The entrepreneurial community is at the forefront of a shift in mindset that emphasizes a more human-centered approach to business. While big businesses, in many respects, remains entrenched in a more mechanistic approach, entrepreneurs are unlocking value by focusing greater attention on the art of empathetic management; putting people across multiple stakeholder groups at the center of value creation.

Empathy has crept into a primary role in entrepreneurial literature for good reason. Empathy is generally understood to be an individual’s ability to sense other people’s emotions, coupled with the ability to imagine what someone else might be thinking or feeling. An individual then, through effective empathy, develops feelings and sensations in response, leading to action that incorporates the perspective of others. Given the closeness of the entrepreneur to his or her stakeholders (customers, employees and shareholders) it is no wonder that people and thus empathetic management feature so prominently in the success of the entrepreneur.

What I believe is sometimes lost in the conversation around the role of empathy in business is when empathy can get in the way of what needs to be done. An entrepreneur sensitive to their environment and their people employs empathy when and as necessary. Striking the right balance isn’t easy, but can pay off by creating the right level of engagement across stakeholders and situations.

For those looking to employ empathetic management, here are three ways that empathy can help and hinder your business.

How empathy helps your business

  1. Defining the right problem to solve. Setting your business up for success starts with designing around the right problem. Identifying an issue and building a solid understanding around how people are impacted by that issue is a highly empathetic process and critical to identifying opportunity for value creation. By doing so, entrepreneurs develop a relevant vision for the future and thus build purpose for the business with which others can more easily identify.
  1. Breeding flexibility and adaptability. Recognizing and incorporating the multiple perspectives, skills and emotions of your employees, shareholders and other partners helps to ensure that your business stays open to available options and thus remains aware of and capable to respond to changes internal and external to the organization.
  1. Increases brand power. The key to a strong brand is compelling storytelling. Once upon a time businesses arguably owned their brand. This is simply not the case anymore, the brand experience is shared and defined by both the company and the customer. Developing an understanding of how customers respond to, interact with and push your brand in new directions is critical to maintaining messaging that resonates with your customer base.

How empathy can hinder your business

  1. Empathy can be emotionally taxing. Entrepreneurs have a lot on their plates, particularly in the early start-up stage where the founder is involved in every facet of the business. Trying to manage the business as well as staying closely attuned to the needs of those working for or with the company can be tiring and thus interfere with the ability of an entrepreneur to make decisions and drive the business forward.
  1. Over empathizing delays solutions. Those in need of a solution, particularly within the context of social impact where the consumer is socially or economically disadvantaged, are looking for the opposite of their current condition. These customers are looking for the solution that the social entrepreneur represents, not to have the current condition explained or mirrored back to them. In these cases, too much empathy at worst can be misconstrued for condescension, at best delays the provision of a better world for those in need.
  1. Empathy can lead to stakeholder mismatch. Have you ever worked with or employed someone who was a great person but was simply not the right person to drive business forward? Sometimes empathy allows for the wrong kind of relationship to develop between people. When entering into a business relationship with someone they must be more than great people, they must also be productive in their roles. Entrepreneurs, rather than look to empathy to excuse or accommodate non-valuable relationships, should evaluate productivity as the determining factor for assigning people to the right stakeholder group whether that be employee, shareholder, supporter or none of the above.

Empathy is a powerful skill for entrepreneurs to employ in their businesses as it can have major positive and negative impacts on performance. Managing the use of empathy, and striking the right balance is the key to ensuring that your business remains appropriately people-centric and thus sustainable over the longer term.

Written By: Sabine Ghali, Director at Buttonwood Property Management and an entrepreneur at heart who endeavors to help investors create real estate wealth over time in the Greater Toronto Area. Visit her at www.buttonwood.ca

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