The transformative power of empathetic leadership

Empathetic leadership is about building a culture where employees feel valued, heard, and ultimately like their work makes an impact. A culture of empathy results in better business outcomes and a more engaged workforce.
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Creating a network of 10,000 employee-owned small businesses requires empathetic leaders.

Teamshares network company presidents support retiring owners as they transition out of the business they’ve built and educate new employee owners about the company’s financial performance.

We spoke with Teamshares network company president Adam M. to understand how leading with empathy has improved employee job satisfaction and, in turn, grown an already successful business.

During his year in the role, Adam has implemented a healthcare plan, vacation policy, and a new compensation structure tied to long-term success.

This has translated into an empathetic culture in a financially successful business, preserving the long-standing success of the company.

What is empathetic leadership

Adam describes an empathetic leader as “someone who is willing to listen.”

“[You have to] give people the benefit of the doubt and listen first, talk second,” he explains.

Adam practices empathetic leadership by actively listening to the employee owners about their day-to-day obstacles.

“Any human wants to be heard and know what they’re doing matters.”

By understanding their pain points before taking action, Adam could pull levers that mattered most to employee owners, his first step in building a people-first culture where employee owners feel valued and heard.

The result has been better employee owner buy-in and increased job satisfaction.

Real-world empathetic leadership examples

As president, Adam has handled adversity with unwavering empathetic leadership. 

He tries to err on the side of generosity for employee owners when faced with difficult decisions.

Revitalizing vacation days

During Adam’s initial conversations with employee owners, it became apparent that many weren’t taking the minimal vacation days allotted, leading to burnout.

“Our retail managers have a hard job,” he explains. “They work six days a week, and the one day they get off is during the week on Tuesdays.”

“Our retail managers are paid hourly plus commission. They could take a maximum of 10 days off a year, but they worried about missing out on commission.”

Adam implemented an idea from one of the employee owners to help encourage paid time off. In the new policy, employee owners are paid their hourly wage plus the average commission they made over the last few years.

The impact was life-changing.

Adam describes sharing the news with his fellow employee owners, “One person started to cry. They were exhausted.”

These efforts started a culture shift where taking vacation days was not just allowed but encouraged.

Adding healthcare benefits

Another turning point for the company culture was when Adam received feedback about the lack of comprehensive healthcare. Employee owners either had to rely on their partner for health insurance or figure it out on their own. 

With generosity in mind, Adam put a healthcare plan in place with health, dental, and vision coverage. 

That was one of many quick wins to help build a compassionate culture.

Supporting life outside of work

A humanizing moment for Adam came when he discovered that five of the company’s 14 employee owners were impacted by breast cancer.

Adam knew he had to make an effort to not only allow employee owners space to cope how they needed, but also to show them support at a community level.

“We signed up to do the local breast cancer walk as a company, and we’re donating a portion of every [product] sale to that team’s fundraising for a month leading up to the walk,” he explains.

“As we made the shift to employee ownership, it was important for us to support employee owners in all aspects and make sure they felt comfortable bringing their full selves to work.”

Apply to become a small business president of an employee-owned company near you.

How to be an empathetic leader by doing… nothing

Presidents build an empathetic leadership style by taking actions that create trust with employee owners.

When a new leader comes into an existing business, especially an already successful one, and immediately enacts changes, it erodes employee owner trust and their confidence in the ability to do their job.

Adam learned this early on from a senior peer president mentor.

“[My mentor] said, ‘You’re going to see stuff that’s not working in the first few months, and you have to be okay with it staying broken for a little while.’”

That advice reminded Adam of the big picture.

“It was helpful to understand that while I can go fix problems, the ultimate vision of employee ownership is that I’m not the only one doing the fixing,” he said.

Instead, his first priorities as an empathetic leader were:

  • Striving to understand
  • Listening first and talking second
  • Being truthful in his interactions

Strive for understanding

Rather than implementing his own strategies or interjecting his opinions when he started as president, Adam took time to understand employee owner obstacles.

“I didn’t [make changes], and was able to have sit-downs with the employee owners and chat,” he recalls of his first 90 days in the seat.

“They all asked, ‘What’s your game plan and what are the next steps?’ But I didn’t walk in with a preconceived strategy or notions. My goal was to listen.”

Listening with empathy and humility paid off for Adam and his fellow employee owners.

He recalls how, three months into the role, “I didn’t know how to make [the product], but I knew what the pain points were, and I could start putting plans in place based on what I’d heard.”

Adam understood that the existing employee owners knew the business and what hindered their performance best. Once he had a baseline understanding of how to remove blockers, it was up to him to pull the levers that would make the most impact.

Listen first, talk second

The landscape of a leader taking over a small business from a retiring owner looks vastly different from that of a new leader coming into a larger corporate environment.

But the employee sentiment is the same.

Empathetic leaders give employees the tools they need to do their job well. To do that, they must actively listen to people’s ideas instead of interjecting their own.

Adam explains, “Empathetic leadership is about giving employees a voice. Not implementing every idea, but considering all of them. For the ideas that don’t get chosen, explaining why and, for the ones that do, making sure that employee got the credit.”

“Empathetic leadership is about giving employees a voice.”

From the front of the house to the back, Adam encourages the employee owners to share ideas for improvement. “We collaborate with our retail managers on the product assortment, and we have updated the way we buy our raw materials based on feedback directly from the employee owners working in the warehouse.”

While he emphasizes the importance of listening to his staff, Adam explains that it’s not without doing proactive research independent of employee owner opinion.

“I did my own research on the company and the marketplace,” he explains. “So I came in with opinions on where I thought we should be, but I tried to not express that to anyone.”

Adam’s proactive research, coupled with active listening to on-the-ground employee owners, allowed him to prioritize tasks in order of importance.

Be truthful

Adam highlights the importance of transparency to foster empathy in the workplace. “It’s being honest and truthful, but in a positive way.”

Adam’s approach to transparency is pragmatic: sharing bad news with a realistic lens, without sugarcoating the message.

As a Teamshares network company, Adam’s business follows an open-book management philosophy. This means giving all employees, as owners, access to company financial performance information.

He describes a time when he had to explain the seasonality of the business to the employee owners, where one month drives the majority of yearly sales.

“The message could have seemedbad, but instead, I framed it as ‘this isn’t bad, look at the total number at the end of the year, the company is fine, we’re in a great place’,” he recalls.

“Being transparent with the financials was a way to empower them. They never had any integration before. They have it now.”

He shares how giving that visibility into company sales provided a new perspective for growth.

The discussion raised two questions that Adam and his team are solving together:

  1. “How do we take that [seasonal] number and keep pushing it to the moon?”
  2. “How do we take the red numbers the rest of the year and turn them black?”

By leaning into these areas for growth, Adam’s fellow employee owners are inspired to innovate and improve sales outside of the seasonal peak.

Adam recognizes and appreciates the rarity of financial transparency between a company and its employees. He feels empowered by the ability to manage in a way that treats employees as more than just workers, but also business partners.

Fostering a culture of empathy in the workplace

True, lasting culture shifts are gradual. Adam understands that building an empathetic culture takes time and care.

He says, “It’s little stuff like going to lunch together. Or taking a half-day to play lawn games and hang out, so there’s a mix of work and play. It’s a simple way to show how much we appreciate their work.”

Part of an empathetic culture is shifting away from the traditional hierarchy seen in larger corporations and fostering an ownership mindset.

Adam continues to be self-aware and vulnerable about what’s gone well to encourage existing empathy and recognize where there’s still room for improvement.

“It’s still me doing most of the talking during monthly meetings and them listening, and we want to get to the place where it’s the opposite,” he says. “So we’re still working on that transition from the former owner making all the decisions to me being a facilitator and the [larger group] making all the decisions.”

Measuring the impact of empathetic leadership

Empathy is a qualitative metric, but it doesn’t mean you can’t use quantitative data to measure its impact.

To do this, Adam ran an engagement survey as an opportunity for anonymous feedback on his leadership.

At first, employee owners, who had never been asked to provide feedback on leadership before, were wary.

Adam explains, “It’s interesting because some folks were hesitant to fill out the surveys. Historically, they’ve never been asked to fill out a survey, and the mindset was, ‘If I respond they’re going to ding me, even if it’s anonymous.’”

Each of these touchpoints, including the wariness of employee owners to complete the survey, provides insight for Adam and other empathetic leaders into where there’s room to improve.

“There’s still room to grow in terms of mindset, but that’s part of putting your money where your mouth is,” he explains.

“Hopefully, over time, the mindset shift will go from hesitancy to ‘he trusts me to do my job,’ and eventually, ‘I’m an employee owner, what I say matters, and I know how my job impacts the profit we make.’”

“Over time, the mindset shift will go from hesitancy to ‘he trusts me,’ and eventually, ‘I’m an employee owner, what I say matters, and I know how my job impacts the profit we make.’”

The employee owner surveys revealed how empathetic leadership has helped employees begin to switch their mindset from passive workers to active partners.

But there’s more work to be done.

“The survey showed skepticism toward Teamshares and me, and not everyone gave us an eight [out of 10] on the survey. But for the most part, the general vibe is good. It’s outliers, and not everyone, who feels skeptical,” he said.

“It’s been a big change. But if we didn’t have one or two skeptics, I would be surprised. The goal is to continue to shift everyone into an ownership mindset.”

Building a culture of compassion takes humility and a willingness to listen. Adam has embodied empathetic leadership from his first day on the job, and its full impact is still to be seen. But his efforts have already built unwavering job satisfaction and overall company success.

If you’re an empathetic leader who wants to make an impact on the lives of newly-minted employee owners and the communities they serve, apply to become a small business president.

Teamshares writers follow strict principles for sourcing credible information within articles. Any outside information including direct quotes, paraphrased information, and concepts that are derived from external sources adhere to our standards for accuracy and transparency.

M., Adam. Interview. Conducted by Jessie Baker, 14 Sept. 2022.

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