The resignation last month of the head of KPMG after a bruising online call with staff is a classic example of the change happening in the corporate industry where companies and leaders can no longer afford to have one-way top-down authoritative conversations without a feedback loop and without listening to the other side. CEOs are increasingly being called chief engagement officers instead of chief executive officers with the shift in focus from authoritarian and profit-first mindset to purpose-led and two-way communication in the corporate world.

As is apparent in this case, employees' voices are becoming more important than ever in the digital world, where social media platforms allow them the agency and a voice to call out companies and leaders when their behaviour is perceived as unacceptable.

A study by Accenture shows that 63% of customers want to buy from companies that take care of people and the planet - and not just profits. Therefore, how businesses treat employees and what employees say about the company really matters.

Combine that with the fact that there has been a war on talent. The ability to attract and retain talent is one of the biggest challenges for professional service firms. Talent has become more powerful than the company, with power dispersed from the leader to the employees. So in order to ensure they don't become irrelevant and redundant, leaders would have to adapt to the changing rules in the workplace.

Empathy is the new leadership currency

Covid has accelerated several pre-existing trends, among them has been mental health, social justice and empathetic leadership.During the pandemic, the spotlight has been on leaders' ability to be empathetic, compassionate and understanding of the struggles people are going through. A much talked about example has been of New Zealand’s prime minister Jacinda Arden who was praised for her emotional connection with the public.

It is not just in the government sector, but across society including in businesses and the corporate industry that it has been important during Covid. For example, Airbnb CEO's letter to employees announcing 25% of its staff were going to be laid off because of Covid in 2020 was praised and called a masterclass in empathy and compassion.

It is evident that in an increasingly globalised world where crises are going to continue because of interconnected global systems, compassionate leadership is going to be increasingly important, with empathy as the new leadership currency.

Harvard Business Review research shows that compassion and empathy is a better managerial style than expecting others to work harder, with feelings of warmth and positive relationships at work having a greater say over employee loyalty than the size of their pay cheque. 

But organisational compassion becomes even more important during crisis situations such as right now when people are struggling, with research showing that it is what helps the company maintain high performance in difficult times.

Mental health has been normalised during Covid, with employees now commonly saying things like, ‘I want a mental health day’. Leaders completely disconnected from the zeitgeist will become irrelevant. Leaders need to create a culture where people feel their struggle is understood and supported.

For example, people's appetite for risk is different. Some will go out without a mask, while others will stay at home. Leaders should be aware of these and other differences. Many parents have a double whammy of juggling elderly parents and until recently home schooling kids.

Risk management over crisis management

Just like a leader needs to have two-way communications and a feedback loop to check if their message is being received and what is the sentiment around it, so does diversity and inclusion training.

As a crisis comms specialist, people come to me when a crisis is in full swing. But done correctly, working on risk before it becomes a full-blown crisis is ideal. It is done by maintaining a risk register, conducting a vulnerability audit to identify pressure points and issues that could escalate to a crisis level, assessing the risk level regularly, practising with frequent crisis simulations and building in a risk perception system for talent across all levels of the organisation to keep the internal feedback loop intact.

All this preparation work is because crisis situations escalate quickly where the ultimate enemy is time. Companies’ and leaders’ reputations disintegrate in a mere few hours that took decades to build up.

Today, people want a different type of leader, they don’t want a leader who says ‘pull up your socks’, they want a leader who is empathy-led and purposeful. So, leaders who can rise up to the challenge will be the leaders of tomorrow. Leaders that are lacking empathy will find that they will struggle in this new era of compassionate leadership.

About the author

Farzana Baduel is a crisis communication and PR expert, and is the CEO of Curzon PR, a London-based PR firm working with clients globally. She is a resident public relations expert at Oxford University’s entrepreneurship centre Oxford Foundry.