Corporate empathy. It’s tough to imagine two words that could relate to each other less, yet Belinda Parmar, CEO of the U.K.-based consultancy Lady Geek, insists that it’s not an oxymoron. Rather, Parmar writes in Harvard Business Review, not only can large consumer-facing organizations be empathetic, but it “is a hard skill that should be required from the boardroom to the shop floor.”
Empathy–the ability to have a cognitive and emotional understanding of others’ experiences–has long been relegated to the domain of less tangible tools that are as difficult to define as they are to quantify. Parmar contends that not only can empathy be measured, but a company’s empathy quotient can be used to reveal strengths and weaknesses, as well as where they stand among competitors.
As such, Lady Geek compiles an annual list of the most and least empathetic companies in their Global Empathy Index. To determine the rankings, Lady Geek’s research team uses a combination of publicly available financial information from the S&P Capital IQ, social media interactions from Twitter and Reddit, and proprietary data from the Lady Geek Opinion Leaders panel survey.
With the increasing importance placed on authenticity in brand interactions with consumers, the researchers analyzed about half a million tweets over the course of several weeks this October for complaints or use of repetitive language. They also analyzed the impact of controversies such as ethical lapses, scandals, and fines.
The most empathetic companies include Microsoft (with a score of 100%), Facebook, Tesla Motor, Alphabet (Google), and Procter & Gamble. Others in the top 20 include Audi, France’s luxury house LVMH, Alibaba Group, and Wells Fargo. The bottom five are TalkTalk Telecom, Keurig Green Mountain, Hargreaves Lansdown, Abercrombie & Fitch, and JD Sports Fashion.
Parmar also notes that while Audi ranked No. 10 overall, its parent company Volkswagen came in close to the bottom at No. 95 due to the emissions controversy that prompted CEO Martin Winterkorn to step down. Audi’s rank did suffer a bit, as it fell from the No. 3 spot it held in 2014.
Given their recent announcements to extend paid parental leave, it will be interesting to see how Netflix (No. 22) and Amazon (this year at No. 61 versus No. 21 in 2014) will fare in next year’s ranking. The flap over Amazon’s punishing work culture may have had an impact in its fall this year. On the flip side, Intel’s much publicized diversity initiatives didn’t push it any further than No. 45.
A Business Case for Empathy Training
Parmar points out that five of the top 10 most empathetic are technology companies that are also the fastest growing. “Their market capitalization has grown this year by 23.3% compared to a weighted average of 5.2% of all the companies in the index,” according to Parmar.
The Index also makes a case for empathy boosting the bottom line as the top 10 generated 50% more earnings than those ranking least. “Average earnings among the top 10 were up 6% this year, while the average earnings of the bottom 10 dropped 9%,” she writes.
Among those with a surprising lack of empathy is Twitter, which came in this year at a middling No. 41. That reflects an improvement from No. 91 last year, when Parmar explained, “[Twitter’s] primary empathy failure [is] its inability to engage with its own customers on its own platform.”
Empathy can be taught, says Parmar, and in doing so, companies can reap the rewards of an investment made in training. Rene Schuster, former CEO of Telefonica Germany, implemented a countrywide training program that led to an increase in customer satisfaction of 6% within six weeks, she reports.
And the organization doesn’t have to be small to implement such measures and realize a return, says Parmar. “There is absolutely no evidence that being big automatically makes you unempathetic,” she writes. “Empathy is most definitely not a problem of scale, but more an indication of management priorities.”
via HBR