Is organizational empathy profitable?

The last few years have seen the emergence of numerous companies staking a claim to “conscious capitalism” (Starbucks, Walmart, Whole Foods, Tata, and so on). Rather than pitting profit against social and environmental commitment, this new approach to accountability is designed to create greater value for all stakeholders.

Business Digest empathy

 A key characteristic of these so-called “conscious companies” is that empathy is etched into their organizational DNA, helping them to understand and meet the expectations of their employees, customers and entire ecosystems. Excerpt from the latest issue of Business Digest:

1. Cultivating empathy with your teams
Online shoe retailer Zappos, whose sales soared from $ 1 million to $ 1 billion between 2000 and 2008, is ranked among the top ten US companies to work for. In addition to management practices that foster autonomy, the firm’s empathic practices aim to anticipate the needs of its staff with a multitude of services: a concierge service, retirement plan, free access to a library and gym, a personalized coaching program, and more.

2. Staying closer to customers
Most companies segment their markets using socio-demographic criteria, whereas consumers have a completely different approach: they simply try to grab the best deal, the one that will solve a problem or meet a specific need or desire. It’s thanks to this ability to predict consumer requirements that Netflix was able to reshuffle the cards in the entertainment market. The company, which started off in mail-order DVD rentals, realized how convenient a legal video-streaming service could be even before its future customers did. As of early 2015, Netflix had 57.4 million subscribers across the world.

3. Acting as a responsible player in the ecosystem
The problematic issue of mineral extraction in conflict zones, such as the Democratic Republic of Congo, led Motorola and Apple to revise the supply lines they use for consumer electronics products, even though it meant raising production costs for some components by over 50%. Offsetting the cost of higher prices, though, the decision increased perceptions of both companies as responsible by consumers who are increasingly attentive to the ethical rankings of mobile phone brands.

The Container Store example
Kip Tindell created The Container Store in 1978 with the goal of taking care of all of his stakeholders (employees, customers, suppliers and wider society). As a result, the firm has enjoyed annual double-digit growth for nearly 40 years and is ranked one of the best US companies to work for.

Based on “Corporate Empathy Is Not an Oxymoron” (Harvard Business Review, January 2015) and “The Empathy Era: Women, Business and the New Pathway to Profit” by Belinda Parmar (Lady Geek, June 2014); and “Empathy: the Most Valuable Thing they Teach at HBS” by James Allworth (Harvard Business Review, May 2012); Empathie et compassion en entreprise by Gilles Teneau (ISTE Editions, February 2014); and “Empathy: the Most Valuable Thing They Teach at HBS” by James Allworth (Harvard Business Review, May 2012).

Watch the video:
Interview with Belinda Parmar on BBC News