Everyone wants their boss to be smart, kind and caring — but new research by an Arizona State University professor theorizes that a CEO should not be too compassionate, especially during a crisis.
The new paper, to be published in the Academy of Management Review journal, calls a high level of empathy in CEOs a “blessing and a curse” during a company calamity.
“Some empathy is needed for effective leadership, but there is such a thing as too much empathy,” according to Jonathan Bundy, an assistant professor of management in the W. P. Carey School of Business and one of the authorsThe other authors are Laura Little of the University of Georgia and Andreas König and Lorenz Graf-Vlachy, both of the University of Passau in Germany. of the paper, titled “A blessing and a curse: How CEOs' empathy affects their management of organizational crises.”
“We call it an ‘inverted U’ relationship, because increasing amounts of empathy make you a better crisis manager up to a point, and then after that, increasing amounts of empathy decrease your ability to be a good leader,” he said.
The researchers defined empathy as the ability to sense feelings of people in emotional stress and experience those feelings for themselves. That quality is useful for a company leader, mainly because employees would be more likely to express concerns to an empathetic boss, who might be more willing to listen to them.
However, a surfeit of empathy in a CEO can have several drawbacks for a company. For example, it can make bosses susceptible to the “Chicken Little effect.” Because they’re attuned to noticing problems, “they’re going to see a crisis in everything, which isn’t good from a leadership perspective,” Bundy said.
Another disadvantage is clouded perception.
“Empathy is well known to introduce bias into an individual’s decision-making, and that bias plays out in a really interesting way,” Bundy said.
An empathetic person will focus energy on where he or she perceives the most harm.
“If I’m an empathic person and there are two people telling me their stories and one person said ‘This happened and I’m sad’ and the other person is crying and screaming, I’m typically going to be biased to the person who’s expressing it more, but that’s not necessarily where the problem is,” he said.
“A medium empathetic person will be more clear-headed and be better at that information processing.”
Bundy said that one famous example of crisis management is Malden Mills, a Massachusetts factory that burned down in 1995, putting 3,000 workers out of a job. The owner decided to keep paying the employees while the factory was rebuilt, to much acclaim. In 2001, the company filed for bankruptcy.
“From a purely economic standpoint, it obviously affected the business’s bottom line,” he said.
And, as a company progresses through a crisis toward resolution, bosses who are very high in empathy could have less energy to devote to the nuts-and-bolts repairs of the operational side. The authors state: “Even though the CEO might not be directly involved in fixing these issues, he or she still needs to attend to and cognitively process vast amounts of technical information to restore normalcy and learn from such complicated situations.”
An abundance of empathy can skew accountability during a crisis.
“When you’re managing a crisis, especially with external audiences, it’s often about whose fault it is,” Bundy said. “Typically as the organization is given more fault, it’s blamed more and it’s punished more, in the stock market and with its reputation.”
People who are high in empathy tend to jump in and take responsibility.
“When you’re managing that critical task of how people perceive blame, being high in empathy will cause you to say, ‘It’s our fault, we’ll take care of it,’ and then everybody will dump responsibility on you, even if it’s not your fault,” Bundy said.
“It can heap onto the organization more responsibility than it should have in that crisis.”
So CEOs must tread a very fine compassion line.
“You have to signal that you care about the people affected by this crisis, but you can’t take too much responsibility because that could damage the company,” he said. “It distorts the reality.”
There’s a “Goldilocks” zone of empathy that’s ideal — neither too much nor too little.
So how does a CEO find that balance? First, the boss needs to know his or her level of empathy.
“We would say for those of you who score in the high zone, having a lieutenant or another member of the management team in the low zone of empathy, particularly during a crisis, would be very helpful,” said Bundy, who added that an outside crisis-management consultant could fulfill the same role.
It’s still a tricky balancing act because people are hypocritical when it comes to CEOs and companies in a crisis.
“My dissertation research, and other papers I’ve worked on, always show that we say we want you to apologize and tell us you’re sorry and take responsibility for the bad things you do,” Bundy said.
“But the second you do, we punish you way more than we would have than if you denied responsibility or were more defensive in the way you responded.”
Top image by Pixabay
More Business and entrepreneurship
VR helps students learn about supply chain management
What if students could learn about business challenges and processes from real-world scenarios, while never having to leave the classroom? Students in Arizona State University's Planning and Control…
Thunderbird at ASU professor uses chess to build students’ business acumen
To be a grandmaster in chess takes dedication, patience and an understanding of the ins and outs of the game. You also have to prepare yourself for setbacks and upsets. Such is the road that…
Thunderbird faculty examine role, benefits of compassion in financial industry in new book
Companies thrive when they have both a productive business philosophy and a motivated workforce whose voices are heard. However, achieving those goals isn’t always easy amid the pressures and myriad…