Leaders don’t need to choose between empathy and efficiency. Here’s how they can be both

In March 2023, Fortune ran a cover story titled “Efficiency is in. Is empathy out?” The first half of the quippy title referred to Mark Zuckerberg, who had recently declared that his company, Meta, would be entering a “year of efficiency.” As 2023 winds down, we can see what he meant. The tech sector alone shed nearly a quarter of a million jobs. People who were spared nonetheless lost a bevy of perks, from egg freezing services to free lunches. Delta employees even lost access to their own lounges while traveling for work. 

Earlier in the decade, 2023’s austerity seemed light-years away. The pandemic produced dramatic shifts in culture and leadership. In the wake of widespread mental health issues and high-profile cases of injustice, organizations around the world seemed to tune in more deeply to their employees—experimenting with more empathic policies to ensure people felt heard and seen. Workers were given more leeway and flexibility. Companies invested in mental health services, equity initiatives, and training in “soft skills” for leaders to be more empathic. 

Were those warmer, fuzzier days a mere blip? Economic downturns cause people and organizations to tighten their belts. Unfortunately, they also tend to tighten our minds—turning people rigid, competitive, and shortsighted. At Google, people were laid off by email, many only finding out when they couldn’t get into their office buildings. At Meta, workers were strongly encouraged to return to the office, despite earlier promises that they could work remotely for the long-term, and though many top executives joined meetings virtually from Europe and New York. 

The playwright Bertolt Brecht once wrote, “First comes a full stomach, then ethics.” Leaders appear to have made the same choice about empathy—it’s fine when companies are flush, unaffordable when they need to be efficient. To save the bottom line, they’ve pulled away from their people. Workers have noticed. For the last decade, Businessolver has measured employee perceptions of empathy. In 2022, more than 90% of HR professionals felt their organization was empathic. In 2023, that number was 68%, the largest drop Businessolver has ever observed. In another large survey, EY found that more than half of employees felt their organization’s commitment to empathy was not genuine. 

The empathy-efficiency tradeoff feels intuitive. It appears to have become a north star for many companies in austere times. And it’s almost perfectly backward. Decades of evidence demonstrate that empathy supports an organization’s ability to work efficiently. 

The bad news here is that leaders who buy into the false dichotomy make big, unforced errors with their workforces. Employees who feel their companies lack empathy feel worse. They are more likely to burn out and call in sick with stress-related illnesses. They report greater cynicism and lower trust toward their colleagues. 

But they also perform less well. Unempathetic workplaces drive down engagement, creative risk-taking, and innovation. Abandoned by their leaders, workers return the favor, much more likely to “quiet quit” and do the bare minimum. A lack of empathy can also lead to the old-fashioned sort of quitting. They’re also more likely to leave. A large survey of employees who left their jobs during the Great Resignation found that 54% cited a lack of empathy from their supervisors as a primary cause. Finally, in cutthroat environments, colleagues turn into competitors. Civility plummets and “knowledge hiding” soars, as people keep information to themselves in order to get ahead. This puts a tourniquet on communication, slowing teams down to a crawl.

This is all, of course, the opposite of efficient. Workplaces thrive when colleagues show up for one another and accomplish things together that none of them could do alone. By focusing on the bottom line instead of their people, leaders lose their people—and the bottom line. 

The good news is that leaders who retain their commitment to empathy will likely experience a “cooperative advantage,” especially when other organizations are busy making unempathetic errors. If callous workplaces tank morale and cooperation, connected ones drive them forward. When people feel seen, heard, and understood by their leaders, they feel better at work and are more committed to their jobs. They also are more likely to take risks and innovate, and to share knowledge, skills, and support with one another. 

If unempathetic workplaces are defined by friction, empathic ones are more like bullet trains—moving swiftly and smoothly toward their goals. Nor does that mean avoiding the difficult choices and accountability required during lean times. Oftentimes, leaders confuse compassion with “niceness,” avoiding saying anything that hurts others’ feelings. But research finds that employees crave direct feedback that challenges them to grow, if it is delivered by someone who clearly has their best interest and potential in mind. Empathy even helps during downsizing. When layoffs are handled with compassion and clarity, laid-off workers are less likely to feel they were wronged, and “survivors” are more likely to remain engaged with work. 

Black-and-white choices are simple and intuitive, which makes them both appealing and dangerous. In the quest for efficiency, many leaders have given up on the very qualities that allow human workplaces to thrive. Hopefully in 2024, more will awaken to the fact that empathy not only helps organizations feel good, it’s also crucial for them to do well.