Business is ultimately about people – and people tend to act on emotions. Strong relationships, whether with employees, customers, or partners, are built not just on logic or transactions, but on how we make others feel.
That’s why empathy isn’t just a “soft skill” or a nice-to-have – it’s a vital strategic advantage, especially in more competitive environments. Leaders who can understand, connect, and respond with kindness create stronger teams, deeper loyalty, and sustained success.
Or at least that’s what Drew Povey, an influential leadership authority specialising in elite level sport, education and business, believes. And he’s not alone.
According to a Deloitte LLP 2021 study on the ‘Global Ways of Working’, 97% of respondents reported that effective managers must have and demonstrate empathy – a stark contrast to the 45% of respondents that said their manager was able to demonstrate empathy in the workplace.
Whether you’re new to leadership or several decades deep into a senior management position, Povey explains how learning how to leverage kindness can become one of the most important tools in your leadership arsenal.
1. The Empathy Dividend
Looking to boost client retention, staff productivity, or even team innovation? Kindness in leadership pays off across all these areas.
In fact, according to the results of a Catalyst survey of nearly 900 US employees, empathy was “an important driver of employee outcomes such as innovation, engagement, and inclusion – especially in times of crisis or rapid change.”
While inclusion may not directly result in improved business performance, it can help to combat high staff turnover rates, passing on recruitment cost savings and fostering more a stable working environment for the whole team.
Gallup researchers also identified key differences in business outcomes between the most and least engaged teams, citing differences of 18% in productivity (sales), 23% in profitability, and a substantial 81% in absenteeism.
By directly linking empathy to business performance, emotional intelligence becomes an undeniable commercial advantage.
2. Triple Bottom Line, Human First
You’re (hopefully) very familiar with the concept of a bottom line as a leader – but what about a triple bottom line? And, crucially, how every aspect of this triple bottom line is rooted in empathy and human connection.
Investment of Choice
As the traditional bottom line, being the investment of choice is primarily about financial health. That’s balance sheets, turnover, profit. But investors are interested in more than just your finances – they want to know about your values and culture.
Is your business built to last? What does your culture stand for? Empathetic leadership offers a strong answer to those questions. By fostering trust, resilience, and a values-driven culture, it signals long-term stability, which is something that investors not only recognise, but reward.
Employer of Choice
People want to work with and for leaders who see them as more than just resources. When leaders act with empathy and recognise the person behind the work, they encourage employees to stay and thrive by boosting staff engagement, belonging, and loyalty.
In turn, the business also benefits from higher employee satisfaction and lower staff turnover rates – it’s a win-win!
Provider of Choice
Who do customers choose to buy from? Spoiler: not the brands that treat them like transactions.
Customers gravitate toward businesses that understand their needs, values, and aspirations. Empathetic leaders see customers as people, building genuine, long-lasting relationships rooted in understanding.
When we frame leadership through this triple bottom line, empathy becomes the common thread, transforming leaders into trusted partners for investors, sought-after employers for new talent, and preferred providers for customers.
3. From Command to Connection
Gone are the days of the old-school ‘do as I say’ directive leadership. While issuing orders, enforcing hierarchy, and streamlining decisions may have worked in the industrial era, that directive style is frankly outdated and ineffective in today’s workplace.
Modern leadership is relational and empathetic. Instead of chasing efficiency through control and compliance, empathetic leaders fuel innovation, collaboration, and adaptability. By prioritizing connection over command, they build trust and make people feel genuinely valued.
The result? Discretionary effort – that’s the creativity, energy, and commitment employees willingly give when they’re inspired, not forced. Command might deliver compliance in the short term, but connection delivers performance, loyalty, and growth that last.
4. Empathy: The Glue of Culture
“Culture eats strategy for breakfast.” While often misattributed to the Austrian-born American management consultant, Peter Drucker, the core message of how a flawed culture can undermine even the best strategy rings true.
A company might have the perfect strategy on paper, but if its culture is misaligned and undermines productivity, engagement, and loyalty, the execution of this plan will suffer.
This is where empathy becomes essential. Empathetic leaders, leaders who listen, understand, and respond, create the trust and psychological safety that holds culture together.
The result is resilient teams, stronger collaboration, and a culture that doesn’t just support the strategy but amplifies it tenfold.
5. The Hard Edge of Soft Skills
It’s a common misconception that empathy is a “soft” skill. Many people mistakenly believe that empathy may be nice to have, but it’s not vital for performance and it certainly isn’t necessary for leaders.
In reality, empathy is anything but soft. It’s a hard-earned discipline that requires awareness, consistency, and courage.
It means listening deeply, making fair and balanced decisions, and fostering psychological safety so people feel free to contribute their best ideas. These aren’t passive behaviours that some people are simply born with, they’re active, intentional practices that take effort and skill.
Practices that produce impressive results – per Volume 10 of the Annual Review of Organizational Psychology and Organizational Behavior, 2023, employees with a high level of psychological safety at work are more likely to engage in helping behaviours and to seek feedback from their peers.
As the American writer Tom Peters says, “it’s the soft skills that get the hard results” and empathetic leadership proves, beyond a doubt, that kindness is in fact not a weakness, but a competitive advantage that delivers tangible results.