A fundamental concept to Adam Smith’s economic theories in The Wealth of Nations is that people act according to their individual self-interest.  His The Theory of Moral Sentiments though acts as a type of counter-balance to the Wealth of Nations.  Sure, people have the natural tendency to look after themselves, and to balance that, they have the natural tendency to have empathy for others thus ensuring human survival.

While models of proactive business leadership often feature the self-interest policies of a company, like policies that should increase the bottom line, leadership ideas have often neglected the compassionate.  By throwing too much of the weight to individualism, The Wealth of Nations, qualities that add cohesiveness to organizations, The Theory of Moral Sentiments, are ignored.

A growing body of leadership and organizational psychology studies are rectifying the balance between the two and are showing that working for social cohesion contributes to the wealth of the company.  A study “Compassion Revealed: What We Know About Compassion at Work (And Where We Need to Know More)” released by four US and Canadian B-School professors, looks at how compassion increases a company’s profit though decreasing turn-over rate, a heightened sense of community and belonging, a higher commitment to organizational citizenship and decreased period of low productivity due to anxiety following a personal trauma. Secondary benefits include increased collaboration, transparency and better horizontal and vertical work relationships.

Take for instance what happened when a call-center company called Appletree consciously set about increasing compassion among employees. The company set up the equivalent of a “Make A Wish” foundation to serve its adult employees, which it called “Dream On.” The CEO, John Ratliff, claimed that the gambit changed the culture of his company. (Call centers have a notoriously high turnover rate, largely because the employees listen to unhappy callers all day.) The Dream On program allowed employees to express compassion to each other on an everyday basis. As a result, the company’s turnover rate dropped from 97% to 33% within six months.

Though it seems pretty basic that employees will respond compassionately to their colleagues’ trauma, workplace systems and physical space often hinder this outcome.  Many companies decrease time for rich forms of interaction through productivity schedules that are too demanding or meetings that call upon the same small group over and over, thus creating an insider social group that may practice compassion to others in their group but don’t practice compassion to those outside one’s group.  Also, simple design elements, such as cubicles or reduction in seating space in the snack shop, reduce potential interactions.

Of course, the biggest factor to increasing compassion is managerial behavior.  Both symbolic and integrated behavior from the leaders can establish and reinforce values that let others know it is appropriate and necessary to know about each other’s’ lives and pay attention to the pain and suffering of organization members.  One way physically show empathy towards the affected individuals is through facial expressions and body stances.  To make it be real though, leaders should be open in expressing a full spectrum of emotions.  By demonstrating compassionate responses, employees see that it is a worthwhile endeavor, thus empowering them to spend valuable time supporting their colleague.  Concrete behaviors can be reducing a person’s workload so that they can process the traumatic experience or setting up systems by which colleagues can care for personal needs of the affected person through meal preparation, childcare or transportation to and from the doctor.

Back to the original question, compassion indirectly and substantially adds to the bottom line by developing a work force committed to each other and the organization that cares about them.