends influence how a brand performs. Internally, elements like retention, culture, and creativity factor into the equation.

One thing that rarely gets mentioned in the context of company performance, though, is empathy — even if it should be. Let’s unpack empathy in the workplace and consider why it’s one of the most important keys to helping your company perform better.

What Is Empathy?

Before considering how empathy impacts corporate performance, let’s briefly review the term itself. The word “empathy” in a general sense refers to relating to and understanding other human beings.

Merriam-Webster defines this by saying empathy is “the action of understanding, being aware of, being sensitive to, and vicariously experiencing the feelings, thoughts, and experience of another.” Empathy is a relational concept that is essential to apply and easy to forget in a work setting.

Why Is Empathy Important in the Workplace?

Empathy can apply to many different scenarios. What does it look like in the workplace, though? In a world that is increasingly driven by remote work and automated interactions, where does empathy factor into the mix?

The Center for Creative Leadership (CCL) applies this critical term to the workplace by narrowing the definition to read, “Empathy in the context of the workplace simply means that your people are able to establish true, empathetic connections with one another that enhance relationships and performance.”

In other words, empathy in the workplace manifests as genuine, empathetic connections between individuals. In addition, workplace empathy has the important statistical side effect of improving relationships and boosting performance.

Empathy vs. Sympathy

CCL also makes the important distinction between empathy and sympathy. The former consists of relating to and understanding what another person is experiencing. The latter takes a more emotionally-charged approach by pitying and feeling sorry for someone, often with minimal cognitive clarity about their situation.

Sympathy in the workplace can lead to damaged pride and distant relationships. Empathy can foster healthy responses and greater understanding.

In his book “How to Work with (Almost) Anyone,” best-selling author Michael Bungay Stanier (commonly known as MBS) digs into the importance of empathy in the workplace. He sets out a tool to help build effective, empathetic relationships: the “Keystone Conversation.” This is a conversation about how to work together (as opposed to about the tasks at hand). It’s a constructive interaction that seeks to build the best possible relationship between two professionals at work. By talking about how to bring out the best (and avoid the worst) in each other, you build an effective working relationship based on empathy.

“Talking about frustrating, broken, and failed relationships is a powerful act of vulnerability,” MBS declares, “It strengthens trust immediately and makes it more likely that both of you will be able to navigate the tougher moments when they inevitably come to this working relationship.”

How Does Empathy Foster Better Company Performance?

Okay, so empathy is important as a way to improve relationships. But what about performance? How do healthy interactions between employees specifically improve how a company operates?

CCL had the same question. To answer it, the organization gathered information from 6,731 managers from over three dozen countries to analyze empathy and how it influenced their job performance.

The results of the study were eye-opening. First, CCL found a direct correlation between empathy in the workplace and positive job performance.

More specifically, the organization had employees rate their bosses based on displays of empathic emotion. This included things like:

  • Being sensitive to overwork in others
  • Displaying compassion for personal loss
  • Helping with personal problems
  • Showing interest in others’ dreams, hopes, and needs.

The analysis found that “empathic emotion as rated from the leader’s subordinates positively predicts job performance ratings from the leader’s boss.” To put it another way, leaders who cultivated an empathetic workplace through example performed better. Of course, it follows that when a leader performs well, it’s reflective of their team, department, and at times, the entire company they are guiding.

Demonstrating Empathy to Achieve Success

It’s wonderful when positive personal behaviors can align with and influence professional success. The ability of empathy to elevate a company and the company’s performance is a perfect example of this in action.

When individuals, and especially leaders, can showcase genuine empathy toward their employees, they create healthier workplace relationships. This encourages employees to reflect similarly invested and interested emotional attention, which translates to greater loyalty and engagement.

In the end, this leads to a happier workforce, greater employee retention and satisfaction, and, ultimately, a more successful company.

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