Editor’s note: Annie Pettit is chief research officer, North America, at E2E Research. She is the author of “People Aren’t Robots: A practical guide to the psychology and technique of questionnaire design.” Pettit also chairs the Canadian mirror committee of the 20252 ISO Standards Committee.

The value of empathy in business can’t be underestimated. If being good and kind isn’t incentive enough, the data show that people want businesses to demonstrate empathy for consumers and society.

A helpful model of empathy has been described by Daniel Goleman and Paul Ekman. Their theory focuses on three stages of empathy which can apply to any business: cognitive empathy, emotional empathy and compassionate empathy. But let’s start even before that.

Disregard for empathy

Whether by deliberate choice or ignorance, business owners can run a company without empathy for people or planet. These owners don’t worry about creating a positive work environment, building environmentally friendly products or supporting the communities around them. These companies exist in the moment doing whatever is required to survive. 

It means their packaging is plastic or paper depending on which supplier is closest or cheapest. It means they have no regard for whether customers can reach a real person when they call the customer service line. It means employees are banned from working from home even when that would create a better quality of life. And for researchers, it means writing questionnaires without open ends because they’re too hard or expensive to code and act on.

Without a strategy that purposefully includes empathy, there is little reason for customers to be loyal to these businesses outside of price points and convenience. Similarly, there’s little reason for employees to be loyal when employment options are plentiful. It’s a tough and lonely business.

Cognitive empathy

Nearly every business demonstrates cognitive empathy. Like it or not, most people are aware of other people’s emotions. Cognitive empathy exists when employees are aware that customers are unhappy with long waits or impossibly complex product return processes. In the research space, it manifests as research reports that are full of human truths that never get actioned. 

Cognitive empathy is empathy with zero action and zero incentives for customer or employee loyalty. Being aware of customers’ and clients’ feelings and then doing and saying nothing in response is lazy and can be cruel. Price and convenience are top motivators for customers, and loyalty is temporary and superficial.

Emotional empathy

Most companies aim to at least demonstrate emotional empathy. Many employees feel the pain and delight of their clients and customers and want to respond kindly as the occasion arises. The best-case scenario is when employees are empowered to speak from the heart and personalize their responses rather than reading from scripts.

Emotional empathy is shown when employees let customers know they understand that standing in a long line is frustrating (but you still have to do it). It’s shown when HR tells employees they understand it can be hard to get a sick note from a health care provider when you’re too ill to take public transit (but you still have to do it). It’s shown when the visible outer packaging is paper (but the mass of inner packaging is plastic).

Speaking kindly without kind actions can create confusion and perceptions of betrayal. It feels and looks good in the short term but serves little long-term purpose. Any customer love or loyalty created by those kind words can be quickly and easily washed away the next time someone has to stand in line or discard unsustainable packaging.

Compassionate empathy

Finally, we arrive at the top of the ladder where companies show empathy and follow it up with actions that reduce or prevent pain points or create happiness. These companies strive to help their employees and their customers do better, which fortunately increases customer retention and employee loyalty. With well-actioned empathy, these companies have the power to avoid playing pricing games, and they find it easier to weather difficult financial periods.

I see this stage of empathy in two categories. 

  • Disjointed empathy. Companies with disjointed empathy do a variety of good things with good intentions. They may have many employee assistance programs, customer service training courses and support specific charitable causes. But the various plans are led by different people and don’t necessarily connect to each other in a logical way. They do good things, genuine things, but those things happen in silos.
  • Systemic empathy. Companies with systemic empathy ground their business in empathy. It is their purpose and mission, and it guides every business decision made by every employee in every department. Not sure what actions to take in HR, product, research or operations? Empathy is the starting point – create a plan that cares for clients, customers, employees, the planet. Every person, whether leader or employee, works from a business led model of empathy that guides them in their daily tasks and goals. 

The customer service team has the power to listen to customers and offer reimbursements and rewards at their discretion because they empathize with their customers. The packaging team has the power to insist on paper packaging because they empathize with the environment. The research team has the power to insist on a larger sample size because they empathize with the perspectives of marginalized people.

Though there are many fantastic examples of companies with systemic empathy (e.g., Patagonia, Ben & Jerry’s), my favorite example is Unilever, particularly as extremely publicly advocated by Aline Santos Farhat (CBO), Keith Weed (former CMO) and Paul Polman (former CEO). Unilever’s purpose is described as making “sustainable living commonplace” which isn’t only about doing good for the planet. It’s also about doing good for society. This one overarching vision directs their environmentally friendly product innovation strategies, their respectful and forward-thinking people management systems and their broader business strategies.

Every business leader needs to decide how to run their business. They need to decide whether they want to worry every day about whether the competition has found a way to beat their prices or create loyal customers who’ll stick with them especially when times are tough. The question is… do you want to market your company as empathetic or do you want to be empathetic?