The basic definition of empathy is that firstly, you have the ability to recognise, understand and feel the emotions of other people


I often get asked what will make a business successful. For me, it’s simple – I’ve always believed that genuinely caring for the wellbeing of your teams, and investing in your culture will lead to business success. And this starts with your people. In my Xero On Air episode, I discussed how you can help your people be the best versions of themselves, at work and beyond, through empathetic leadership. I also shared what tools are out there so you don’t have to feel like you’re shouldering all the responsibility yourself.

What is empathetic leadership?

The basic definition of empathy is that firstly, you have the ability to recognise, understand and feel the emotions of other people, and secondly, you can respond appropriately to others thoughts and feelings.

So for me, empathetic leadership means people feel listened to. They feel valued. They feel like they belong. If we can support our people to feel like this every day that they come to work, then they become more connected to the purpose, and their productivity and wellbeing increases. 

If you pay attention to others’ emotions, you can pick up on shifts in actions or mannerisms, and then consider what is driving a behaviour or attitude. It’s also worth reminding yourself – there is always more to the story. You may see someone’s reaction but it’s what is behind the reaction that you need to be conscious of.

The business case for leading with empathy

As leaders and managers, we often underestimate just how much of an impact we have on people’s wellbeing, and the knock on effect that has on how they do their mahi. I believe empathy and business success are not mutually exclusive. You can achieve outstanding business results from leading a culture focused on wellbeing. 

And you don’t have to just take my word for it. According to the He Ara Oranga Report1 of the Government Inquiry into Mental Health and Addiction, every dollar spent on mental health services in Aotearoa will repay the nation with $3.50 in productivity gains and other savings. 

Additionally, The Mental Health Foundation of New Zealand notes that organisations that prioritise employee engagement and wellbeing outperform the industry average by approximately 10 percent on the Financial Times Stock Exchange 100 Index.

How do you know where to begin?

If you are a small business owner, the most important place to start is with yourself. Check that you’re responding to your own wellbeing needs because you can’t fill someone else’s cup up if yours is empty. Leadership starts with you – you have to walk the talk.

To help small business leaders get started, we’ve created The Check In. It’s a 5-step guide that’s easy to implement and doesn’t need to cost a lot of time or money. 

It starts with the simple action of getting to know your people. Book in some one-on-one conversations with your staff that aren’t about work, and give them your full attention – without judgement. Establishing this relationship means they will be more open and honest with you about what’s going on in their lives. They will be more likely to flag issues or distractions that might be weighing on their mind and impacting their productivity at work. 

Encouraging your employees to build their own connections with one another is also important because it helps to foster a sense of belonging. Celebrating achievements and hosting a variety of social events are just some of the ways to encourage these connections. 

The Check In includes advice on how to support others to look after their mental and physical wellbeing through healthy habits, and how to make it okay to ask for help. You don’t have to do all five steps, but even implementing one of the steps can make a difference to your company culture. 

You don’t need to have all the answers

Remember – checking in on your team’s wellbeing doesn’t mean you need to play boss, confidant and therapist. There are many resources you can leverage to start conversations yourself, or point people in the direction of further support. 

For example, you can access free and confidential counselling through the Xero Assistance Programme if you, your team members, or their families need extra support. Step Four of The Check In goes into this in more detail so I’d encourage you to take a look if you’re at all concerned about how you might handle some of these conversations.

If we can foster this sense of value and belonging, and continuously work to improve the wellbeing of our teams through empathetic leadership, then I’m certain business success will follow. And it doesn’t stop there. It has a ripple effect through the business, to your customers and into our communities. Ultimately, we have the ability to impact the wellbeing of individuals, workplaces, families and communities across Aotearoa – and it’s up to us as leaders to make it happen.

Xero On Air – our free to watch digital content series shares advice, insights and actionable tips for managing right now, to what’s next. Check out the list of episodes here:

Written by: Craig Hudson – Xero