Empathy and performance – the crucial link

In this month’s The INside Leadership View I’m exploring the trait of empathy, often linked to that commonly used term ‘high EQ’ which regularly appears at the top of the list of desired leadership traits.? We’ll touch on what empathy is and isn’t, why it’s important for business and how we can assess and harness the EQ of ourselves and others.? As this article is part of our InX Connect Private Equity Newsletter, we’ll also look at the traits prized in the PE / investment industry, too.

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Empathy – the in-demand trait of the boardroom

When hiring executives and leaders boards spend just as much time talking about the personality traits they’re looking for as the experience and skills required for their key roles (see my previous article ‘The Leap To The Boardroom’ ). Having a high emotional quotient (EQ) is often requested.? Actually, it’s regularly taken as a given, e.g. “Of course, they’ll need to have a high EQ.”?

According to Psychology Today , those with good levels of emotional intelligence are tuned in to the feelings of others and naturally pick up signals relating to emotional well-being more easily than those with lower EQ.? Naturally empathetic, they are:

“..generally supportive of the people in their lives, and they easily modulate their emotions to match the mood of another person as well.”?

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A clarification about empathy

It’s worth briefly mentioning that empathy often gets confused with sympathy or pity.? Empathy goes beyond making a passing comment or light connection with someone’s situation.? It involves trying to feel what the other person is experiencing in order to have a deeper understanding of their experience.? This requires doing some things that don’t come naturally to everyone: being a good listener, acknowledging the feelings of others and responding in a sensitive way.

If this all sounds a bit… well… ‘soft’, it’s important to realise that empathy can bring significant benefits for business.

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The link with empathy and performance

In this 2023 Forbes article Alain Hunkins writes:

“Once thought of as a warm and fuzzy soft skill, empathy is no mere ‘nice to have’; it’s now a business imperative.”? ?

It’s particularly important in light of the continuous turmoil of recent years and the need for leaders to provide certainly in an uncertain, everchanging environment (the covid pandemic, international conflicts, changing (isolating) work patterns, economic upheaval and political uncertainty have all impacted wellbeing).?

Alain refers to research from Catalyst , a global non-profit, who’s work on the power of empathy states, “Empathy is an important driver of employee outcomes such as innovation, engagement, and inclusion—especially in times of crisis. In short, empathy is a must-have in today’s workplace.”

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Do YOU / THEY have performance enhancing empathy?

Susan Schmitt Winchester, Global SVP and CHRO of Applied Materials (a Fortune 500 company) and co-author of Healing at Work talks about empathy as a facet of temperament.? She says, “A leader’s temperament is the way they show up in the world… and this can impact their performance and the performance or those around them”.

I asked Susan if empathy can be taught.? She recommends considering what good EQ and empathy ISN’T and reflecting on how this applies to you and those around you.? She says, “Somebody with good empathy is less likely to be aggressive, oppositional, self-centred and rigid in their views (‘my way or the highway’), impatient with others and judgemental.? Leaders who wish to lead with a more empathetic style need to reflect on these traits.”

This will be easier for some than others and requires effort, but, Susan adds:

“Self-awareness and self-regulation are the key.? People perform best when they are free from anxiousness and stress, and believe they matter and are respected and heard.”?

So, building empathy to increase wellness at work is not only the right thing to do, but will also increase performance.

Join InX’s upcoming webinar with Susan - ‘A breakthrough approach to mental wellness in the workplace’ - on the 19th March. Find out more information and sign up here .

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What traits are prized in the Private Equity world?

I asked two contacts for their views on the ‘softer skills’ that are prized in the PE industry.? Fred Soneya is co-founder and Partner at Haatch , who accelerate pre-seed SaaS companies and Andrew McManus is the technology leader of Bridgepoin t, an international alternative asset fund management group.

For Fred, the most crucial traits are, “Strategic thinking with the ability to think outside the box - every day in PE/VC is different, there is no rule book….. Also, it’s beneficial to be a great generalist with the ability to dive deep into verticals. As a PE/VC investor, you're likely investing in many different verticals so being a great generalist with broad macro awareness whilst being able to deep dive into a specific pain, industry and solution is important.”?

Andrew adds, “Working in PE requires you to be very action orientated and straightforward in all aspects of communication. You also need to be willing to work at pace given the speed at which investments are made and the companies can be sold.”

Those ‘softer skills’ are hugely important in PE, too, Fred reflects, “I recently read a sad stat that the average investor <> founder relationship is longer than the average marriage globally, so this is a people business…. Funds typically have 5-12-year cycles, so short-term thinking for short term financial or personal gain is a big turn off”.

Andrew agrees:

“In my experience, PE is less ego based and far more collaborative than other professional services businesses. Being willing to work with all teams and not care about taking the credit is very important. It's all about getting the job done.”

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Conclusion

Empathy isn’t just a nice to have ‘soft skill’, it’s a crucial trait that can attract and retain talented people, and directly improve business performance.? By connecting with colleagues at a deeper level and striving to be self-aware, leaders can inspire trust, foster collaboration and drive organisational success.

As the saying goes; people may not remember what you say, but they will remember how you made them feel.

Be sure you subscribe to the InX Connect newsletter here and don’t hesitate to contact me or one of our team if you need to hire talent or deliver transformation.? We’d love to help.

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