When we think about empathy, most of us think of it in the context of personal relationships and friendships. We don't often think of it as being an important factor in a hard-nosed business world.

But new research from Professor Liliana Bove from the University of Melbourne has explored the potential benefits and limitations of empathy, finding that it is definitely good for business.

"Empathy is a key factor for businesses because it communicates care for clients," says Professor Bove.

"Businesses perceived as unempathetic miss the opportunity to improve perceptions of the quality of their service, gain customer cooperation, or have customers forgive them following a service failure. Empathy provides valuable brand reputation protection when needed."

Empathy is an important psychological phenomenon that allows us to imagine what it is like to be in someone else's position – to live in their world, to walk in their shoes and to experience things as that person sees, hears and feels them.

Empathy offers broad benefits in business from a micro to macro level, says Professor Bove. It can boost sales, enhance customer satisfaction and perceptions of service quality, and increase consumer compliance. It also enables innovation.

Empathetic service personnel are more in tune with subtle social signals, take the perspective of customers and respond to them in a sensitive, congruent way.

"Salespeoples' customer-oriented attitudes and behaviour is strengthened when their empathy is high. An empathetic salesperson can read what type of relationship the customer expects and desires," says Professor Bove.

"In particular, adaptive selling, which involves tailoring approaches to individual customers, is predicated on the salesperson's ability to empathise and gather information to facilitate the interaction, which will help achieve successful selling outcomes."

"Negative word-of-mouth or online reviews that are perceived by consumers as unfair can trigger feelings of empathy for the affected brand, especially when the brand is relatable and 'person-like'," says Professor Bove.

Another benefit of empathy in business is innovation, especially in design. Design thinking begins with developing an understanding of users' needs and behaviour by observing them in their natural environments and developing empathy for them.

"The Hasso Plattner Institute of Design at Stanford, which offers design-thinking education, articulates a five-stage model of design thinking in which empathy is centrally located," explains Professor Bove.

"Overall, empathy offers a vehicle to take customers' viewpoints and develop rich insights into their service experiences. This allows an organisation to appreciate their current service processes and reimagine how they might be better."

When it comes to the behaviour of people in business, empathy can promote helping behaviour, facilitate social bonding and enhance social support between clients and service professionals. It can help reduce prejudice, discrimination and stigmatisation encountered by certain customer groups and workers like minority groups or people with disabilities.

Empathy also improves ethical decision making in commercial settings as it influences moral judgement. This allows powerful individuals to evaluate the potential harmful effects of their business decisions or negotiations. It also reduces antisocial behaviour like aggression, theft and bullying, making the job of service workers easier.

So how can organisations stimulate empathy?

"It is important to consider that empathy is a trait – it develops early in life so certain individuals are predisposed to it," says Professor Bove.

"High-empathy service professionals like doctors, nurses, teachers or social workers are likely to experience more positive emotions, like pleasure and warmth, as patients and clients express relief and gratitude. In turn, this brings higher job satisfaction. Related evidence shows that high empathy trait is associated with lower burnout."

Professor Bove also points out that context and training can play a role in influencing empathy.

"Individuals may have a predisposition to be empathetic, but whether they are or not depends on situational factors, like for example the recognition that another person is in discomfort or in need of help," she says.

"In marketing communications, this can be achieved by vivid imagery or the use of narratives, like a public service announcement that narrates a story of the daily aggression faced by a healthcare worker and the effect on her well-being. That's likely to elicit greater empathy and subsequent helping behaviour towards the worker than simply depicting occupational violence, or presenting the damaging statistics of what healthcare workers endure."

But can there be too much empathy?

"Too much empathy has unintended consequences like misappropriation of scarce resources. A flight attendant who devotes all their attention to a distressed customer who is afraid of flying, ignores the immediate needs of other passengers," says Professor Bove.

"There is also the risk of compassion fatigue in roles involving caring for the sick or vulnerable, especially if staff are exhausted and sleep deprived through extended periods of overwork.

"There is also some evidence that too much empathy may result in a potential loss of objectivity and job performance."

Professor Bove believes more research is needed to find the most effective way of managing factors that affect a person's capacity to empathise and the flow-on impact on well-being.

This is especially important given there are strong suggestions that empathy is eroding due to people becoming less sensitive, and due to rising social isolation and self-interest. Empathy may also decrease as Artificial Intelligence replaces people in some service areas.

It means businesses would do well to ensure they are cultivating empathy, because human understanding benefits everyone.

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