Is corporate empathy an oxymoron?

In a transparent world dominated by social media, corporations are feeling the need to become truly responsive to the needs of their customers and employees. The corporate world is an increasingly immediate, intimate, and interactive space. The call for companies to engage in authentic dialogue is becoming louder. And yet this desire to change is hampered by the fear of appearing weak and vulnerable, meaning that most businesses still suffer from an empathy deficit. As the CEO of a British bank confided at last year’s World Economic Forum, “We all know it’s important to be empathic, but how do I galvanize 48,000 people in my UK operations — most of whom think that empathy is for wimps?”

Enlightened companies are increasingly aware that delivering empathy for their customers, employees, and the public is a powerful tool for improving profits, but attempts to implement empathy programs are frequently hamstrung by the common misconception of it as “wishy-washy,” “touchy-feely,” and overtly feminine. So empathy is de-prioritized, and relegated to the status of just yet another HR initiative that looks good in the company newsletter. It is seen as a soft and frilly add-on rather than a core tool.

An additional problem facing CEOs is that many see empathy as an intangible quality, and as such hard to quantify. If you can’t measure empathy then it is very difficult to assess how much empathy your company is delivering, and where the greatest empathy deficits lie.

This is a misconception. Empathy can be measured, and your business’s empathy quotient can be assessed, allowing CEOs to pinpoint their companies’ strengths and weaknesses, and see how they rank alongside their competitors. Empathy should be embedded into the entire organization: There is nothing soft about it. It is a hard skill that should be required from the board-room to the shop floor. Corporations must demonstrate empathy across three channels: internally, to their own employees, externally, to their customers, and finally to the public via social media.

We define empathy by three components: customer, employee and social media. The combination of these, with equal weighting, across the three channels–internal (employees), external (customers), and social–gives us a company’s “empathy quotient.” We then applied our thinking to the 100 best-known companies in the UK, where we’re based.

Which, then, are the most empathic and least empathic household names? And what does this tell us about the way the corporate world is dealing with its empathy deficit?

While confirming many of our expectations, the results revealed a number of interesting surprises. The top places were not all taken up by trendy tech brands, and the bottom was not dominated by multinational banks. The sector that fared worse was the telecoms, with Vodafone and BT scoring particularly badly. Employee and customer satisfaction are the casualties of the race for short-term profits that is endemic in that sector. Their social media strategies tell one part of the story: they are over-reliant on unhelpful canned responses which merely shunt customers to more traditional forms of contact, such as call-centers.

The highest performing company was LinkedIn. It was striking that LinkedIn actually has a strong presence on the rival platform Twitter. One might expect them to force customers exclusively onto to their own channels of communication—which is the policy of both Twitter and Facebook. Instead, the company makes an effort to go where their customers are, even at the risk of being seen to endorse a rival product. This approach shows that LinkedIn empathizes with its customers’ interests and choices.

Other surprises included Twitter, which flails in a mediocre mid-table spot—with its primary empathy failure being its inability to engage with its own customers on its own platform. Few would have been surprised to see the airline Ryanair down at 99th. The only shock there was that the technology retailer, Carphone Warehouse, did even worse.

We expected the small and medium-sized companies to come out on top, guessing that larger companies would be the least empathic. But large companies were evenly distributed and well represented at both ends of the scale. There is absolutely no evidence that being big automatically makes you un-empathic. Empathy is most definitely not a problem of scale, but more an indication of management priorities.

Very few companies are good all-round empathizers. Even LinkedIn underperformed on our customer interaction score. The index highlights that each of the hundred companies had room for improvement. Two particular findings deserve emphasis: Customers are unforgiving of poor service and inauthentic communications (got that, telecoms?). And companies that see empathy as a single-dimension issue of employee relations will fail to realize the broader benefits of becoming more empathic across the other two channels.

Methodology

This index can be really useful in locating the strengths and weaknesses  of individual companies and using them as a basis of comparison. The management at Mercedes, for example, should be asking itself why it comes in at a relatively modest 35th, while Audi’s results put it in third place, and consider an expansion of its investment in social media which is where Mercedes is underperforming.

The good news is that the empathy deficit can be reduced. Empathy can be learned and companies can improve. With prioritization and commitment, companies can measure where they are and chart a path to becoming more empathic. Enlightened leadership can create a more empathic culture. Rene Schuster, former CEO of Telefonica Germany, puts it this way: “Empathy is not a soft nurturing value but a hard commercial tool that every business needs as part of their DNA. Our aim is to make every interaction our customers have with us an individual one.” Schuster implemented a Germany-wide empathy training program that led to an increase in customer satisfaction of 6% within 6 weeks. Even companies within the worst performing sector in our Index can show rapid improvements given focused management attention.

Empathy pays, and it pays best when it comes from the top.

This article is published in collaboration with Harvard Business Review. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Belinda Parmar is the CEO of  the consultancy Lady Geek and the author of The Empathy Era and Little Miss Geek.

Image: Pedestrians cross a road at Tokyo’s business district September 30, 2014. REUTERS.