October 17th, 2022
Your Brain At Work LIVE – S7:E18 | The Role of Empathy in Making (or Breaking) Your Organization
In this week’s episode, we’ll explore the deeper neuroscience of empathy and the role it plays in making organizations run effectively. Our special guest is the author of the recent national book release, How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America – and How to Undo His Legacy.
In this discussion, we will dive into how a generation of leaders may have lost their empathetic way and what we can do to correct course.
SEASON 7 EPISODE 18
[00:00:02] SW: Welcome back to season 7, episode 18 of Your Brain at Work podcast. In this week’s episode, we’ll explore the deeper neuroscience of empathy and the role it plays in making organizations run effectively. Our special guest is the author of the recent national book release, How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America – and How to Undo His Legacy. In this discussion, we will dive into how a generation of leaders may have lost their empathetic way and what we can do to correct course.
I’m Shelby Wilburn, and you’re listening to Your Brain at Work from the NeuroLeadership Institute. We continue to draw episodes from our weekly Friday webinar series. This week, our show is a conversation between Dr. David Rock, co-founder and CEO of the NeuroLeadership Institute; and David Gelles, columnist for the New York Times. Enjoy.
[00:00:56] SW: Hello to all of our viewers across the world. And welcome back to another week of Your Brain at Work Live. I’m your host, Shelby Wilburn. In this week’s episode, we are diving into the neuroscience of empathy, and the role it plays in making organizations run effectively. We will also be joined by a special guest author who recently released a new book for a conversation about how a generation of leaders strayed from empathy and how we can do to correct course.
Now, before we get into that, we’re sending a big hello out to our audience today, our registered Zoom participants, as well as our friends streaming across our social platforms. For our regulars, it’s also great to have you back. For those of you that are new to Your Brain at Work live, welcome to the party.
For some context, it is the title of one of the bestselling books by our CEO and Co-Founder, Dr. David Rock, and it’s also the name of our blog, and podcast. Now, as we’re about to kick off, stretch, grab some coffee get settled in as we get ready to dive into this topic for the next hour.
So, let’s introduce our speakers for today. Our guest for today is the author of the new book titled How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America – and How to Undo His Legacy. He is currently a reporter for the New York Times where he writes about business and climate change. He has also been meditating for 20 years, and is the author of mindful work, how meditation is changing business from the inside-out, as well as additional guides and columns about meditation for The Times. Please join us in welcoming David Gelles. David, thank you for joining us today.
[00:02:26] DG: Thanks for having me.
[00:02:27] SW: And an Aussie turn New Yorker who coined the term neuroleadership when he co-founded NLI over two decades ago. With a professional doctorate, four successful books under his name and a multitude of by lines, ranging from the Harvard Business Review, to the New York Times, and many more, a warm welcome to our co-founder and CEO of the NeuroLeadership Institute, Dr. David Rock. David, great to have you back. And passing it over to you.
[00:02:49] DR: Thanks, Shelby. Great to be back. And thanks to the team, have been running some fantastic sessions the last few weeks. Have been some great sessions.
David, great to connect with you. When we look at our kind of history and interests, it looks like we’ve been friends for years. But we’ve hardly ever had a chance to cross paths. I know you spoke at our summit a few years ago. And I know we’re both long term meditators. I started when I was about 15, both writing a lot, passionate about humans, issues in organizations, and the world and all sorts of stuff. But we haven’t had a chance much to connect. I’m delighted to have conversation with you. Congrats on your book.
[00:03:25] SW: Thank you so much.
[00:03:27] DR: Let’s dig in. When I saw this, this kind of hit my desk. I was like, “Wow! That’s like quite a statement. The man who broke capitalism. And crushing the soul of corporate America. For the uneducated, about this man and this kind of change, give us the cliff notes of kind of what happened? What did he do? Let’s start there, first of all.
[00:03:51] DG: Yeah. Well, first, maybe I’ll just even start with some level setting. A lot of people don’t know who Jack Welch was. And it’s important to just have the facts on the table. So, Jack Welch was the chief executive of General Electric, big United States conglomerate, from 1981 to 2001. And during that time, he not only changed General Electric and the way this company operated. But he was so powerful. So influential, for reasons I hope we can talk about, that he effectively rounded up redefining what it meant to be an American company. Resetting the perspectives, the values of other chief executives. And ultimately, through that force and through the ripple effects of all those actions over the course of decades and years, really reshaping our economy in ways that make the world in which we all live in, and operated, and working today really looks quite different than the way it did before he was CEO.
[00:04:53] DR: Interesting. I’ve been to Crotonville, that kind of famous learning center that he built. And there’s a whole lot of stories out there about him in what they call the pit, over these management programs. And I’ve been out there. There’s this whole kind of heritage of developing leaders. And I think one of their goals was to develop leadership skills in his kind of mold, and then have these people go out and run their organizations, but also go out and run lots of other organizations.
I know that GE was a training ground, like places like Bank of America, and in another world, McDonald’s, like, these places are like training grounds for legions of people. So, I can see how he’s influenced.
But 20 years is a long time for a CEO these days. But what’s the average CEO tenure now? Like, five or six at best? It’s a long time. How did he stay there for 20 years? What his secret, you think?
[00:05:46] DG: Well, we got to give him credit where credit’s due. He was enormously successful for much of his run if you measure success by increasing shareholder value. And that, of course, is right at the heart of the big central thesis of the book, which is that he reshaped the priorities of corporate America and really embrace this shareholder first ideology that was maybe first articulated by men like Milton Friedman. But really, I argue, first put into practice by Welch himself.
And during that time, listen, he took GE from a market capitalization of $14 billion or so when he took over to $600 billion at its peak just before he retired. And so, you asked why he stayed in power, because he was making a lot of money for himself, for other investors for shareholders. But the long-term consequences of how he did that are what I think we as a society are still reckoning with today, and which GE is still reckoning with itself. Just last year, the company announced that it was going to break itself up once and for all into three separate companies as sort of a final repudiation of his vision.
[00:06:55] DR: Yeah, interesting. Tell me, what would the – Like, if we had to simplify it to maybe three things, two or three things, what are the kind of themes that he was driving that changed America? How did he crush the soul of government America? What were the sort of two or three big things that he really did?
[00:07:10] DG: Yeah, well, I hope we can talk more about what it means to have a soul when we’re talking about corporate America. We can come back to that. But the way in which he did, listen, I identify three main tactics he used in this quest to promote what I call Welchism, which is the word I use to describe this relentless pursuit of shareholder value, the single-minded pursuit of corporate profits at any cost and the mannerism in which he did it, which we need to talk about as well, especially in this context, which was this very aggressive, unempathetic, bullying, materialistic, alpha male style of management, which he embodied and which still a lot of people think is sort of the default mode of CEOs.
Now, those three tactics I mentioned, they were downsizing. He was the layoff king. In his first few years as CEO, he fired some 100,000 or so employees at GE even though the company was very profitable. He unleashed a wave of mass layoffs and factory closures which destabilized the middle-class. And he continued to do so with outsourcing and offshoring for his whole career.
The second one was deal making. During those 20 years, he executed some 1000 mergers and acquisitions. That’s practically big deal every single week. And in the process, he transformed GE from a very concentrated, very sort of discrete manufacturing company, an industrial company, into this sprawling conglomerate that had large operations in media, finance, and more.
And the third one was financialization. He used this entity known as GE Capital, which was originally just a small division inside the company that was really used to help people for GE products and services and turned it into what was effectively an unregulated bank that was involved in all sorts of dubious financial products. And ultimately, led GE into real severe trouble when the financial crisis hit. So those are the tactics I identified that he used in his pursuit of shareholder value above all else.
[00:09:22] DR: Yeah, interesting, downsizing, deal-making and financialization. As I’m thinking about those, the common thread through all of those is kind of from – When I think about this from a cognitive perspective, it’s taking the human out. It’s taking the human element out and thinking conceptually about everything. So, you’re kind of dehumanizing in every sense of the word. And I’m thinking about in the brain, the way there’s a network for thinking about people, which is the default mode network. It’s more central in the medial prefrontal. This network is used for thinking about yourself and others and how you will interconnect. And this network switches off when you think more about like your plans, and goals, and the future, and all this stuff.
And so, people are like very, very goal-focused, and conceptual thinkers end up activating this more lateral network in their brain like all day, every day, and not spending much time thinking about how other people might feel. And I feel like he’s sort of – When he was sort of an outlier in that, sort discounting the human element completely, and going as far as you could into just conceptualizing and not caring whatsoever about people. And it creates this sort of value that it’s good to imbalance, be imbalanced like that. And I think a lot of people role model him and said, “Oh, it’s good, that I’m massively goal-focused and don’t care about people. That’s how I need to get ahead.” He sort of primed a generation of managers to not care about the humans is sort of the way I see it.
But tell me more. Like, should companies – Let’s go there. Should companies have a soul? And what would that solve be made up of? Let’s go there.
[00:10:59] DG: Yeah. Well, listen, that’s sort of a turn of phrase that can mean a lot of different things to a lot of people. But what I’m referring to, there is the fact, right? This is a fact. This is an established history, that in the post war era, those years from roughly call it 1945, to the 70s, and call it 1981, when Welch took over GE, major US corporations had a fundamentally different relationship with their employees than the one they do today. And what it looked like was an acceptance of their responsibility to really consider the well-being of all stakeholders and not just investors.
And so, in practice, what that meant was that companies like GE we’re proud to pay handsome wages to offer employees really generous benefits, to keep people with the company until they retired, and not to have this transactional sense of employment, to take good care of their communities, and even to pay the government taxes.
In the book, I cite the 1953 GE annual report, where the company proudly ticked off the fact that it had the highest payroll ever, and it was paying its suppliers so much money. And here’s how much we paid in taxes. Oh, and by the way, the last thing they mentioned, yes, our investors made a modest return. And this was emblematic of the way many other companies approached their posture. Sort of understood their relationship with society in these decades after World War II.
You look at companies, whether it’s IBM, or Johnson & Johnson, the quintessential major American employers all understood that what was good for their companies was good for the country, and vice versa. And so, that’s what I talked about when I mean a soul of corporate America. It was a recognition that the people mattered, that the communities mattered. And all of that went out the window with Jack Welch.
[00:13:00] DR: Yeah, that’s interesting. Interesting. I mean, let’s, shift this to empathy, something that we’ve been studying at our institute. We’ve been studying it for like three years, like, really closely, and trying to synthesize the research that cognitive scientists have been digging into for the last decade or two. But we’ve been synthesizing. Tell me about like how do you think about empathy? And what kind of impact did he have on empathy across this wave of corporate America?
[00:13:26] DG: if I may digress, when I was with the Financial Times as a reporter about 10 years ago, I had the opportunity to interview Bernie Madoff, the Ponzi schemer, in prison. He and I sat down for hours. And he gave me one of his only interviews after he was arrested. And what I quickly discovered, as I asked him about the consequences of his actions, did he feel remorse? Was he regretful that he had stolen $60 billion and ruined hundreds, thousands of lives with these actions? He really had no empathy whatsoever. He could not express and connect with that sense that he had really caused suffering in other people. And that’s the mark of a sociopath, is the inability to sort of connect and empathize with other people.
And in reading about Welch and talking to people who worked with him and knew him, he was not a Ponzi schemer, right? We can talk about his financial shenanigans. He was not a Ponzi schemer. But there was clearly some of that same lack of empathy, some of that unwillingness to truly account for at a human level the degree to which his actions, his decisions, as CEO were really detrimental to the human lives of so many hundreds and thousands, tens of thousands, hundreds of thousands of his boys who he laid off in mass year after year. And maybe that’s necessary when you’re making these sort of sweeping decisions. We can talk about compartmentalization of what leaders need to do when they make these kind of decisions. But without a doubt, Welch did not seem to demonstrate a whole lot of empathy for those individual employees who suffered the consequences of his really cutthroat management practices.
[00:15:13] DR: It’s interesting. You just remind me of some research that we don’t talk about often, but I think it’s really important in this context and relates to empathy. We did some research a few years ago on essentially what does a little bit of power do to your brain? And drawing on the good work of many, many different labs, we synthesized a way to think about this that sort of becomes a useful kind of rubric.
What we’ve done is even a little bit of power has a very significant or non-obvious effect in the brain in three ways. And when I say a little bit, I mean, like, get a cohort of people in a lab, get six people together. Tell them they’re all in a group. And then tell one person they’re slightly in charge of the group even. Just even a little bit of power. Not like, “Oh, I’m king of the world.” But even a little bit of power.
And what we see, it’s really interesting, a little bit of power does three things. Firstly, it actually makes you think a lot less about people as people. And so, it switches down this people network, and switches up your conceptual networks, right? And it’s interesting, you actually have to do that in a way as a leader or someone in power, you sort of have to be able to let go of every single person’s hopes and dreams and goals in order to make some of the difficult decisions. You need to as a leader, like even what project to prioritize. You can’t care about everyone’s feelings to get that done.
There’s an adaptive value to sort of turning people into a straw person in your head as opposed to filling them out with all their intentions and motivations, right? But what happens is, when you have a lot of power, you’re now not thinking about people at all. You’re thinking about them as concepts. You’re literally conceptualizing people and taking all their emotions and feelings. So, that’s one thing that happens.
The second thing that’s interesting is that you become very optimistic even with a little bit of power. And again, that is adaptive value, because you’re going to do difficult scary things when you’re in charge. And so, you become more approach-focused, less avoidance-focused, and you actually don’t notice potential risks anywhere near as much, right?
And then the third thing that’s interesting is that you lift up to higher levels of construe when you have even a little bit of power. Again, just a little bit in. In other words, you’re thinking more abstractly. You’re kind of not thinking about the details anywhere near as much. So, now, you think about someone like Welch and others who feel like they have a lot of power. You can imagine it’d be really tempting to conceptualize people, not think of them as humans at all, not really care about the downside of things, and not really care about the details. And sort of you end up in this sort of dark place. Any comments on that? What are your thoughts on that?
[00:17:43] DG: That all sounds right on. And, I mean, in my mind it immediately starts to go to not only corporate leaders, but world leaders, and the man who move pieces around the strategy board when they’re waging wars. And we need only look at the headlines to understand that this sort of abstraction of human life is still a part of the human experience today and the worst possible ways.
The other ways it makes me go is the recognition that I think there’s something shifting in leadership today and in the discussion of what makes good leaders. And that’s part of why I think this book has been met with a real willingness to have this conversation. Because today’s best leaders, I would argue, make a point of humanizing their employees and really trying not to lose that sense of them as individuals.
And I talk about in the back half of the book about some companies who are looking for ways to continue to do this and to put their employees first. And yet, I think the sort of paradigm I described in the book and the Welch playbook and the degree to which his model of leadership and that abstraction that you just described is still just a fundamental part of the DNA of corporate America today and global capitalism. And we’re seeing it again right now with the slightest fluctuations in the stock market. Companies are laying off 1000s of people again just because they’re a little afraid that they might have a rough couple quarters ahead. It’s a reminder that this Welchian worldview is deeply entrenched in the way companies do business today. And yet, I still think there’s a glimmer of a willingness to change that paradigm, that we’re starting to see all sorts of companies up and down the sort of the value chain.
[00:19:32] DR: Yeah, I mean, there’s definitely a movement. And in some ways, I have Jack Welch to thank, because my organization is – Like, our slogan is literally making companies better for humans through science. And so, we exist as an institute to help companies bring that human back in.
I do think there’s a movement. And it’s sort of a reaction to what happened. I’m a big fan of the JUST Capital people. JUST Capital, I don’t know if you know them. They’re a research institute. They’re studying organizations that are just looking at their performance. And they’re showing that the more kind of humane and just a company is, actually the better they do.
And one of the best performing companies in the last decade to be Microsoft, who happens to be in the top few in terms of justice and all this. And there’s showing that actually being more human pays. And I think you’ve got these kind of movements. You also have, obviously, this incredible consumer power that we have through being all connected, where an individual consumer can have a lot of impact on a company. An individual employee can have a lot of impact on a company. There’s a greater accountability where organizations, leaders can’t just be the tyrant and not be expected to be kind of cold out in some ways. And so, I think there’s a lot of that sort of driving this issue.
There’s obviously a huge movement around diversity, equity and inclusion that’s happening. You get some pushback in some quarters. But there is a big movement to make organizations kinder, more thoughtful. And what we’re seeing is the companies that do that are attracting better talent. And I think, ultimately, that is going to be a big motivator. There’s this virtuous cycle of if they’re better for people, and everyone says they’re better for people, they’re able to hire better talent, keep better talent, retain them, be more productive. I think we’re at this point where, hopefully, the system is starting to upward spiral a bit from a number of these different things. It sounds like – I mean, are you hopeful as well about the future of empathy?
[00:21:29] DG: Listen, I’m a perennial optimist. I try to stay hopeful. But I’m very sort of clear-eyed and realistic about just how swiftly this kind of paradigm shift can happen and how durable even the changes we might be seeing today really are.
You mentioned Microsoft. And it’s important to note that it wasn’t too long ago that when Steve Ballmer, instead of Satya Nadella was running Microsoft, Steve Ballmer implemented stack ranking, a Jack Welch practice of automatically firing the bottom 10% of your employees every single year. And it caused absolute strife within the Microsoft ranks. People were competing against one another. It absolutely sort of eroded the culture. And that was not very long ago in the history of Microsoft.
It’s great that a company like Microsoft is ranking well on the JUST Capital list. And I’m a fan of them. And I think they’re doing important work and sort of trying to quantify what it means to be a really enlightened employer. But the last couple of years, man, it’s just been such a reminder of how fickle these changes can be.
Remember, only in 2019, that the business roundtable redefined its purpose of a corporation and said, “It’s no longer just about the profits. Now, companies are really here for all stakeholders. And we’re going to get employees, and the climate, and everyone else first. And investors will get their share. But they’re not going to be who we make our decisions for.”
Three months later, COVID hits, mass layoffs, mass furloughs. And there was a study that showed that even the companies who signed the business roundtable pledge were more likely to institute mass layoffs in the wake of the pandemic than the companies who didn’t.
And so, I think we just got to be real skeptical of how quickly we expect these companies to move. I’m all for it. I think it’s the right thing. But we just got to be very clear-eyed about how we measure our progress.
[00:23:20] DR: It’s interesting, we actually helped Microsoft get rid of that stack ranking process and put something in focused on just people having conversations. We did that work with them that continues to this day.
[00:23:31] DG: Let me ask. If you did that work, David, just give us a snapshot. What was it like when you went in there and you said, “Okay, we have to help you undo this?” What was the effect of stack ranking in Microsoft? What does that do? This process of ranking your employees by best, middle and poor performers and saying the poor performers, that bottom 10%, every year, no matter how well the company is doing, you’re fired?
[00:23:54] DR: Yeah, yeah. I mean, we actually did a lot of research on this. Our early work that really scaled was around transforming performance management. And in some ways, we feel this connection with GE, because they kind of started the force ranking. And also, the force distribution. Sort of the same thing. But you got to have a certain percentage. You got to let go of a certain number each year. You can only have a limited number of the top. We did a ton of research over a decade on this and ended up advising not just Microsoft, but dozens of big organizations on kind of how to get rid of that sort of focus on the rating and the getting rid of people.
The trouble is, it feels right to have the single number. But there’s this non-obvious cost where you’re hiring 10,000 people who’ve all got an A or B their whole life, and you have to tell half of them that they’ve got actually a C or a D. And it’s not just dehumanizing. It’s creating a lot of unnecessary noise. And it was not obvious for a long time, unless you really track the data.
We ended up writing a piece called Kill Your Performance Ratings, which became a really big, widely shared piece or kind of rethinking the whole performance management. A lot of our early success a decade ago came in that space.
But the cliff note is people react really badly to being dehumanized. And having a plan, like 10% out of a year or 5% is really dehumanizing. Having a plan, like, you’ve got to have X% in each category. Really dehumanizing. And it affects people’s sense of status, their sense of control or autonomy, their sense of fairness, right? They have competing goals with their boss around shared goals. So it creates a threat in kind of four out of five things that matter to people. So that’s really what’s going on?
What do you think would have been some of the biggest turning points maybe positively as we sort of swing towards more human organizations? And maybe you mentioned a couple. But what do you think some of the biggest turning points have been, say, in the last 20 years since Jack? Where we’ve started to point in the right direction?
[00:25:51] DG: The financial crisis of 2008 was really a watershed moment and I think sort of gave [inaudible 00:25:56] to the line that corporate America and the bosses had been putting forth for so long that a rising tide lifts all boats. And if the stock market was going up, and everyone was going to be okay, right? We saw in those few months that year, the fact that lives across the world, financial well-beings were absolutely decimated, that governments, for the most part, bailed out the corporations, and effectively the executives, while leaving individuals and homeowners holding the bag. And then there was zero accountability for the people who have made these decisions.
And so, I think – Listen. Again, I’m careful not to give too much credit where it might not be due. But I think it was hard for CEOs and executives coming out of that experience to make the case with a straight face that the status quo was working, and then everything was just hunky dory, and the system was working fine. It just clearly wasn’t. I think what we’ve seen, CSR and ESG, you mentioned stakeholder capitalism, whatever you want to call it, I think all of that is at some level a response to the global financial crisis.
And, listen, I think how we respond to the pandemic. And this story is not over yet. I think it was going to be really defining, right? Whether it’s work from home, whether it’s how we treat our lowest paid employees, these big fundamental questions about what the relationship is between employers and their workers, the pandemic has just brought it into focus in a way that I think we just haven’t seen in our lifetimes, frankly.
And I think companies, through the labor shortage, through new work from home policies, through the rising unionization efforts across the United States are being forced to really dig deep and try to understand what are their values? How do they want to show up when they interact with their own employees? And that’s going to have a whole sort of ripple effect of policy decisions that I’m eager to watch them play out.
[00:27:58] DR: Yeah. I know it’s really interesting. Lots of different directions we can take the conversation. The pandemic obviously created this absolute necessity to care more about your people, because people were so exploding in their feelings. But we saw a kind of more thoughtful leadership style emerge. Obviously, the George Floyd incident and the incredible racial crisis we’ve had has kind of forced people to take stock of others feelings, and incredibly deep feelings.
But I think there’s still this incredible goal focus in organizations that sometimes just overrides the people focus. And I think of those as two kind of sides of a seesaw, right? Goal focus and people focus. I wrote a piece for Fortune a couple of years ago about kind of how organizations fail when they just become too goal-focused, and they forget about the people focus. I think that’s what’s going on.
I want to take this to empathy a little bit and sort of shift gears a little bit. Have a bit of a conversation about kind of some of the research we’ve been doing and get your view on this as well. So, we’ve been studying this question of how do you get more empathy in organizations? There are three data points here that I think kind of make you stop in your tracks a little bit. And this is last year. This is fairly recent. Only 25% of people think their organization is empathetic enough. That’s not very many, right? People really want the organizations to be more empathetic. I think if you took that statistic in the 50s, or 60s, or 70s, you probably see a much different picture. Maybe it was not 100. Maybe it was 50. Maybe it was 60. Maybe it was 70. But that’s a quarter of people think empathy is sufficient there. That’s a problem, right?
What’s interesting is that the other two numbers, 68% of CEOs fear a loss of respect if they show empathy. They kind of feel like, “I have to be very Welchian, or people won’t respect me. If I’m not hard-driving, I won’t be able to get my job done, right? I have to be tough.” And 70% say it’s actually hard for them to demonstrate empathy at work. It’s really interesting. Any comments on these statistics? Any reflections there?
[00:30:03] DG: Yeah. I mean, this is like this the story of our times. I wish I had the – I would have used these numbers in my book, but I hadn’t seen them, because it speaks to this gap between what people need and want, and what CEOs are willing to give.
And I think that the question that this prompted me is like, why, right? Why are CEOs so fearful? And why is it hard for them to demonstrate empathy? Or people can write dissertations about the answers to those questions. But to me, part of the answer gets to this question of incentives. And who is the CEO leading for? Who are they? This gets to sort of the agency theory of Jensen and Meckling, which I talked about in the book. But we don’t have to go into all of this.
But there’s a supposition that sort of a default assumption in corporate America today that CEOs are essentially the agents of their shareholders, and that they are working on behalf of shareholders. And that their number one job is to make money for the people who own the stock of their companies. And from that perspective, that I think is, to me, some of this sort of root answer, where the stockholders don’t care if you show empathy, right? So why should I? But the employees, the people who are actually doing the work showing up every day in your organization, they need to be humanized. They need to feel that connection. These are the numbers that need to move. We’re going to get to a better kind of capitalism.
[00:31:34] DR: I’m glad you agree. We have a hypothesis on why the gap is there and what to do about it. And our strong hypothesis is that they don’t know how to build – They don’t know how to show empathy. And so, when we started this research, one of the things we do as a research institute, we do lots of different types of research. We’re synthesizing insights from neuroscience labs all the time. But we’re also listening to organizations. And a question we asked organizations all the time is, “What’s your biggest challenge right now that you’re investing in, and like putting resources in but not getting movement on?” And about six, seven years ago, it was actually bias. And we ended up building a whole framework for bias. Right now, it’s actually empathy. And it’s been for about a year.
It’s this interesting thing that it’s actually an outlying gap. Empathy is this weird thing that is a much bigger gap than anything else. Like, the next biggest challenge was significantly down. In fact, the US is a huge outlier in terms of GDP. The next one down is much smaller, everyone else.
Empathy is a challenge. It’s a much bigger challenge than anything else right now. And it’s interesting, this is despite people being trained in it, and everyone reading books in it, and everyone supposedly knowing how to do it. You might just say, “Well, it’s a motivation problem. And there’s not enough will.” And there is some pretty good research that when you motivate people differently, they can show more empathy. For example, there was a study done a few years ago that tackle the question, “Are women more empathetic than men?” It turned out that if men were motivated the right way, they were able to have as much empathy. There wasn’t a biological difference in their ability to show empathy. But it did require motivation, which is kind of fascinating. We could dig into that another time.
But we think a part of the problem is that we’ve actually been taught empathy wrong. And we’ve been following this. Actually, started following this research over a decade ago. But we got really serious about it about three years ago. And we’ve had multiple researchers come in and refers. And we’ve been doing a lot of thinking about this for quite some time. And we’ve come to see that the common way of thinking about empathy might actually be creating part of the issue.
And so, I’ll give you what we’ve been looking at. Empathy is sort of – We always think of it as one thing. Actually, it turns out to be three things. And to address that and do better, we need to think about it as three things.
Now, the first thing I’ll say is we actually want to talk not about empathy, but about quality connections. Because when you’re talking about goal-focused people and driven people, CEOs or any leader, you’re going to start to get them switching off even when you use the word empathy. But we think like the essence of empathy is actually an accurate connection between two people, where one person really understands the other accurately. And information is shared and adaptive actions follow, right? But there’s a lot of misunderstanding of people’s feelings, intentions, goals, all of that. We saw it as three different stages. And there’s really huge amount of research illustrating this.
And the first stage of this is somewhat automatic. There’s a mirror neuron component to it, but it’s more than that. This first stage, which we call emotional, is literally sensing what someone’s feeling, but you don’t necessarily understand it. Right? So you can look at someone while you’re on your phone and you might not notice what they’re feeling. You also have to kind of tune in, which is that first step. You have to pay attention to what someone – To literally pay attention to someone’s voice, choice of words, facial cues, everything. But you once you pay attention, once you tune in, you can really center something up with that person, right? But you don’t necessarily understand it.
The real challenges happen in the cognitive stage. Now, we did some research on this called perspective taking. Sometimes this cognitive stage is called perspective taking. We published a piece of research on this a couple of years ago. And this is where you actually understand why someone is feeling a certain way.
And what’s really fascinating is that as a bunch of biases that get in the way massively and drawing from the SEEDS model in our work that there are there are three specific biases that have you try to understand someone and basically fail. And you try to understand someone and you end up only – Well, you end up correlating your own experiences with them. You end up jumping on to first impressions. You end up believing your perceptions. There’s a whole bunch of biases that get in the way.
But there’s something even more poignant than this. What we found is that when you tell people to try to understand someone, when you say, “Hey, put yourself in someone’s shoes.” What happens is you actually become more confident that you understand people but not more accurate.
Now, I want to say this again, because it’s quite life changing when you really understand it. When you tell people to try to have empathy, when you tell people to try to understand what someone is feeling, what humans do is – The way we cognitively process this is we literally imagine ourselves being there, right? The metaphor is putting yourself in someone’s shoes, right? But you’re putting yourself, right you, in their shoes. There is no way with your working memory which can barely hold three or four chunks. There is no way with that limited working memory we can actually imagine being that person. All we can do is imagine ourselves being in that situation. And what happens is, the harder you try, the more confident you get you understand them, but actually don’t get any more accurate. It’s crazy.
The way we’ve been taught to have empathy is trying to understand. And our perspective on that is give that up. If don’t try to understand at all, actually ask questions. And so, the second stage of this is inquire. And the third stage of this – Or just to go back, rather than like trying to understand them in quiet.
The third stage of this is extend options. Now what we mean here is the third stage of empathy is doing something, right? So, you pay attention. You understand someone’s real motivations. And then you try to help. So, empathy includes a helping component. What happens with this helping component is people are usually at one end of the spectrum improperly. One end of the spectrum is essentially, “Oh, you should do what exactly I did last time I had this problem and do this,” right? And you get evangelical about your solution.
You get overly prescriptive. When you do that, people react. They become like, “Oh –” They give autonomy threat, a status threat. Either people are overly prescriptive, you have to do this, or they become too vague, and say, “Well, how can I help?” which puts the sort of effort back on the person you’re trying to help to come up with ideas? We think the third stage is don’t say, “How can I help?” Don’t tell people what to do. Say, “Look, here are a couple of ideas. What do you think?” Give people some autonomy in that process.
For us, this is a somewhat new framework for us. We’re starting to launch it into organizations. But essentially, like, you got to pay a lot of attention, you’ve got to actually ask questions, and you got to provide options. And it’s a really different way of thinking about empathy overall. What’s your reaction to this? And what are your thoughts, David?
[00:38:24] DG: It all makes sense to me. I think the challenge is, for me, I keep coming back to this work of incentives. How do we get CEOs of big corporations to actually focus and make decisions based on this? How do we get them to tune in? How do we get them to inquire? Not easy?
[00:38:43] DR: Yeah, it’s interesting. Our bread and butter is trying to get or getting people who are very rational, somewhat cynical, very logical-driven, goal-focused to care more about what you might call soft skills, or people skills, or human issues, social issues, right? All of that.
And one of the big things that we found is like meet them where they are, right? Let’s talk science. And that’s incredibly helpful. But the other thing is to triangulate with something – Like, to triangulate to something that leaders already want, right? Other than saying, “Hey, we want –” Because otherwise, people will hear it as, “Oh, you need to schedule more like two-hour meetings with people to show that you care.” And no one has the time for that, right?
So, you got to sort of meet people where they are and say, “Look, what percentage of the time do you think people really understand you? And when you say something, they go and do it and they completely understand you? And when was the time do you say something and people seem to have just gone off and done something completely different? Right? And actually, that happens a lot. And what do you think about the other way? How often is it that there’s a missed connection? Like, we really don’t understand each other. Or even outside of you and your teams, how often do you see people misunderstanding each other all the time, right?
And so, we’ll use a metaphor like computers are 99.999% accurate. If you send an incredibly complex PowerPoint around the world with really complex animation, sometimes the animations will be buggy. But everything else seems to get through. Like, they’re really good at sharing information. Humans are terrible. Humans are like 50%, 60%, 70% accurate at exactly what’s in one person’s head landing in the other person’s head, right?
And so, we’ll say, “Look, how do we increase the quality of connection between the humans?” And how do we increase the quality of connections between the humans literally, so that information is shared more accurately? So that’s one kind of, I guess, with them or what’s in it for me that that I think is really helpful.
The other thing that we’ll talk about is – And this is a big issue right now, resilience, burnout, people feeling exhausted. When you ask people, what’s going on a really common thing is my managers doesn’t seem to care. My leaders in the business don’t seem to have any interest in what’s going on. My manager doesn’t seem to care. And so, there’s a real issue with retention and engagement, and particularly retention, because people ae feeling like the company doesn’t care, whatsoever.
I think there’s a real motivation right now in the form of kind of culture, and efficiency, and productivity to say, “We need to do some work on just literally how well people connect,” particularly in a virtual world, particularly when we’re actually not with each other very often. We kind of need to work harder on this.
Yeah. Any thoughts from your side, David? What’s coming up for you?
[00:41:34] DG: Well, listen, I think I’m reminded of all these news stories we’ve seen in the last few months about CEOs firing large swathes of their team and mass over Zoom, and just the absolute lack of human experience in that.
And if there is a silver lining, I don’t know if we can call it that, the degree to which people have called that out as an example of what not to do I think is, again, sort of a suggestion that maybe there’s a change in the air. Maybe there’s something shift in the zeitgeist where people at least recognize that that’s not appropriate.
And the bigger question is, just what I keep coming back to, is like how do we actually move the needle? What is it going to take for a CEO to recognize that that shouldn’t be the way that we do it? I just learned of a friend yesterday who essentially had an experience just like that. They were called onto a Zoom meeting and told, “You no longer work for this company. Your email and phone are locked. Thank you for your service.” And it’s like, “I’ve been with this company for years and years and years. And this is how you’re treating me?”
And so, I don’t know what the answer is. And I try to talk about policy solutions in different ways you can actually move the needle. But I don’t know if there’s a policy solution that can prevent that kind of sort of brutal management tactic from actually taking place. If anything, I think it’s got to be like public shaming, and a recognition, and that those kinds of companies are not ones that people are going to want to work for. But beyond that, it’s really hard stuff to change that kind of behavior.
[00:43:02] DR: Yeah, I think there’s these feedback loops now that we never had before that is kind of starting to work. Like companies that do this do get shamed really quick. I mean, the cycle there is fast. I mean, we all heard about one manager at Apple that left because he was told he had to go back to the office. The feedback cycle is fast and kind of brutal when companies do these inhumane things.
I’m optimistic that there’s some kind of inbuilt motivations at the moment to do more human things. But I also think – There’s two things going on for me. One is it does take courage, right? I have a team of 200 people. I don’t have classic shareholders or investors, family-owned and held. But I can see the dynamic. Like, if I had to report to shareholders all the time, every quarter, literally, I can imagine having to make this trade off all the time of, “I’m going to care more about people. We’re going to invest a little bit more in them, versus we’re going to get our profit number.” And if you just care about the profit number, you’re going to keep prioritizing that and keep deprioritizing the people. Because you do have to make some binary decisions now and then, right?
At NLI, we’ve made the decision to develop more regenerative practices, which is even beyond sustainable. We want our people practices to have folks better every year as opposed to just sustainable. We want to model and copy the principles of regenerative practices from agriculture and the built environment and say doing that. But that actually costs money at times. Doesn’t always. But it costs money. It takes some courage, I think.
And one of the things I’ve noticed is that CEOs are likely to do things when other companies do them. We were talking with some banking people recently and we said, “What are you doing about Roe v. Wade?” And they said, “Well, we’re literally watching what Citi and JP are doing. And we’re going to do that.”
I think part of it is sort of they watch their peers. And people don’t want to be left out of that. That turns out to be one of the biggest motivators. People do things because everyone else is doing it. It’s part of the biggest motivator.
The other thing I think – And this is just maybe really practical, is we need to make it easy to be more empathetic. We need to make it easy to do what’s right. It’s easier right now to be goal-focused. Goal-focused is more tangible, more concrete. So, it’s easy to think about. So how do we make it more tangible, more concrete to be slightly empathetic? And what’s involved in that?
And so, for us, it’s like let’s put extremely simple guides at the point of use in people’s technology. Let’s have like little nudges that remind people of better ways of having empathy. Let’s have this kind of stuff pop up right when you need it. So, we’re sort of imagining different ways of making this stuff easier so that people build habits across the board. That’s sort of where we’re going. But what you don’t want is people pretending to have empathy on one level, right? You don’t want folks sort of having empathy because they’re being told to have empathy.
Tell me, last couple of minutes, tell me your hope for the future as you finish writing the book and as you’re out there talking about it. What’s your hope for the future as we move past the Jack Welch era? Coming back to the book, what’s your hope for the future about kind of leadership now and leadership going forward? What are you hopeful about?
[00:46:20] DG: Yeah, I hope that the people leading our biggest companies and our organizations really are able to answer the question of who are they leading for? Are they leading for themselves, and their own egos, and their sense of accomplishment? Are they leading for their investors and their shareholders? Or are they leading for this much broader constituency of the people who work for their organization? The families of those people? The communities that all those people live in, as well as themselves, and their shareholders, and everyone else. And I think absent that crucial component, which is the people in the heart of these companies, and the people in the communities where they live. It’s just going to be more of the same.
I’ve been heartened over the last month since the book came out to see the reception. People want to have this conversation. Because there is this recognition. You go around. You look at the headlines. You walk the streets of a city, just about any city in the country. And the problems are just so glaring for us to see right now.
And part of that solution, part of the work of repairing this damage that this model of leadership, that this model of capitalism has inflicted on our society over the past half century, starts with CEOs rethinking who they’re working for. If we’re just working for The Wall Street analysts who want a certain number at the end of the quarter, it’s going to be just the same old story. If we can start to rethink who we’re doing all this for, what the incentive structures are, and how we reward and define great leadership, I got a glimmer of hope that maybe things will get better.
[00:48:00] DR: Yeah. No. That’s great. David, I was at Harvard Business School a few years ago. There was an ethics symposium, a two-day conference about ethics in business schools. And Nitin Nohria was there, who’s the head of HBS at the time. And he said something that’s always stuck with me. He said, “We get these amazing kids,” they get kids in their, “who have these really good values, and we spent several years beating them out of them.”
And I think the business school, changing the way we think about value in business schools, changing the way that we teach in business schools as a piece of it. The thinking more holistically about what to value and how to value. And ironically, all the data is showing that the more you care about humans, actually, the more successful your company might be.
It’s getting people to think more holistically about these things. And don’t just be goal-focused. But be goal-focused and people-focused, right? Don’t be one or the other. Completely stuck, right? Integrate both. But thank you so much for being here. Appreciate it a lot. Take care yourself, David. Bye-bye.
[00:48:59] DG: Thanks, man. Thanks, everyone.
[00:49:02] SW: Your Brain at Work is produced by the NeuroLeadership Institute. You can help us make organizations more human by rating, reviewing and subscribing wherever you listen to your podcast. Our producers are Matt Holidack, Mary Kelly, and me, Shelby Wilburn. Original music is by Grant Zubritsky. And logo design is by Catch Wear. Thanks for joining us. And we’ll see you next week.