How The Empathy Gap Became a $180 Billion Organizational Problem

Forbes

3 days ago

Large group of business people sitting on a meeting in the office and having problems. getty
Empathy isn't a nice to have anymore; it's a business essential.
In a volatile market, organizations that prioritize empathy see higher levels of retention, increased employee engagement, and improved financial performance. Yet, companies still struggle to embed empathy into day-to-day operations.
For 10 years now, HR and benefits technology and consulting firm Businessolver, a past podcast partner, has released an annual empathy report to track workplace sentiment across CEO's, HR professionals, and employees. This year's 2025 State of Workplace Empathy Report links $180 billion in annual attrition costs to the gap between how empathetic leaders think they are and how supported employees actually feel. And yet, many leaders assume they're still doing enough: 89% of CEOs agree that empathy drives financial performance
But only 55% believe it is undervalued in their organizations
This disconnect suggests that leaders understand the value of empathy in theory, but assume it's already embedded in their culture. Meanwhile, employees experience something very different. And from where they sit, perhaps leaders can't see they may be wrong: While 73% of employees say that their workplaces are empathetic, the 27% who disagree are sounding the alarm
Over half of employees would take a pay cut to work somewhere more empathetic
72% say they'd consider changing roles, industries, or even careers
The report also highlights the human toll behind these numbers: Employees in unempathetic organizations are three times more likely to perceive workplace toxicity
They are 1.3 times more likely to struggle with their mental health
This leads to burnout, absenteeism, and disengagement
At the same time, a cultural shift around work expectations is underway: 72% of employees, 80% of HR leaders, and 85% of CEOs report being less willing to sacrifice their mental or physical well-being for their careers than they were before the pandemic
Flexible work hours and remote options are viewed as key signs of empathy at work, according to 91% and 88% of employees, respectively
72% of all respondents say they'd work longer hours for an empathetic employer
This reveals a bold workplace reckoning: Employees aren't just asking for empathy, they're willing to give more in return when they receive it. Overall, these numbers tell a story we cannot afford to ignore. Employees are asking for something deeper than perks; they want to be treated like whole people, not productivity machines.
Here's what leaders can actually do with this data:
Organizations often assume empathy is intuitive or unteachable. On the contrary, it thrives when it's deliberately developed through practice. Invest in professional development, workshops, and ERG talks on how to strengthen empathy and apply it practically in the workplace. One standout example is KKR's CEO Empathy Gyms , an immersive leadership development program that places senior leaders into frontline employees' experiences. When leaders truly understand the emotional, financial, and logistical realities their teams navigate daily, it becomes the difference between talking about empathy and actually building it.
If we're not tracking how employees experience support, inclusion, and flexibility, we're missing what impacts all other KPIs. Leaders must measure what matters. And while measuring 'empathy' in and of itself is not the organization's ultimate goal, companies can track other KPIs and assess whether a lack of empathy is dragging them down or how operationalizing empathy and upskilling leaders can drive better results. As Businessolver's chief strategy officer, Rae Shanahan discussed on The Empathy Edge podcast , workplace empathy is built on three pillars: professional support, whole-person support, and community support. These offer leaders a practical framework for assessing where empathy is working and where it's falling short. Pair empathy with accountability
Empathy and accountability aren't opposites; they're complementary. Empathetic leaders still set high expectations, but the difference is in how they motivate and manage performance. As I've previously written about what empathy is not : it's not about excusing poor performance or indulging mistakes, it's about seeing, hearing, and valuing people as full humans while holding them to high standards.
What should every leader take away from this? When empathy is present in our organizations, employees stay, thrive, and contribute at higher levels. But when it's absent, they walk, along with their talent and trust. Leaders can no longer afford to view empathy as a 'nice-to-have' or mistake it for indulgence; rather, we must see it for the strategic opportunity it truly is, because frankly, both our people and our bottom lines are counting on it.
As Businessolver CEO Jon Shanahan shares in the report, "Without empathy, there is only apathy. And I challenge you to find any leader who believes apathetic employees are good for business.'