From Prof. Dr. Andreas König
This is one of the statements from our conceptual study, which appeared in the internationally renowned journal "Academy of Management Review". In this study, we – Andreas König (University of Passau), Lorenz Graf-Vlachy (University of Passau), Jon Bundy (Arizona State University) and Laura Little (University of Georgia) – investigated the impact of the empathy of CEOs in crisis situations [pre-publication of the paper]
We understand empathy as a personality trait that is initially positive. It is composed of (1) the ability and inclination to take on other people's perspectives, (2) the tendency to understand other people's feelings – especially negative feelings such as worry, fear and pain – and (3) the inclination to feel warmness and concern for people in stress and need.
At first, this sounds as if every manager, and above all a CEO, should have this characteristic. And this is indeed the case: empathy helps in many situations, especially during a crisis. The problem is, however, that it can also be detrimental.
Professor Andreas König
How do established organisations and their leaders respond to the discontinuities that emerge with digitalisation?
How do established organisations and their leaders respond to the discontinuities that emerge with digitalisation?
Professor Andreas König holds the Chair of Strategic Management, Innovation, and Entrepreneurship and is deputy spokesperson of the DFG Research Training Group 2720: "Digital Platform Ecosystems (DPE)" at the University of Passau. His research output is published in leading international journals such as Administrative Science Quarterly, the Academy of Management Review and Research Policy.
Four theses on the subject:
The more empathetic a manager is, the faster they will recognise possible warning signals – but they will also tend to see a crisis where there isn't one.
Empathy is required in the runup to a crisis. The manager must recognise warning signals quickly in order to be able to react quickly.
For example, in the case of the VW 'dieselgate' scandal, there were many signs of systemic problems long before they became public. The situation was similar with the scandal surrounding the British BP group's exploded Deepwater Horizon oil platform.
More empathetic leaders will recognise such signs more quickly: they can really detect when something is in the air in the company and the situation is particularly tense.
The problem here is that the more empathetic a manager is, the sooner and more often they will sound a false alarm. In extreme cases, this leads to the staff becoming desensitised and even considering a real crisis to be a false alarm, as in The Boy Who Cried Wolf fable.
The other extreme is just as problematic: the emotionally cold manager who does not recognise a crisis even if it has already escalated.
Something in between is required: a person who is not over-sensitive, but sensitive enough to recognise signs of a real crisis. A manager's empathy initially has a positive influence when it comes to their efficiency in identifying crises. But things tend to fall out of balance when empathy increases.
Empathy helps managers to acquire relevant information during a crisis, but also makes them biased in the processing of this information.
A manager has to make decisions in a crisis. They do this based on information. Managers often need a certain amount of technical expertise to achieve this, but they also and above all need empathy to be able obtain the necessary information at all. Employees are more likely to share information with a person they believe appreciates their point of view and from whom they fear no negative consequences.
Acquiring information therefore requires empathy. However, empathy is less helpful when it comes to processing this information, as impartially as possible: more empathetic leaders may have the better information, but they lack the cool head needed to draw the right conclusions. This is because they too are suffering in the crisis: they are stressed out and feeling their employees' tension and distress. In case of doubt, they therefore cannot successfully form a comprehensive picture from the available information. They tend to make decisions that improve the stress situation in the short term but do not lead to a long-term solution.
They also tend to find solutions that improve groups they feel close to, for example, their colleagues in executive management. This explains decisions such as those made by Robert Benmosche, the long-time head of US insurer AIG, who paid out millions in bonuses to employees responsible for the misery during the peak of the financial crisis. When asked about his motives, Benmosche cited his sympathy for this group.
Empathy is also not necessarily distributed equally to all involved. In case of doubt, it tend to benefit the group to which the manager themselves belongs.
Hence the same applies here: A manger's empathy of and the effectiveness of their decisions in a crisis have a positive relationship initially. However, the relationship is upended with increasing empathy.
The assertion that the more empathetic a manager is, the easier it is for them to show compassion and understanding is not always true.
The communication of corporate crises is one of the greatest and most responsible challenges facing top managers. On the one hand, a manager should actively engage in the dialogue with stakeholders to regain their trust. They should show compassion, concern and understanding.
On the other hand, however, in the interests of the company and its employees, a manager must also be careful not to take on too much responsibility prematurely. Otherwise, the image that stakeholders such as the public, analysts and investors have of the organisation will shift. They will turn away – with potentially fatal consequences.
The same applies here: empathy is a double-edged sword. It helps managers to emphatically communicate a crisis. But too much empathy can be detrimental.
The more empathic a manager is, the better they can heal a damaged relationship system after a crisis – but the more difficult it is for them to eliminate operational damage.
At the end of a crisis, a manager must get the organisation back to normal. It is only by achieving this that the organisation learn from the crisis and gain strength. In order to restore a normal state, it is necessary to heal the workforce's relationship system that has been damaged or even destroyed by the crisis.
A more empathetic leader can better see when the workforce is ready to put the crisis behind it, make a fresh start and learn from experience. Empathy also helps to better support and moderate this healing process.
However, technical and operational difficulties are often also part of a crisis. The solution to crises often consists of tough, detailed technical work and mastering operational challenges. For example, after the sinking of the Deepwater Horizon, the resulting oil spill had to be eliminated: a highly technical, operational process. If a manager concentrates too much on the company's network of relationships because due to their empathy, they will have no time left for such operational aspects.
From our point of view, however, both are required for a company to return to normality after a crisis. What is needed is an executive with an eye both for the disrupted network of relationships within the company and for the resulting operational damage. Accordingly, the same applies here: empathy is both a blessing and a curse.
The core message of our study is as follows: in many aspects, empathy initially has a positive influence on crisis management. But there's a point at which the relationship falls out of balance. Finding this out will be the subject of future research.
As much as we advocate empathy, we need a critical, nuanced approach to empathy among managers.
