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The case for empathy in business

Updated: Aug 3, 2022

A CURIOUS thing happened several nights ago. A friend asked if I could give an opinion on a fee hike proposed by a local gym she frequented. The case looked rather straightforward so I agreed. The increase was reasonable, yes. The reason was pretty obvious, what with the country-wide sharp rise in labor, utility and fuel costs. The move, however, didn't exactly go down well with many of the gym's longtime patrons. Some argued about a lack of empathy by the operators. While the business strategy was financially sound, it made me ask: What is the value of empathy in business?

Empathy is the capacity to understand or feel what another person is experiencing from within their frame of reference. In an article on VeryWell Mind, educational consultant Kendra Cherry defines it as "essentially, it is putting yourself in someone else's position and feeling what they must be feeling." In organizations, empathy can mean a business being intrinsically curious about the condition and experience of its stakeholders and seeking to understand those experiences.

More and more business leaders are highlighting the importance of empathy as a business skill and as a guide in decision-making and developing business strategies. "Empathy should be embedded into the entire organization," Belinda Palmer, founder of the consultancy The Empathy Business, wrote in a 2015 Harvard Business Review (HBR) article. "It is a hard skill that should be required from the boardroom to the shop floor." In another HBR article, The New York Times best-selling author James Allworth wrote in 2012 that empathy was the most valuable thing being taught at Harvard Business School. He also said that "depending on... [rational analysis] alone to form your opinion can cause you to miss six billion other very valuable sources of insight."

Many companies are now becoming increasingly aware of the competitive advantage empathy can bring. For example, empathy increases sales and retains customer loyalty. By understanding their customer's lives, companies can better anticipate their needs. Empathy also creates stronger ties with customers that lead to repeat purchases and brand loyalty.

Empathy accelerates innovation. Companies can develop products and market them based on their deeper understanding of customers. Companies that don't look at things from the perspective of customers and competitors risk being disrupted right out of their industries.

Empathy in the workplace increases productivity. Work becomes more collaborative as colleagues find it easier to compromise between two points of view when they start putting themselves in each other's shoes.

But practicing empathy, especially in the business setting, is not so easy. Business Evolver's 2021 empathy study found that for 7 out of 10 CEOs (chief executive officers), it was hard for them to consistently demonstrate empathy in their working life, with 68 percent fearing that they would be less respected if they showed empathy in the workplace. In the same study, only 1 out of 4 employees believed empathy in their organizations was sufficient.

So how can business leaders develop or increase their empathy? Bruna Martinuzzi, author and founder of Clarion Enterprises, lays out some simple suggestions in her book The Leader as a Mensch: Become the Kind of Person Others Want to Follow, starting with wholeheartedly listening to people and taking note of how their speech, expressions and body language, and then talking to them and asking about their interests, paying attention to what they are doing, praising them for things done well, and encouraging them to offer their own ideas. Multiple social behavioral articles also recommend reading fiction, getting into role-playing activities and meeting different kinds of people to help cultivate empathy.

However, prioritizing empathy may also have its disadvantages. Psychologist Paul Bloom, in his book Against Empathy, claims that empathy can lead to terrible business decisions, citing three main reasons. First, empathy is innumerate. A person is likely to empathize with one suffering person rather than a large, faceless group. This could lead an organization to over-index on a particular stockholder's needs over that of the group. Second, empathy is biased. A person is more likely to empathize with people who are like them. This risks creating an echo chamber in an organization, stifling efforts to expand diversity, equity and inclusion. Lastly, empathy can be weaponized and used against one another.

That these risks exist isn't a reason to avoid utilizing empathy in business completely. The fact that the European Council recognized empathy as one of the key competencies for the future in May 2018 is a testament to its value and importance. The key, as with all things, is balance. Empathy must be practiced in line with a company's values and goals.

The Founder Coach CEO Dave Bailey, in a blog post, offered an excellent strategy to help business leaders make tough but humane decisions. He wrote: "If you're faced with a gut-wrenching decision where there'll be winners and losers, reflect on these two questions: What is the rational thing to do for the business? How can I be compassionate to all the people involved?"

As someone used to reducing companies and organizations into cold measurable data, the matter of compassion is something very easy to overlook. During economically challenging times, it also becomes increasingly difficult to exercise empathy in business decisions, especially when you're a small business owner focused on your own survival. But sometimes, we must remind ourselves that there's value in looking beyond the numbers and short-term profits. We can posit the best techniques and strategies but in the end, whether in business or in our own lives, empathy really is all about one thing: our humanity.

Eba May L. Desabelle-Tibubos, CPA is a partner of Desabelle, Desabelle and Associates and a member of the Acpapp Negros Occidental Chapter. The views and opinions in this article are hers and do not represent those of the Acpapp.

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