Show Me the Money
Research clearly shows that compassionate leadership is a powerful performance and revenue driver. It cuts costs by reducing turnover and boosting engagement.
Let’s first talk retention. According to some researchers, each time a business needs to replace an employee, it costs 6 to 9 months’ salary, on average. Others say the cost of replacement is more like one to two times an employee’s annual salary (Charaba, 2023).
Regarding retention, the research over the last few years shows that two things are undeniably true.
First, less compassion means more turnover:
- Employees who don’t feel their manager cares about them as a person are 37% more likely to resign. (Wagner & Harter, 2007)
- 89% of workers who had recently left their job, or where planning to leave, felt burnt out and unsupported. (Cengage Research Group, 2022)
- 54% of employees say they’ve left a previous job because their boss wasn’t empathetic to their struggles at work or in their personal lives. (McWilliams, 2021)
- 82% of employees say they would leave their position to work for a more empathetic organization. (Shanahan, 2023)
Second, more compassion means less turnover:
- 79% of workers feel that empathetic leadership in the workplace decreases turnover. (McWilliams, 2021)
- 62% of women of color said they were unlikely to think of leaving their companies when they felt their life circumstances were respected and valued by their companies. (Van Bommel, 2020)
- Highly compassionate leaders have 200% lower intention to resign. (Hougard and Carter, 2022)
- Employees who experience their manager as compassionate have 36% higher commitment to the organization. (Hougard and Carter, 2022)
But compassion affects other fiscal factors, too, including employee engagement and productivity. The cost of low employee engagement is estimated to be $450 – $500 billion annually (Tenney, 2023).
When people spend their days in a compassionate work environment—when they feel connection and active care, especially from their manager—they are more present, interested, innovative, and efficient. Compassionate work cultures are directly linked to lower employee absenteeism and emotional exhaustion (Barsade & O’Neill, 2014). And neuroimaging research even shows that people’s brains respond more positively to leaders who demonstrate compassion (Boyatzis, 2012).
In compassionate work environments, people get more done:
- 76% of workers who feel their manager is compassionate are highly engaged at work. This is compared with only 32% who experienced a lack of compassion from their manager. (Van Bommel, 2020)
- 87% of employees agree that mutual empathy between leaders and employees increases efficiency, creativity, and innovation. (McWilliams, 2021)
- 85% of employees report that caring, connected leadership in the workplace increases productivity. (McWilliams, 2021)
- By raising the level of managerial care in the workplace, employers can expect boosted engagement and an accompanying 41% drop in worker absenteeism. (Harter, 2022)
The bottom line? Compassion helps solve problems of turnover, engagement, and productivity. Why? Because it creates a connected, trustful relational environment that helps calm nervous systems and convey psychological safety. In this kind of organizational culture, employees can crawl out of survival mode, find support and belonging, and start firing on all cylinders again.
Compassion and Self-Compassion in Organizations: Select Sources
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