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THE EMPATHY ERA WOMEN, BUSINESS AND THE NEW PATHWAY TO PROFIT Written by: Belinda Parmar Lady Geek Ltd. www.ladygeek.com @ladygeek LadyGeekTV Š 2014 Lady Geek Ltd. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any informational storage and retrieval system, without prior permission from the publisher. ISBN: 978-0-9573898-1-6
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THE EMPATHY ERA
THE EMPATHY ERA WOMEN, BUSINESS AND THE NEW PATHWAY TO PROFIT
Belinda Parmar
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THE EMPATHY ERA
CONTENTS
6
Preface
10
Acknowledgements
14
Chapter 1 Empathy Needs to Be on the Menu
30
Chapter 2 Empathy Deficit: The Male Model
46
Chapter 3 The Empathy Revolution Has Arrived
60
Chapter 4 Strategic Empathy at Work
84
Chapter 5 The Empathy Toolkit
100 Conclusion 105 Lady Geek 106 Endnotes and Bibliography
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HIGH-TRUST ORGANISATIONS OUTPERFORMED LOW-TRUST ORGANISATIONS IN TOTAL RETURN TO SHAREHOLDERS BY 286%.1 286%
High-trust companies
Low-trust companies
$91,370
AT L’OREAL, SALESPEOPLE WHO WERE SELECTED ON THE BASIS OF EMOTIONAL COMPETENCE OUTSOLD THOSE WHO WERE NOT BY $91,370.2
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THE EMPATHY ERA
THE LINK BETWEEN EMOTIONAL INTELLIGENCE AND EARNINGS IS SO DIRECT THAT EVERY POINT INCREASE IN EMOTIONAL INTELLIGENCE ADDS $1,300 TO AN ANNUAL SALARY.3
PREFACE
The Empathy Era Is Upon Us The corporate world view says that empathy has no place in business. It believes that traversing the hard, rugged and unforgiving terrain of modern business requires systems, stats and number-crunching forecasts; not the sort of cosy, lazy notions used to soften corporate brochures.
T 
his world view is wrong. Unequivocally, unforgivably and irremediably wrong. Empathy, as I will demonstrate in this book, is the key to profit. It is a natural social resource that has, for years, been left untapped by an outdated corporate model, hampered and trussed up by its systemising protocol. The corporate world is in need of rehabilitation. It needs to redress its empathy deficit.
The time has come to appreciate the importance of embedding empathy into every aspect of business: to unleash the potential of empathy – and the three pillars on which it stands: emotion, reassurance and authenticity – on the corporate world. We also need to wake up to the role women have to play in the new empathic model. Empathy is the key to tapping the ever-growing resource that women represent, and women are the pathway to integrating empathy into your business model. Together, women
PREFACE
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and empathy open up the door to profit; because the bottom-line is that empathy pays. The time to cash in on empathy is now. We are on the verge of an empathy era. Society is urgently calling on its favourite brands and companies to engage; to enter into an emotional relationship with both their customers and the world at large. And this involves us all. Empathy isn’t some aesthetic add-on but rather a core characteristic that can be taught to shop floor workers and board directors alike. It is the basis of a working culture that has the power to transform corporate life. Most crucial of all, empathy lies at the heart of commercial success. The empathy era is ushering in a corporate revolution, and it is calling on the business world to respond. We need to forget outdated perceptions of empathy as a soft, fluffy HR value and recognise it for the hard commercial tool it is. This revolution isn’t a ticket-only affair. Everybody’s invited. What it doesn’t offer are second chances. This is the moment to climb on board and chart a course for a new business model.
Belinda CEO of Lady Geek and Founder of Little Miss Geek
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THE EMPATHY ERA
True empathy is not just about emotion without substance. Empathy is the fusion of logic and emotion to deliver a truly remarkable customer experience in our dealerships.
Andy Palmer, Nissan Motor Co. Ltd. Chief Planning Officer and Executive Vice President.4 PREFACE
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Acknowledgements I would like to give a special thanks to the following people. Without their support, this book would not have been possible.
Richard Reed
John Mackey
Martin Richards
Innocent Co-Founder
Whole Foods CEO
Hostage Negotiator
Stephen Taylor
Rory Sutherland
Samsung Europe Chief Marketing Officer
OgilvyOne Executive Chairman and Creative Director
John McGuigan Telef贸nica Germany Former MD
Cary Cooper
Daniel Chen
James Vaccaro
Psychology Professor Lancaster University Management School
Boston University School of Medicine Research Fellow
Triodos Bank Head of Market and Corporate Development
Maya Foa
Dr. Anders Sandberg
Roman Krznaric
Acting Director Reprieve
James Martin Research Fellow and Author
The School of Life Founding Faculty Member and Author
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THE EMPATHY ERA
Judi James
Kavita Parmar
Brenda Bailey
Body Language Expert
IOU Project CEO
Silicon Sisters CEO
Chris Galvin
Richard Layard
Maureen Cooper
Galvin Restaurants Co-Founder
Economics Professor London School of Economics
Awareness in Action Founding Director and Author
Sam Richards
Tania Singer
Paul Zak
Sociology Professor The Pennsylvania State University
Max Planck Institute Director of the Social Neuroscience Department
Claremont University Center for Neuroeconomics Studies Director
Helen Weng
Ren茅 Schuster
Sharon Salzberg
Center for Investigating Healthy Minds Researcher
Telef贸nica Germany Former CEO
Buddhist Meditation Teacher
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Thank You There is just the one name on the outside of this book, but it is actually the fruit of the work and dedication of many. Those include the very talented designer Joana Pereira, the illustrious illustrator James Barker, the unstoppable force that is Lucie Sarif, the merciless red pen of Lucy ZoĂŤ Birch, the insight of Sara Kietzmann, the attention to detail of Dotty Baker Hassan and two brilliant editors, James Fritz and Dan Whitcombe, without whom this book would be little more than illegible notes.
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THE EMPATHY ERA
Dedication I'd like to dedicate this book to my son, who challenges my empathy every day; to my daughter who finds empathy so effortless, and to my mum and my husband, who show me empathy when I least deserve it.
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THE EMPATHY ERA
CHAPTER 1
Empathy Needs to Be on the Menu Things just couldn’t have got any worse that day. If it wasn’t the unproductive morning meeting or my client’s unpredictable mood swings, there was the evening commute wedged in-between a restless four-year-old and sweaty backpacker. No, things most definitely couldn’t have got any worse that day; until they did.
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s I ascended the escalator en route to the restaurant where I was meeting Sarah, my mobile phone started to pick up a signal and beeped into life. The message? Supper was off – one of her kids had come home from school sick – and would a rain check do?
Of course it would do. It would have to do. But that supper date had been my chance to unburden myself of the trials of the working week on someone who would actually listen. Someone who, more than just offering lip-service sympathy, would actually empathise with me. Not to mention the added bonus of the culinary delights of Galvin’s Bistrot de Luxe where we had arranged to meet. Taking a look around me, the streetlights were muffled by the fine drizzle that
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18% Providing dining customers with inexpensive and unexpected gestures of gratitude such as chocolates can increase tips by 18%.5
People often feel obligated to reciprocate acts of generosity even if those acts were not requested or anticipated.5
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was falling, somehow managing to pick up the nuanced fragrances of London pollution on its way down. Shoving my phone back in my bag I headed defiantly down Baker Street. No bout of infantile colic was going to come between me and the Galvin brothers’ white chocolate mousse. Few people choose to dine alone. There is something innately tragic about the lone diner; suspicious, even. To make things worse, dining alone can often leave you feeling like a pariah. You are taking up a whole table to yourself, and every trip the waiter has to make for one solitary glass of wine, one mozzarella salad, or one black coffee can feel like an imposition. It’s not surprising that service is rarely as quick or as cheerful as when you are in a rowdy group of friends who are likely to reward the staff with a hefty tip at the end. So it was with a feeling of unease that I pushed open the door to the Bistrot de Luxe and explained to the Maître d’ that it was going to have to be a table for one, not two. Without missing a beat he flashed a welcoming smile and ushered me to my seat – refreshingly far from both the kitchen and the toilet – and set in motion one of the most gratifying, relaxing and enjoyable dining experiences I'd had in months. The food was great. Of course it was. Galvin restaurants are renowned for their excellent menus. But for me, what made the experience so memorable was the way I was treated. The staff did two remarkable things. They made me feel at home, and they made me feel that, although I was dining by myself, I wasn’t actually alone. The waiting staff were attentive but not stifling or condescending. I was offered a newspaper soon after being handed the menu. Casual conversation was proffered but not imposed, the waiter had what you might call the perfect table-side manner; and I was given some lovely little chocolates in a gorgeously packaged holdall with the bill.
The service anticipated my needs and improvised in accordance with my responses. The entire experience exuded empathy. The result? One very happy Belinda. But let’s look at it from the other side. From the point of view of the restaurant, a touch of empathy had enhanced the dining experience of one customer, a customer who, apart from leaving an over-sized tip, would go on to recommend her experience to a wide circle of friends, colleagues and acquaintances. Make no mistake, empathy pays. Just what do I mean by empathy, though? And what role, exactly, should it play in the world of business? One thing is clear: empathy is not sympathetic condescension; it isn’t a fake painted-on smile; and it isn’t just a set of protocols to make clients or colleagues feel welcome, valuable or comfortable. Instead, it is a question of personal engagement, something the British, in particular, shy away from. It is putting yourself in someone else’s shoes, feeling what they feel, seeing the world from their standpoint and, by doing so, anticipating what they want, need and require – sometimes before they realise it themselves. ‘People do not know what they want. Empathy is about enchanting people and being one step ahead to give them what they want’.6 Judi James, Body Language Expert. Yet this skill is both under-represented and under-valued across all forms of business. It is labelled a soft skill, which can only ever serve as an additional complement to hard skills like efficiency or prioritising. There is no imperative to get inside the heads of colleagues or customers. Having a good understanding of spreadsheets or sales figures always prevails. What is worse still, the lack of empathy in the workplace leads to a business environment in which only those with the loudest voices are
EMPATHY NEEDS TO BE ON THE MENU
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WE FEEL
sympathy others. WE FEEL
empathy others. 18
THE EMPATHY ERA
heard. There is often a group of people whom I call systemisers; the sort of people who have all the stats at their finger-tips, who see empathy as a weakness and whose own feelings are safely buried under years of systematic conditioning. Where does that leave the empathisers? It leaves them unheard. I think it’s about time they were given the air-time they deserve! Why then, if empathy pays, is it given so little room to flourish? The reason is, that most businesses suffer from an under-representation of natural empathisers. Those for whom the ability to empathise – and the importance of receiving empathy in return – forms a dominant part of their personality are simply not prevalent in the business world. Sadly, even when they do find a niche in the corporate world, they quickly discover that it is best to hide their empathy away under a traditionally male, systems-led suit. But why are these natural empathisers so scarce? The answer is simple; because the majority of them are women. In the finance, technology and automotive industries in particular, the vast majority of businesses are run in accordance with a male model, which is hampered by a significant empathy deficit. When was the last time you saw empathic nature as a required skill on a corporate job description? Empathy is simply not valued as a business tool, in fact it isn’t even considered. It’s high time it was. According to the research of psychologists such as Simon BaronCohen7 – Professor of Developmental Psychology at the University of Cambridge – while women have a greater tendency towards empathising, the average male brain is more comfortable with systemising – the ability to figure out the underlying rules. This is particularly relevant because most forms of business are run by systemisers, and the business world remains a largely male-
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the more empathic YOUR MARKETING MESSAGES,
the more women WILL WANT TO
listen to you. the more empathic YOUR CULTURE,
the more women WILL WANT TO
work for you. the more empathic YOUR SALES EXPERIENCE,
the more women WILL WANT TO
buy from you. 20
THE EMPATHY ERA
dominated environment. The 30% Club is especially enlightening on this point.8 This group, made up of business chairmen committed to getting more women onto corporate boards, reports that FTSE-100 companies have an average of just 20.4% female representation on their boards. This is particularly important when one considers from where the 30% Club took its name. The theory has it that when a business profile is made up of one woman to every nine men she will fit in with the male model and then quit. The same goes for company profiles with just two women to eight men. It is only when there are three women to every seven men – when women reach the critical 30% – that they can implement change.
50%
50% of every buying decision is driven by emotion.9
In this book, I will be making a call for that to be put right. It is my aim to help bring about a shift in business culture, one that sees empathy integrated into businesses from the boardroom to the shop floor. But why should businesses listen? Because ultimately, a more empathic business is a more profitable business. Yes, more profitable. Not trendier or more hippy-chic cool. But actually more profitable. And the stats are there to back up this claim. One of the keystones of an empathic approach is that it generates an emotional relationship with customers based on reassurance, and this leads to trust. Studies show that high-trust companies outperform low-trust companies, not only in shareholder value – in 2002 high-trust organisations outperformed low-trust organisations in total return to shareholders by 286% – but also in sales and profits.1 A 2012 Nielsen study found that the majority of consumers (65%) express a general preference for companies making a positive difference in the world. This preference extends to other matters: they also prefer to work for these companies (62%) and invest in them (59%).11 The advantages of an empathic approach in
96%
96% of unhappy customers won’t complain, but 91% of these will simply leave and never come back.10
EMPATHY NEEDS TO BE ON THE MENU
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business are both external and internal. On the one hand, it is attractive to customers and society at large, leading to greater levels of sales and profitability. On the other hand, it creates a far more gratifying working environment, which increases levels of employee retention, especially that of the born empathisers who will finally feel at home. This of course, then feeds into improved performance, higher sales, greater profits and so on... A study by Strohmetz et al.(2002) showed that diners were more likely to leave a generous tip when a small piece of candy had been left for them at the end of the meal.5 This small, inexpensive gesture not only increases the perceived friendliness of the waiter, but also cements the emotional bond between customer and restaurant. It becomes a question of reciprocity – they’ve done something nice for me, so I want to do something nice for them. But even if the business world wakes up to the advantages of an empathic approach, there is still one fallacy it needs to be disabused of, and that is the myth that empathy is simply something you are born with, and that there is nothing you can do to change the genetic hand you’ve been dealt. This is wrong. Empathy can be learnt. While the empathic/systematic divide does undoubtedly exist, with male systemisers on one side and female empathisers on the other, every one of our brains is capable of both faculties. Just like an atrophied muscle, exercising a dormant part of us will activate and invigorate it. Take a born systemiser – one who has always worked within the male model – and put him (or her) through intensive empathy development training. The results will not fail to surprise. You can’t manufacture a born empathiser, but you can maximise a natural systemiser’s potential for empathy. Take my experience at Bistrot de Luxe, it gave every impression
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COMPANIES NEED TO BE KNOWN FOR SOMETHING. A 2012 NIELSEN STUDY FOUND THAT...
65%
65% OF CONSUMERS PREFER COMPANIES THAT MAKE A POSITIVE DIFFERENCE IN THE WORLD.11
59%
59% OF PEOPLE INVEST IN THESE COMPANIES.11
46%
46% OF CONSUMERS ARE WILLING TO PAY EXTRA FOR PRODUCTS AND SERVICES FROM THESE COMPANIES.11
62%
62% OF PEOPLE PREFER TO WORK FOR THESE COMPANIES.11
EMPATHY NEEDS TO BE ON THE MENU
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Strategic empathy: the building of shared emotional connections to motivate people to do things.
Empathy is the pathway to connecting with women, and women are, increasingly, the pathway to profit.
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of being effortless, which was indeed, central to its being as effective as it was. Co-founder Chris Galvin explains that the perfect restaurant experience is something you have to practise tirelessly: ‘We have a standard procedure for taking a reservation, greeting a customer, ordering a drink, serving a drink.’ Yet the staff are not just automatons: ‘To keep the humanity in it, we run role-plays as part of our training. We want our staff to bring their own personal style. What we try to do is give the ultimate customer experience to each individual.’12 Chris and his brother Jeff have made a concerted effort to embed empathy into every facet of the organisation. There is a focus on personality as much as on efficiency. And this is what I call strategic empathy; the building of shared emotional connections to motivate people to do things. So with the right training and enough effort, everyone can be an empathiser? Yes. Quite emphatically so. Yet while it would be simplistic to posit all women as empathisers and all men as systemisers, the gender gap mentioned earlier is still pronounced. The business world continues to adhere to its male model whereby empathy is undervalued and ignored in favour of systemising – and those who systemise. All of which, would be perfectly sustainable if it were not for the following two facts: empathy is the pathway to connecting with women and women are, increasingly, the pathway to profit. The Harvard Business Review (2009) has calculated that women represent a growth market bigger than India and China combined.13 It’s been shown that Fortune 500 companies with a strong representation of female executives deliver a 34% higher return to shareholders than companies with the lowest representation of women.14
WOMEN ARE NOT A NICHE MARKET. GLOBALLY WOMEN ARE RESPONSIBLE FOR PURCHASING...
65% 80%
65% OF NEW CARS.15
80% OF HEALTHCARE.15
66% 91% 66% OF COMPUTER SALES.15
91% OF HOME PURCHASES.15
EMPATHY NEEDS TO BE ON THE MENU
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LADY GEEK'S DEFINITION OF EMPATHY:
E.R.A. EMOTION ‘Make me feel’
REASSURANCE ‘Make me trust you’
AUTHENTICITY ‘Show me you mean it’
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Having established the importance of women both as customers and as workers, the consequences for empathy in business are clear. On the one hand, the ever-growing purchasing power of female empathisers is channelled far more successfully into brands that are perceived as being empathic, while on the other hand, empathysensitive employers who both attract and value empathisers, profit more from women’s empathic skills. The empathic approach reaps benefits for both newly-empowered female empathisers and for the business itself. In the U.S., women control more than 60% of all personal wealth16 and 85% of all consumer purchases, while UK women are responsible for 83% of purchases.17 Globally, women decide on 91% of home purchases, 65% of new cars, 80% of healthcare choices and 66% of computer sales.15 In Marketing to Women, Martha Barletta explains the importance of women in purchasing decisions, with joint decisions being impacted four times as often by women as by men, because they lead four of the five stages of the process, with the fifth, actually making the purchase, being made jointly.18 ‘Because women are the information filter, if you don’t get on her short-list, forget about it’.18 Martha Barletta, Marketing to Women: How to Increase Your Share of the World’s Largest Market. In the current age of Twitter, Facebook and a multitude of socially interactive networks, distances have become irrelevant and communication has exploded. If someone you barely know is willing to post the appropriate smiley or sad-face emoticon on your Facebook update, then you can hardly be willing to expect
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Myth EMPATHY IS A SOFT AND FLUFFY VALUE.
Fact
EMPATHY IS A HARD COMMERCIAL TOOL.
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less empathic engagement from your bosses, colleagues, clients or service providers. The world now expects more. Women now expect more. Businesses that don’t change their culture will soon see themselves being passed over as more innovative and likeable competitors take their place. To thrive in an empathy-rich future, businesses need to learn three simple lessons:
The Three Empathy Revelations 1 Empathy is a commercial tool, which can be deployed
to drive profit.
2 Empathy is not just an innate quality; it is a skill that can
be taught, trained and honed.
3 The more empathy is embedded in a company’s culture,
the more it will attract female customers and employees.
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