Why Compassionate Leadership Makes Both Dollars and Sense

By Rodger Dean Duncan

Leadership development has always been and will continue to be a pressing need in the workplace. Trouble is, “people development” is often among the first budget items to take a hit in tough times.

You may have noticed: We’re living in tough times.

But rather than hunker down in a hidey-hole, smart leaders are upgrading their own skills and those of their team members. In today’s world, we see rapidly accelerating technology and a five-generation workforce. So, proficiency with communication, transparency, and adaptability will continue to make sense. And rising to the top of the must-have list are empathy and compassion.

That’s the view of Donato J. Tramuto, author of The Double Bottom Line: How Compassionate Leaders Captivate Hearts and Deliver Results.

Putting people first and delivering results are not incompatible goals, Tramuto says. Rather, a strong focus on people drives results, creating the double bottom line. Company leaders can measure their success by producing strong financial results as well as a positive impact on their people and the community.

Tramuto’s book is based on decades of experience as well as numerous studies, original qualitative research of more than 1,500 people, and in-depth interviews of nearly 40 successful leaders who practice compassionate leadership.

His findings provide helpful tips on the leadership skills that are most pertinent in today’s workplace.

Rodger Dean Duncan: Although there are still plenty of old-school, dictatorial managers around, you say there’s an acceleration in the rise of “compassionate” leaders? To what do you attribute this change?

Donato Tramuto: Over the last 30 years, we've seen a continual “trust decay” in our organizations and institutions. Workers have become increasingly disengaged and dissatisfied. The pandemic greatly accelerated these issues and workers emerged with stronger, more clarified views about what they want out of work and life. This is especially true in younger generations.

Today's workers want to feel respected, included and empowered at work. They want to feel that their professional growth and personal wellbeing are supported. They want to feel a sense of purpose in their work. Compassionate leaders are uniquely equipped to address these needs. Their approach creates stronger teams and healthier cultures that get the best from their people and deliver stronger results. This is what I call the double bottom line.

Duncan: From your research on the workplace, can you cite two or three key data points on evolving views regarding the effect of leadership approaches on productivity and profitability?

Tramuto: Our research points to some interesting gaps between belief and action. We saw for example that 84% of respondents believe a compassionate workplace leads to cooperation, which in turn leads to greater productivity and profitability. Yet most workers (68%) believe the workplace is more competitive than cooperative. The belief in a cooperative workplace is there, but the implementation is lagging far behind.

In another example, we found that 77% of leaders believe compassionate leadership can be part of a double bottom line where people and profits dovetail. Conversely, 60.5% of workers believe leaders reject compassion because they see it as contradictory to productivity or profit. This could be telling us that some leaders just aren't walking the walk, or that they're not communicating their values clearly. In either case, there's a trust issue.

Duncan: What are some of the myths that may cause some people to resist being “compassionate” in their leadership practices?

Tramuto: Some think compassionate leadership is weak leadership. This could not be further from the truth. Compassionate leaders do tough work like addressing conflict to create stronger teams or letting people go when they are toxic to company culture—and they do these things with a combination of toughness and compassion.

Another myth is that being compassionate is the same as being nice. “Nice” might mean being pleasant, smiling and saying “How are you?" or "Have a Nice Day.” Compassionate leaders move beyond that. They offer empathy and action. For example, during the Iraq war I was on an elevator with an associate. I asked him how his day was unfolding. He told me he had just received terrible news that he lost several family members in Iraq and his mother needed help. When the elevator arrived on my floor, we went to my office and created a fund to help his family. This is not to say that you're responsible for solving your employees’ problems, but acting in circumstances where you can or should help creates stronger connections in your workplace.

Duncan: You say some people confuse empathy with compassion. How do you explain the difference?

Tramuto: Empathy is understanding someone else's situation or pain, then expressing sympathy and understanding. Compassion offers empathy but goes further. It includes the willingness to do something about it.

To illustrate the difference, I'll expand on the example I used previously. Upon hearing about the crisis my associate's family was living through in Iraq, if I offered only empathy, I would have told him that I could imagine how difficult it must be, and maybe “I hope things get better for your Mother." The compassionate response was to express empathy, then act to help him improve the situation. Or another example, if an employee comes to their boss and complains about a conflict they're having with a coworker, an empathetic boss might commiserate with the employee but do nothing about it reported situation. A compassionate boss might express feelings of support or understanding, and then act to help resolve the conflict.

Duncan: What role does trust—both earning it and extending it—have in compassionate leadership?

Tramuto: Trust is at the core of compassionate leadership and now replaces the old adage that culture eats strategy for lunch.

The new mantra is trust eats culture and strategy for breakfast, lunch, and dinner. It's the foundation of strongly performing teams. If people feel safe with their coworkers, they are proven to be more likely to share their ideas or to speak up if they see a problem. Leaders earn trust through being honest and transparent, following through on what they say they're going to do, and by being authentic.

It's equally important to show your employees that you trust them. One way to show employees trust is by allowing them to do their jobs with autonomy. It shows them you respect the professional they are.

Duncan: There’s a lot of talk these days about “vulnerability.” Please give us an example of what that is and how it helps leaders connect with their people.

Tramuto: Vulnerability is sharing something about yourself that might be difficult to share—like the fact that you made a mistake, that you're struggling with something, or that you need help.

It's not always easy to be vulnerable. I suffered from hearing loss as a boy and many years into my career I still hid that fact as I feared it would make me seem weak. After finally sharing this, I realized that the opposite was true. My coworkers opened up to me about some of their own challenges, and they told me that they thought I was stronger as a result of learning to overcome my challenges. Seeing our leaders make mistakes or admit to vulnerabilities allows others to feel it’s okay for them to be human too.

Duncan: What do you think leaders most often get wrong in their culture-building efforts?

Tramuto: They fail to take the time (it may take many months) to hear the stories and concerns of their employee population, they forfeit a quintessential opportunity to lock in the trust that becomes their currency in moving the organization in the direction employees will embrace. Culture building comes after you gain the trust.

Duncan: Tell us what your research and experience have taught you about performance reviews.