Claire Logan, head of people and talent at PA Consulting Group is quoted in an article in Ignites Europe, a Financial Times title covering the European fund industry. The article looks at empathy as a critical skill in fund management and how empathetic leaders can have a positive impact on culture which can help to boost business performance and retaining talent.
Claire says that the ability to understand what others are feeling makes for effective leadership but also more ethical organisations. Without empathy asset management leaders are at risk of becoming insular in their perspective.
Claire goes on to say that business success depends on empathetic leaders who are “intimately aware” of what is going on in their organisations both internally and externally so they are able to build on the strengths around them.
“Leaders will get the most out of people through openness and understanding of their feelings and emotions,” she adds.
Claire talks about what empathy means for business relationships: “Effective relationships enable employees and their leaders to work powerfully together. That’s critical in enabling the creative thinking that will drive innovation and future growth.”
Claire explains that a fund firm with empathetic employees will reduce the fear of ridicule in sharing new ideas and create a culture where there is a focus on the future development of the organisation: “Empathetic employees will be critical to engaging effectively with customers who will increasingly be driving the development of products. In contrast business and ethical failure often results from leaders who stop focusing on understanding their environment intimately and are insulated in their own operations,” she says.
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However, Claire acknowledges that there are “limits to empathy” in that it can lead to poor decision making. Even in empathetic organisations it is still important to carry out rational assessments, and sometimes leaders and employees will need to make decisions that have a negative impact on others, she says.
“However, empathy is a critical skill and leaders should actively work to ensure that it does not get eliminated in those with power in the organisation,” she adds.
Claire goes on to say that cultivating empathetic employees requires clear human resources policies and other processes to support it: “Fund firms will need to do more to incorporate empathy into the way they do business.”
At present they are “too focused” on spreadsheets, financial models, and the potential of artificial intelligence and automation, she says.
Another challenge facing firms is that not all leaders are blessed with empathy: “The solution is to find leaders who have enough emotional intelligence to identify who in their team can read a room, keep tabs on the mood in the business and then use that individual to inject that empathy into decision making,” says Claire.
Claire concludes: “By getting a greater diversity of leadership styles and emotional intelligence into investment institutions we should see a change in how they go about their business and adapt to meet future challenges.”