Compassion in business: why it matters and how to practice it05/02/23
For decades upon decades, most companies’ primary focus has been on making money. Indeed, a company must generate revenue or it will cease to exist. I’ve heard it described that money is to a company what red blood cells are to the human body – necessary for survival. But sometimes this focus on money turns into an end in itself. If making money becomes the myopic focus of a company, this may lead to the neglect of things both close and peripheral such as values, purpose, customers, stakeholders, employees, etc.
In business discussions, a dichotomy has surfaced between making money and being responsible for concerns beyond making money. Today, the idea that a company can only do well or do good is being questioned. Times are changing, and matters such as compassion, empathy, and mindfulness are emerging as important considerations for businesses to survive and thrive. With this, myriad companies are evolving to incorporate compassion into their company culture.
I’ve had the honor of working on a book with my colleagues, “Integrating Compassion into the Financial Services Industry,” set to be published this year. The book focuses on compassion in the global financial sector – a pressure-filled, high-stakes, and historically cut-throat industry. But in all industries, especially high-stress ones, practicing compassion can have a compelling impact on employee retention and satisfaction, cohesion within teams, innovation, and increased revenues.
So, what does compassion look like in business? Compassion is empathy in action. It is not just a shared feeling with a person or community; it is acting with consideration, care, and relational understanding to come together and help alleviate distress or solve a problem. Compassion is an important ingredient in interpersonal connections, and as workplaces evolve and adapt, it is just as important in professional relations as well. Through practice, it may allow the reframing of failures as learning experiences, improve life-work balance, give focus to professional development, and encourage a sense of community within the organization.
Why compassion matters in business
It is commonly assumed that companies focus on one thing only – driving revenue. But in fact, many leaders and companies find that compassion and mindfulness can actually help drive higher revenue, especially as topics like corporate social responsibility have become important to a greater number of stakeholders. Younger generations especially have a sharper focus on buying from, working at, and supporting companies that treat their employees well, give back to the community, and make a positive impact on the environment.
Many studies have shown that compassion in business has numerous benefits. Here are just a few:
Diversity – Our world is more globally connected than ever before. We are interacting and working with more diverse groups of people, from all over the world, and from many different walks of life. Engaging with people that are different from us in a constructive way requires compassion. Compassion and diversity also help companies consider a broader group of stakeholders.
Purpose – Compassion drives purpose. And purpose is essential when running an organization. Why do we do what we do? How do our actions support our core values and purpose? Published in his 2022 letter to CEOs, head of BlackRock Larry Fink says, “Putting your company’s purpose at the foundation of your relationships with your stakeholders is critical to long-term success.” When leaders are compassionate decision-makers, they are less likely to become unmoored from the company's purpose. Compassion also helps people overcome obstacles, as well as embrace any subsequent failures as learning opportunities. Fink also adds, “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.” If one of the largest investors in the world is looking not just at shareholder profits, but at how a company operates for the greater good, you pay attention.
Employee retention and satisfaction – The 2021 Ernst & Young LLP Empathy in Business survey revealed that 90% of U.S. workers believe empathetic leadership induces higher job satisfaction, with 79% agreeing it decreases employee turnover. Many of the survey participants claim to have left a previous job because their boss wasn’t empathetic to their struggles at work (54%) or in their personal lives (49%). Emma Seppala, a researcher at Stanford, has also provided evidence for the benefits of compassion and empathy. Her research shows that compassionate workplace cultures reduce burnout and increase productivity by 12% or more. Compassion has also been linked to higher levels of employee engagement. A study from Catalyst found that 76% of people who experienced empathy from their leaders reported they were engaged, compared with only 32% who experienced less empathy.
Innovation – The same study from Catalyst found that 61% of employees who reported having compassionate leaders regard the company as more innovative, compared to 13% of employees with less empathetic leaders. Compassion stimulates innovation and moves people to look at things from diverse perspectives and to effectively handle unexpected events. Exercising compassion can foster innovation.
Compassion is a practice
Compassion is a skill, and it takes practice. Some people have a more compassionate nature. For others, this is something they must work harder at. No matter, acknowledging where you are and understanding that you can improve are key to developing compassion. Here are some practices anyone can implement to be more compassionate in the workplace (or anywhere else):
- Manage stress – Regular stress is taxing on our body, mind, and soul; high amounts of stress can be exceptionally exhausting. Especially in high-stress industries, it is imperative to find ways of coping – exercising, cultivating hobbies, eating healthfully, meditating, spending time with others (family, friends, pets, groups), or using small breaks during the day to breathe, stretch, or take a walk.
- Consider the whole person – Employees are your greatest resource, but they are more than just employees – they are parents, friends, spouses, children, and so on. People have interests outside of work and should be encouraged to find a healthy life balance. Those who have more balance in their lives, however they define it, are happier and healthier, and thus tend to be better employees.
- Practice active listening – When talking with people, avoid the temptation of developing what you’ll say next instead of focusing on the dialogue, or being distracted through activities such as mentally checking ‘to-do’ lists and monitoring your phone. If you cannot give someone your full attention, let them know this and reschedule for a time when you can. They probably sense that your attention is divided and will appreciate your respect for their time.
- Practice mindfulness – Mindfulness is the art of holding space for our feelings without latching on to a single emotion. Mindfulness enables compassion to flourish. It allows us the ability to pause and consider what we say or do before we say or do it.
- Practice self-compassion – Give yourself some grace and some space. There may be times when stress or your emotions get the better of you, and your reaction is something other than compassion. It happens to everyone, so understand that this is normal. Then repair the damage by treating yourself with kindness, understanding, love, and support. Self-compassion helps to nurture compassion toward others and subsequently a compassionate culture.
Embracing and fostering a compassionate workplace will benefit the company leaders, the employees, and other important stakeholders. A compassionate mindset drives more contemplative decision making that not only positively impacts business in general, but also benefits the financial services industry specifically. In our increasingly connected (and disconnected) global environment, practicing compassion might just be the conduit to thriving business and productive interconnected relationships.