Why Is Empathy Important in Business?

Written by: Wilson College • Jul 16, 2026

A Smiling Business Leader and Their Employee Have a Conversation in an Office.

Success in business depends on more than having technical expertise or operational proficiency. It also requires a distinctly human characteristic: the ability to understand and respond to the needs, perspectives, and experiences of others.

According to Businessolver’s 2025 report on the state of workplace empathy, just over half of workers at organizations deemed to be lacking in empathy said they’d take a pay cut to work for a more empathetic employer. Meanwhile, nearly 75% of consumers said they would avoid doing business with companies that demonstrated a lack of empathy in a 2025 survey by Zurich Insurance Group.

Organizational leaders play an essential role in fostering empathy within their business. When they help set the tone of their organizations as empathetic, they can realize a host of benefits, from higher team morale to greater innovation. To create these kinds of environments, aspiring business leaders need to understand how empathy applies in business and why it matters.

Understanding Emotional Intelligence and Empathy in Business

Empathy is a core component of emotional intelligence, which refers to a person’s ability to recognize, understand, and respond to both their own emotions and those of others. In a business context, empathy is the ability to see situations from another person’s perspective and respond in a way that reflects that understanding. This capability helps leaders connect with their employees and build trust within their teams.

Empathy is considered a defining characteristic of effective leadership . Ernst & Young’s latest report on empathy in business revealed that 87% of U.S. workers believe empathy leads to better leadership.

Employees who feel understood and supported are generally more comfortable sharing their ideas and raising their concerns, and are often more motivated to perform at a high level.

As artificial intelligence (AI) and automation continue to reshape the workplace, empathy remains a distinctly human trait that technology can’t replace, and one that directly contributes to business success. Leaders who develop emotional intelligence and practice empathy are better equipped to support their teams, navigate any challenges that arise, and create environments where their employees can perform at their best.

Examples of Empathy in Business

Empathy can show up in many ways in a business setting. Employees may demonstrate empathy toward each other by offering constructive feedback to a co-worker on a project or stepping in to help when a colleague’s workload becomes overwhelming. At the organizational level, companies can leverage empathy strategically to better understand their customers’ needs and deliver more tailored products or services to them.

Business leaders play a key role in modeling empathy and embedding it into their workplace culture. Common examples of empathetic leadership in business include:

Checking in on employees: Empathetic leaders take time to regularly check in with their teams, especially during high-stress periods. Proactively asking employees how they’re managing their workloads and about their overall well-being can help leaders identify signs of overwork or burnout early.
Offering flexibility: Leaders demonstrate empathy by recognizing that employees have lives outside of work. Providing flexible scheduling or time off for employees as they navigate difficult personal situations helps them manage their competing demands while remaining engaged and productive at work.
Listening actively and validating employees’ concerns: Empathetic leaders listen attentively when employees share their feedback, challenges, or ideas. By acknowledging workers’ perspectives and experiences and responding thoughtfully to them, leaders reinforce their employees’ sense of trust and create an environment where they know their input matters.
Recognizing employees’ goals and aspirations: Effective leaders take time to understand their employees’ professional goals and motivations. Aligning each worker’s responsibilities with their strengths and interests can improve their engagement and job satisfaction.

4 Benefits of Empathy for Business Growth

When organizations prioritize empathy, impacts extend beyond employees’ individual relationships. An increased focus on empathy can elevate workplace morale, improve workers’ ability and willingness to collaborate, and drive greater productivity and innovation among teams, ultimately contributing to better organizational performance and long-term business growth.

1. Higher Employee Engagement and Retention

Empathetic leadership plays an important role in strengthening employees’ engagement and commitment to the organization. Recent reports from industry experts like McKinsey & Co. and Businessolver show that empathetic workplaces are associated with higher morale, lower burnout, and better mental health among workers. In contrast, employees who view their organization as not empathetic are more likely to disengage or seek opportunities elsewhere. Businessolver’s workplace empathy report notes that these workers are 1 1/2 times more likely to change jobs, which can result in turnover and its associated costs.

2. Improved Collaboration and Communication

When leaders exhibit empathy, it helps create an environment where employees feel confident enough to share their ideas and give and receive feedback. This can strengthen relationships among co-workers and improve communication across teams. A culture grounded in mutual respect encourages more effective collaboration and helps teams work together more efficiently toward shared goals.

3. Greater Innovation

Empathetic leaders help foster a sense of psychological safety in their employees, allowing them to express their ideas without fear of criticism or negative consequences. This openness encourages creative thinking and experimentation, both of which are essential for innovation. Psychological safety makes employees more willing to take initiative on projects and explore new approaches that improve processes, products, or services.

4. Better Customer Relationships

An empathetic perspective also enables businesses to better understand and respond to their customers’ needs and preferences. When companies demonstrate to their customers that they genuinely care about and understand them, they’re able to build trust with them and foster their loyalty. This, in turn, can lead to improved customer satisfaction and reduced negative feedback, giving empathetic organizations a clear competitive advantage.

Building Stronger Organizations Through Empathy

A growing number of organizations are recognizing that placing a premium on empathy in business interactions of all kinds is fundamental to effective leadership, particularly as technology continues to transform how organizations operate. Professionals who cultivate and express empathy are better positioned to support their teams and drive business growth.

If you’re looking for a business program that understands the importance of empathy, consider the Master of Arts in Organizational Leadership degree program at Wilson College Online. The program takes a human-centered approach to leadership development and can prepare you to lead in a myriad of business roles and settings.

Discover how Wilson College Online can help you become a more capable, confident leader.

Recommended Readings

Interview Techniques for Employers

Master’s in Organizational Leadership vs. MBA

4 Types of Leadership Styles Every Manager Should Know

Sources:

Businessolver, “2025 State of Workplace Empathy”

Center for Creative Leadership, “The Importance of Empathy in the Workplace”

Ernst & Young, “Authentic Empathy: The Key to Your Organization’s Business Success”

Forbes, “The Business Case for Empathy at Work: What the Research Says”

Indeed, “Empathy in the Workplace: Why It’s Important and How to Show It”

McKinsey & Co., “It’s Cool to Be Kind: The Value of Empathy at Work”