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DOES COMPASSION AT WORK REALLY MATTER?

IT’S NOT ALWAYS OBVIOUS TO businesspeople, immersed in competitive markets or dealing with financial bottom-line questions, that compassion is relevant to their world. For employees who are under strain from deadlines or the stress of living up to performance demands, it’s easy to forget that something that seems “soft” like compassion is significant. Facing challenges from turbulent environments, regulatory changes, or customer complaints, leaders and managers can easily dismiss the need for compassion. But when seeking to build high-performing organizations that meet the challenges of a twenty-first-century work environment, compassion matters more than most people recognize.

Sometimes people think that compassion obviously matters in a not-for-profit setting driven by a mission that relates to helping. Not so. While the rhetoric of compassion might be more recognized in these organizations, the same strain, stress, and demands for change, coupled with a lack of resources, can make it easy for people to overlook the value of compassion in their day-to-day work. Similarly in health care, where compassion is at the heart of the professional value system, we see that the practice of compassion at work is often driven out by overload, time pressure, technological changes, financial worries, regulatory mandates, and other organizational pressures that make humanistic concerns seem marginal.

It’s time to challenge this tendency to disregard the value of compassion. We articulate a strategic case for the fundamental value of compassion that emerges from evidence gathered by a number of researchers across a range of disciplines. While a growing body of research continues to highlight new benefits, significant questions about the fundamental value of compassion for organizations have been answered. Compassion is an irreplaceable dimension of excellence for any organization that wants to make the most of its human capabilities.

COMPASSION TIPS THE BOTTOM LINE

Our colleague Kim Cameron has spent the last decade examining the impact of what he calls the virtuousness of an organization on its financial and operational performance. By virtuousness, Kim means characteristics or strengths that represent the best of the human condition and the highest aspirations of human beings. Kim’s research shows that compassion as part of the values of an organization makes a measurable difference in productivity and financial performance. In a study of eighteen organizations that had recently engaged in downsizing, the extent to which employees characterized their organizations as more virtuous was correlated with higher profitability, greater productivity, and enhanced customer retention.¹ Another study examined performance over two years across forty business units in the financial services industry. When compassion was part of the values of the business unit, as rated by the members, the compassionate units exhibited better financial performance, executives perceived the compassionate units as more effective, and these units realized higher employee and customer retention.²

Studies that examine compassion as an overall characteristic of organizations are still rare. Even so, strong evidence emerges from unexpected sources. For instance, when members of American organizations were surveyed after the terrorist attacks of September 11, 2001, employees who rated their workplaces as excellent at offering compassion in the wake of the crisis became far more engaged in their work. On the other hand, when people felt that their organizations did not value compassion in the wake of the attacks, more than a third of members became actively disengaged, meaning that they were likely causing harm to their workplaces. This finding led Gallup researchers to caution top leaders: “When compassion is called for, know that your bottom line is at stake.”³

COMPASSION FUELS STRATEGIC ADVANTAGE

Organizational strategy scholars write about strategic advantage as being driven by the collective capabilities of organizations. By collective capability we refer to a group’s ability to collectively undertake action to do something important for the organization, such as creatively innovating products or quickly changing services in response to customer feedback. Compassion is at the heart of an organization’s ability to do these things. Because of its role in enhancing collective capabilities like innovation, service quality, collaboration, and adaptability, compassion matters for competitive advantage. Think of it this way: when human suffering threatens to diminish collective capabilities such as working together creatively and quickly, compassion restores and even strengthens the organization’s ability to accomplish its aims. For this reason, compassion belongs on every leader’s strategic agenda.

Compassion makes strategic advantages more sustainable. Sustainable strategic success matters for all organizations, regardless of their sector or industry. Capabilities that cannot be easily substituted or imitated—such as service infused with compassion and care—are particularly advantageous over the long term.⁴ Consider the example set by the Ritz-Carlton hotel chain. To sustain its strategic advantage based in excellent individualized service, the Ritz needs people who can build high-quality connections with customers and respond to their suffering with compassion. In a story told by Gallup researchers, an employee at the Ritz provided a scented candle for a guest who had experienced a particularly stressful travel hassle and arrived just before an important meeting, bedraggled and exhausted.⁵ Feeling this gesture as an act of compassion, the guest complimented the employee and the hotel. When managers in the hotel learned how much she appreciated this act of compassion, they alerted the entire Ritz system and arranged for a scented candle to be placed in her room on every visit. She became an extremely loyal Ritz customer, because she felt that the organization cared about her. These seemingly small actions are what we call compassion moves in chapter 6; compassion moves like this are the fuel for a sustainable competitive service advantage. Research shows that employees can more easily build high-quality connections like this when they experience compassion in their own work teams⁶ and when they are encouraged to express compassion for their customers.⁷

The same general link between collective capability and compassion is true for other hard-to-imitate human-based capabilities, not just hospitality. Let’s look at six capabilities that have repercussions for almost every organization’s strategic success: innovation, service quality, collaboration, recruiting and retaining talented people, employee and customer engagement, and adaptability to changing environments. We can find compassion at the heart of each.

KEY POINTS: THE COMPASSION ADVANTAGE

∞ Compassion contributes to an organization’s financial resilience, profitability, and customer retention after downsizing.

∞ Compassionate business units exhibit better financial performance and higher employee and customer retention.

∞ Compassion fuels human-based collective capabilities such as creativity and learning that contribute to sustainable competitive advantage.

∞ Compassion matters for six types of strategic advantage that have repercussions for all organizations: innovation, service quality, collaboration, retaining talented people, employee and customer engagement, and adaptability to change.

COMPASSION AND INNOVATION

Generating new products, services, processes, and ideas is a deeply human activity. Acting on creative ideas to put them into production or operation is the cornerstone of an innovation capability. Evidence indicates that compassion in organizations bolsters human creativity and the capability for innovation in two ways—first, by motivating new ideas, and second, by creating psychological safety that enhances learning.

COMPASSION MOTIVATES INNOVATION

When an organization’s purpose is linked to alleviating suffering, the call for compassion in people’s work can stimulate human creativity that fuels innovation. Nina Simosko is a Silicon Valley executive who spends a good deal of time wondering about what keeps technology companies on the forefront of innovation. “I’ve come to learn that people come to work searching for purpose and meaning, much as they do in their everyday lives,” she writes. “Frankly, if they come to believe that the company’s sole mission is to make money for shareholders, people don’t find that terribly attractive.”⁸ A purpose that fuels innovation doesn’t have to be as grandiose as ending world poverty, but it does have to be human-centered and directed toward alleviating suffering.

Putting compassion directly in the center of this kind of innovation is motivating. For instance, FoodLab is an entrepreneurial organization that was studied by our colleague Suntae Kim, one of a number of scholars who are investigating compassion in the field of social entrepreneurship.⁹ FoodLab explicitly seeks to reduce suffering created by hunger and lack of access to fresh, local, healthy food in urban Detroit. In Suntae’s studies of social entrepreneurs in Detroit, all of the founders of social ventures were motivated to start a business as a means for alleviating suffering in their communities.

Compassion can motivate innovation in the design process as well. Powerful new ideas are often the result of empathic designs created in collaboration with users. Interaction with users can help designers to take their perspective and draw out feelings of concern for their experience. Empathy equips innovation teams with ideas for products and services that alleviate suffering, expanding the organization’s effectiveness and customer base.¹⁰

An example of compassion motivating the innovation of a business model and products comes from Dr. Govindappa Venkataswamy, who founded an eye clinic out of his family home in South India at the age of 58, with little money and no business plan. Dr. V, as he became known around the world, famously wondered why, when the McDonald’s Corporation could accomplish highly consistent, reliable, and clear standards for hamburgers in restaurants all around the world, couldn’t the same be done for eye surgeries? This curious link between hamburgers and health care in Dr. V’s mind grew into a counterintuitive experiment to offer high-volume eye surgery in a clinic that charged whatever patients could afford to pay. Dr. V’s clinic grew as his high-volume, low-cost surgical model took off. Aravind’s surgeons each perform more than 2,000 surgeries a year, compared with only a few hundred for each US physician, while treating one-third of patients at no charge. In 2011, Aravind clinics saw seventy-five hundred patients each day, performed 850 to 1,000 surgeries, and manufactured thousands of components for eye surgery while holding daily classes for more than four hundred professionals who visited hoping to learn from their model.

Along with this operational success, Aravind is also a financial success. Because of its impeccable attention to quality and detail, Aravind attracts not only poor patients who can afford to pay little but also thousands who pay full price for comprehensive specialty care. Aravind now operates at a surplus. When scholars have tried to unpack how Aravind became one of the lowest-cost, highest-quality eye care systems in the world, they found compassion as a primary driver of innovation. Pavithra Mehta and Suchitra Shenoy, who wrote a book about the Aravind business model, conclude: “Aravind is an unconventional model that came into being not despite but because of the deep-seated compassion at its core.”¹¹

COMPASSION FOSTERS LEARNING

The second way in which compassion fuels a strategic advantage based on innovation involves its role in learning. Harvard scholar Amy Edmondson has been on the forefront of developing a fresh understanding of the role of compassion in fueling innovation through its impact on learning. In an early study, Amy observed the work of eight different hospital units, each of which seemed different to observers in terms of its quality of teamwork.¹² She expected that the units with the best teamwork would also have the lowest rates of medical errors. When she analyzed the data, however, she found exactly the opposite. The units that seemed the most supportive and scored highest on a survey of team performance had the highest rates of errors. Determined to understand this counterintuitive result, Amy dug deeper.

She gathered new data that showed that detecting and reporting medical errors is complex. What counts as an error isn’t always clear. Lots of errors are never registered in any official database. What are called “near misses,” when a team intercepts an error before it affects a patient, were almost never logged. In the teams with less teamwork and less trust, people didn’t report errors unless they absolutely had to do so. These teams rarely talked about errors or what they could learn from them. They looked the other way if they saw coworkers fail. Contrast this with the units with more teamwork. They exhibited what Amy called psychological safety—a willingness to discuss and learn from errors, failures, mistakes, or near misses. They reported errors more often and talked about them more easily.¹³ They also learned more and were more innovative. Compassion helps people to greet errors and failures with the open-mindedness and open-heartedness that foster learning.

COMPASSION AND SERVICE QUALITY

As we were writing this chapter, Monica’s beloved Bernese mountain dog, Amaia, was gravely ill with cancer. Monica had planned to take the dog to a specialty veterinary treatment center in another city and had booked a hotel nearby. On the eve of her arrival, she got news that Amaia’s tumor was not treatable. Monica recounted, “I called the booking service I had used for the hotel room and informed the agent that I would no longer need the reservation.”

“I see that you are subject to a 100 percent cancellation charge at this time,” the agent said.

“That’s OK, I understand,” Monica answered. “I just wanted you to be aware that I won’t be checking in.” The agent asked why she was canceling the reservation.

“I was going to take my dog for treatment at the specialty hospital near the hotel, but . . .” Monica felt tears welling up in her eyes and her voice wavered. Taking a deep breath, she described the situation.

“I’m so sorry,” the reservation agent responded genuinely. “Let me at least call the hotel and see what we can do.” About a half hour later, Monica received an email from the reservation service. The agent wrote:

Thank you for contacting us.

I am so sorry to hear about your pet. As we discussed during our phone conversation, I approached the hotel on your behalf and asked them to cancel your reservation without any penalties. I am happy to confirm that the request has been approved.

I am glad to have helped. I am so sorry for what you are going through.

Though Monica’s phone call was a momentary interaction, just one of many in this call center employee’s day, the agent really listened. Instead of treating this as just another transaction, the reservation agent tuned in to Monica’s sadness and responded with compassion. Research by the Gallup organization shows that genuine expressions of compassion such as this one, when delivered authentically as part of high-quality service, create brand loyalty and forge lasting bonds with customers.¹⁴ That was certainly Monica’s feeling about the booking service and her intentions to use it again in the future. It was as if she had received a gift.

Research supports the idea that when employees give feelings and actions as gifts to customers, not only does the customer become more loyal, but the employee feels better about work as well. In Monica’s case, the reservation agent’s quick follow-up, with a personal expression of care, represents what some researchers have called a philanthropic approach to emotions at work.¹⁵ This kind of approach highlights the ability of service providers to give feelings and actions freely at their own initiative as gifts to their customers in order to express empathy and compassion. The connections formed through a philanthropic approach to emotions at work can be rewarding and motivating.¹⁶

This approach contrasts with an emphasis on emotional labor, where employees like flight attendants must smile and act cordially toward even the rudest of customers, expressing emotions that they don’t actually feel in order to perform their work. Research shows that emotional labor can be draining and contribute to burnout.¹⁷ This reinforces the idea that compassion at work can’t be mandated—instead it emerges when people authentically pick up on suffering and feel moved to respond.

Service work is often measured in time to resolution or other metrics that create pressure to shut down encounters with clients quickly. Managers and leaders who are striving to deliver distinctive high-quality service that fuels strategic advantage must recognize that there are times when employees who interact with customers who are suffering will want to give their customers time and attention as a kind of gift. Making room for compassion as part of a service strategy opens the door for employees to have a more philanthropic approach to their interactions. Great benefits accrue to the employee when work is more genuinely compassionate, and to the organization in customers’ loyalty and an inclination to recommend the service to others.

COMPASSION AND COLLABORATION

Complex organizations need people who coordinate and collaborate across all kinds of boundaries. Divisions proliferate in organizations, whether from different forms of expertise, a variety of professional norms and education, different parts of supply chains, geographic and time boundaries, or cultural differences, just to name a few. When we think about coordination and collaboration across boundaries like these, research highlights the importance of voluntary actions that people undertake to work with others for shared advantage or mutual benefit.¹⁸ This goes beyond simply working together on tasks. Coordination and collaboration are domains in which qualities of human relationships determine strategic success.

Important evidence related to the impact of compassion on coordination and collaboration comes from the work of organizational scholar Jody Hoffer Gittell.¹⁹ Her research has addressed a central strategic question in the airline industry: when short-haul flights are inherently more expensive for the airline to operate than long-haul flights, how was it possible for Southwest Airlines to become the leading low-cost airline in the United States? As with the Aravind eye clinic in India, where we saw compassion at the heart of shaking up the entire production logic of an industry, compassion is hidden at the heart of Southwest’s story as well. In this case, compassion infuses rapid coordination with respect, trust, and strong human connections.

One key to Southwest’s strategic advantage is its capability for quick turnarounds at airline gates. It’s not an exaggeration to say that at Southwest Airlines, cooperation is money. As employees learn quickly, “Our planes don’t make any money sitting on the ground—we have to get them back into the air.”²⁰ An aircraft turnaround involves coordination among twelve different functional roles, from pilots and crew to ticketing and gate agents to multiple maintenance, baggage, and cargo functions. Plenty of factors make coordination difficult. Differences in status can sometimes hinder willingness to engage in communication. Each function works in a different geographical area of the airport, providing little access to one another. Each function holds distinctive expertise about a part of the process, which may or may not be valued by other functions. Each function has distinct labor practices, different measures against which they judge their work, and different professional norms and values. In most airlines, cooperation between these functions isn’t generally warm. But within Southwest, a sense of egalitarianism pervades the organization, supporting a value of caring for one another that fuels cooperation across all these boundaries. Compassion in the coordination process becomes key to strategic success that hinges on this type of seamlessly coordinated effort.

Jody’s findings, now referred to in a theory of relational coordination, demonstrate significant positive effects of the kind of compassion that supports coordination. In sixty-nine studies across sixteen different industries and eighteen different countries, relational coordination has been shown to be essential to better financial performance, efficiency, quality, and safety.²¹ Compassion is at the heart of transformative cooperation.²²

COMPASSION AND TALENT

Doing any kind of great work requires great people. Finding them and keeping them is central to any human-based strategic advantage. Building compassion into recruiting and hiring helps organizations find talented employees with the right cultural fit, which matters more than ever.²³ Experiencing compassion as part of the work environment also builds commitment, which helps organizations keep talented people.

Some organizations with compassion at their core deliberately emphasize compassion during the recruiting and hiring process. At the social media firm LinkedIn, for instance, the organization as a whole values the idea of compassionate management, and the CEO, Jeff Weiner, routinely speaks about this value in public.²⁴ We will talk more about compassion and leaders in chapter 10. In relation to recruiting at LinkedIn, we documented the case of a hiring manager who has adapted his interview process based on the values that Jeff Weiner espouses. He routinely asks candidates to tell him what they would do if they were just about to step into leadership of a very important global meeting and they got the news that a valued employee at a different location had been rushed to the hospital.²⁵ There’s no correct answer to the question, but a candidate’s responses help him to understand the candidate’s potential fit with the organization’s culture. Our research also shows that experiences of compassion—giving it, receiving it, and even witnessing it at work—are significantly related to commitment and employees’ intentions to stay with their organizations.²⁶ In the recipe for developing sustainable competitive advantage through people, compassion is a surprise ingredient.

COMPASSION AND ENGAGEMENT

Organizations need people who are actively involved in and enthusiastic about their work, the essence of employee engagement. Measures of the engagement of employees are significant predictors of an organization’s overall profitability and productivity.²⁷ Since the late 1990s, the Gallup organization has surveyed more than twenty-five million employees in 195 countries, finding that engaged employees also tend to create engaged customers who are involved in and enthusiastic about an organization’s products or services.

Compassion is hidden at the heart of employee engagement. One group of questions on the engagement survey asks about the quality of relationships at work and whether supervisors or others “care about me as a person.” As we’ve already seen, caring relationships at work are a source of intrinsic motivation. Research shows that people want to care about others at work, and will volunteer or seek out opportunities to engage with compassion.²⁸ In our research, we met Isabel, whose story illuminates the relationship between compassion and employee engagement. Isabel told us that when she was diagnosed with and treated for breast cancer, she “was flooded with hugs, prayers, gifts, and tons of support throughout the various surgeries and chemotherapy. I was so overwhelmed when food was delivered to my house to feed my family by this group of very caring people from work. I have never felt so loved. This experience has given me a deeper commitment to my coworkers, and I find myself contributing to all other calls for sharing and giving.” In Isabel’s story we see how an experience of receiving compassion from coworkers translated into increased engagement at work. And in terms of strategic success, Gallup’s research shows: “Engaged employees create engaged customers, and those engaged customers spend more money, more often with their preferred brands.”²⁹

COMPASSION AND ADAPTABILITY

An organization must have the capacity to perform with excellence at the same time that it adapts to fluctuating markets, changing competitive landscapes, advancing technologies, shifting regulatory environments, and emerging social or environmental conditions. Adaptability to change is at the heart of sustaining strategic competitive advantage over time. It has become a truism that change is a constant in organizational life. Even so, the difficulty and pain associated with change often goes unaddressed—and these are missed opportunities for compassion at work. As we saw in Patty’s story in chapter 1, when organizational change opens the door to suffering, greeting change with compassion is an underrecognized strategy for enhancing an organization’s adaptability.³⁰

Organizational researchers Karen Golden-Biddle and Jina Mao quote from the former CEO of a health organization, who described the visceral sense of suffering that sometimes accompanies organizational change: “I can remember a conversation with my new boss . . . it was a conversation around goals—where we were headed. And I said that, as I look over my shoulder at the change that had occurred in the region, I see all these human remains strewn in the ditches.”³¹ When this is our experience of organizational change, it’s obvious that compassion is necessary and valuable. Karen and Jina show that leaders and managers who notice suffering, relate with empathy and concern, and actively attend to emotions, make change easier. People affected by change done with compassion are less likely to resist and more likely to invest in making change effective.³²

Compassion researcher Donde Ashmos Plowman and her colleagues showed how an urban church that was in severe decline enlisted creative ideas from its members in hopes of shifting the downward trend in financial resources and membership.³³ Compassion for the organization’s broader community of stakeholders sparked ideas about new services the church could offer, including breakfast for homeless urban residents in the neighborhood. As these sparks of change caught fire in the organization, change accelerated because new people added new ideas that expanded the pattern of compassion. For instance, a doctor volunteered medical services to be offered during the breakfasts. More ideas caught on. Soon the church offered meal services, a full clinic, showers, employment services, and more. The organization reversed its decline. Its adaptability was fueled almost entirely by sparks of compassion that ignited passion for change.

KEY POINTS: HOW COMPASSION BUILDS COMPETITIVE ADVANTAGES

∞ Compassion fuels innovation by motivating creative ideas and by fostering psychological safety that enables learning.

∞ Compassion fuels service quality by motivating a philanthropic approach to emotions, building customer loyalty.

∞ Compassion fuels collaboration by building trust and respect that increase people’s willingness and ability to work together for mutual benefit.

∞ Compassion fuels the recruiting and retaining of talented people by increasing commitment and cultural fit.

∞ Compassion fuels employee and customer engagement by helping people to feel cared about at work.

∞ Compassion fuels adaptability by alleviating the pain caused by change processes and sparking passion that motivates resourceful change.

AN INVITATION TO REFLECT ON THE CASE FOR COMPASSION

Technologies will race onward. Robotics will replace human labor, creating even more change in the future of work.³⁴ Organizations will need to adapt and to create things that have never existed before. When organizations need adaptability and innovation, they also need human ingenuity—the kind of ingenuity that can be crushed by unmet grief or pain at work.³⁵ In this way, compassion is at the heart of success.

Some organizations succeed because they offer high-touch services that respond to the unpredictable desires and demands of clients. These organizations require the sensitivity and responsiveness of people who can harness empathy and compassion to deliver great service. All organizations do what they do because they can find and keep people who engage with work. Human-based capabilities require compassion.

More and more organizations strive to work together in ways that are unprecedented, where partnerships can make or break success. These forms of strategic advantage depend on people who can coordinate and collaborate for mutual benefit. People who can compassionately notice and respectfully embrace one another’s states of mind and heart propel or undermine this form of competitive advantage. Compassion is not just a nice-to-have; it is the hidden heart of strategic success.

∞

How does compassion comprise the hidden heart of strategic advantage in your organization?