Due to continued economic uncertainty around the world, empathy has never been in such high demand.
As the 2016 Empathy Index shows, empathy is more important to a successful business than it has ever been before. In today’s business world, empathy strongly correlates to growth, productivity, and earnings per employee.
The annual Empathy Index seeks to answer this question: Which companies are successfully creating and fostering empathetic cultures, and which are not?
Companies that create strong empathetic cultures are ones that retain the nicest people, create environments where diverse and open-minded teams thrive, and ultimately reap the greatest financial rewards.
Empathy was down into five categories: ethics, leadership, company culture, brand perception and public messaging through social media.
Some of the metrics used, which are publicly available, include CEO approval ratings from employees, gender ratio on boards, and the number of accounting infractions and other scandals. This year, a new metric was added: carbon, or how environmentally conscious the company is.
The financial information came from S&P Capital IQ, and the employee information came from Glassdoor.com. The study also analyzed over 2 million tweets from Sept. 27 to Oct. 16, 2016. In a new source of qualitative data added this year, the leaders of the World Economic Forum’s Young Global Leaders were asked to rate the companies’ morality.
The Empathy Index focuses on global companies. Unfortunately, due to a lack of public information, it was not possible to include companies from China in the survey.
The top 10 companies in the Empathy Index 2015 increased in value more than twice as much as the bottom 10. They also generated 50 percent more earnings than the bottom 10, as defined by market capitalization. A strong 80 percent correlation was found between departments with higher empathetic value and those with high performers.
The Index results found empathy is correlated with ethics, and any ethical failure on a company’s part can prove costly. This is best reflected by the Deutsche Bank’s sharp drop from 40th place in the 2015 Index to the 110th place in this year’s Index, and Wells Fargo plummeting from 20th place in 2015 to 130th place in 2016. Both of these falls from grace come in light of the two banks’ recent scandals and poor brand perception.
Meanwhile, the tech sector continues to lead the ranking in high empathetic value, now accounting for an even greater share of the top 10 with 60% value in 2016 compared to last year’s 50% value. Facebook usurped Microsoft as the number one most empathetic tech company, owing to its focus on improving its internal culture and the introduction of the Empathy Lab.