Empathic leadership means better talent management and higher profitability.

How much is it worth to you to keep your ship alive until journey’s end?

Hopefully a lot more than British Sea Captains from the 1700’s. At least until they were compensated differently.

I’m an economics junkie and love reading about and listening to as much of it as I can.

NPR Planet Money is a favorite read and listen of mine. A recent podcast included economist Alex Tabarrok of George Mason University (and Marginal Revolution) relating this story:

Back in the 1700s, the British government paid sea captains to take felons to Australia. At first, it didn’t work so well, because about a third of the prisoners died during the trip.

This was scandalous in England. Government tried to regulate and improve, and clergy pleaded with the captains, but nothing improved.

Finally, an economist had a new idea.

Instead of paying for each prisoner that walked on the ship in Great Britain, the government should only pay for each prisoner that walked off the ship in Australia. And in fact, this was the suggestion which in 1793 was adopted and implemented. And immediately, the survival rate shot up to 99%.

[Holy mackerel.]

Here is the first, fundamental lesson of economics: Incentives matter.

Before the captains were paid to keep the convicts alive, they had different incentives — “like keep food from the prisoners, and then sell the food in Australia,” Tabarrok says.

Reward the captains for keeping the passengers alive, and — voila! — they arrive alive.

Indeed. But are you only just keeping your prisoners employees “alive” as to compromise the health of your organization, even though you’re still being compensated for selling out your products and services (or maybe not, which will make it a very short trip)?

Motivated when compensated, but probably not very empathic.

I’m no incentives expert, but I’m making the segue, so bear with me.

More recently, 186 sea captains (CEO’s) were studied in an emotional intelligence research project via Dr. Steven Stein and MHS. The study was published in the Leadership and Organization Development Journal, which I don’t have access to, but I did watch Dr. Stein present the summary yesterday as follows:

  • Those with higher emotional intelligence ran more highly profitable companies than those who didn’t.
  • Those with higher emotional intelligence were less challenged by managing people, growth, training employees or employee retention.

The results were of statistical significance as compared to the general public.

Empathic leadership means better talent management and higher profitability. And all the cool mushy stuff in between, too. Trust me.

Think about that the next time you’re sailing the seven seas.

Be better and brighter.

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