And now, taking care of business, your hosts Craig Moen and Shye Gilad. Welcome to Business Owners Radio episode 231. Our guest today is Heather McGowan, author of the new book "The Empathy Advantage: Leading the Empowered Workforce" with Chris Shipley. Heather is an in-demand internationally known speaker and future of work strategist. She has assisted corporate clients ranging from startups to Fortune 500 companies in rethinking their business models, teams, and organizational structures to become resilient in changing markets. Her academic work has included roles at Rhode Island School of Design and Jefferson University, where she was the strategic architect of the first undergraduate college focused exclusively on innovation. Shye and I are so energized to have her on the show today. Good morning, Heather. Welcome to Business Owners Radio.
Heather: Thanks so much for having me.
Shye: Yeah, we're very excited to talk to you today about your new book, "The Empathy Advantage: Leading the Empowered Workforce." Tell us, what inspired you to write this book?
Heather: Well, I make my living as a keynote speaker, and I had written a book called "The Adaptation Advantage," which came out in April 2020. I don't recommend launching a book in the middle of a global pandemic. But I did. And I found that the book was an accidental guide to how you navigate the pandemic. It was a prediction of things I thought would take three to five years, and they happened in three to five months, in some cases three to five weeks. So as I carried on with my speaking, I noticed all the things I had predicted to take place further out in the future were happening. And those required another set of changes. So I started on the second book, which is called "The Empathy Advantage: Leading the Empowered Workforce." It came out of a change in the relationship between individuals and organizations, and a fundamental change in how we operate in business that requires leadership shifts. The book came out of seeing changes taking place in real-time during the pandemic.
Shye: That's amazing. I mean, you know, first, I want to thank you for validating me not releasing a book that I was working on that overnight seemed to become irrelevant during the pandemic. But on the flip side, I also want to talk about how interesting it is that your work really informed and, I'm thinking, probably made this book even better. You must have learned a lot during that process.
Heather: Yeah, I certainly did learn a lot. I mean, as a keynote speaker, I learned a lot because I get the opportunity to speak to all sorts of companies all over the world, from military to finance to yesterday, I was at a healthcare event. I just got in at two o'clock in the morning last night, but I was at a healthcare system yesterday. The week before that it was education, and before that, it was oil and gas. Sometimes it's three times a week in three different industries. So when you see that many organizations at the height of crisis, panic, uncertainty, and ambiguity, you certainly learn a lot, no doubt.
Shye: And when I think of the five large ideas in this book that you put together, these are terms a lot of us have heard, but I'm not sure all of us have defined them or we may have different definitions for them. So I'm thinking about things like the Great Resignation, the Great Refusal, the Great Reshuffle, the Great Retirement, and you also talk about the Great Relocation. Help us break that down to set the stage for really understanding the driving forces behind the need for your work.
Heather: Sure. So everybody was hearing about the Great Resignation in 2021 and early 2022. I tracked down Anthony Clocks, who's the individual who coined that term and had been looking at talent market churn for some time. I interviewed him for this latest book, "The Empathy Advantage." And one of the things I started to realize in talking to folks, traveling around, and having conversations with Anthony and other experts is that it really wasn't one thing. It was a series of things. And I, I like alliteration, so I found a bunch of great words. The first is the Great Resignation. People thought of that as a phenomenon that happened between 2021 and 2022. But in reality, the trend has been building since 2009. You can draw a straight line up from 2009 with a little dip during the first year of the pandemic. What that means is talent is mobile, and talent is mobile for three reasons. First, we realize that with the speed of change of skills and knowledge, it doesn't make sense for a lot of folks to be in one organization for a very long time if it's not providing them constant opportunities to learn because those are opportunities for future earnings. So I say things like learning is the new pension. It's how you create your future value every day. Investing in yourself, your learning, and your organizational capacity is the greatest investment you can make.
As individuals or organizations, people are witnessing the speed of change. If an organization is not investing in those changes, it's time to hop to somewhere else where a greater investment in oneself can be made. This trend has been building due to generational and attitudinal changes in the workforce. With boomers exiting and Gen Z entering, a shift in perspective occurred during the existential crisis of the pandemic. Many individuals questioned their life's purpose, connection to their values, and working to their potential. Underemployment and lack of appreciation also contributed to significant job changes. This level of job hopping may not continue at the current rate, but Gartner estimates it to be around 20% going forward.
Labor shortages are another factor fueling this trend. Unabated labor shortages are expected for at least a decade, if not two. The Great Resignation is one piece of this movement. However, several other factors underpin it. The Great Retirement is marked by 75 million baby boomers retiring between now and 2030, significantly impacting the workforce. The Great Rescaling and the Great Reshuffling involve people moving across industries and functions. In fact, 53% of job changers between 2021 and 2022 moved to different industries, functions, or jobs, indicating individuals working towards their potential.
The Great Refusal refers to people refusing to tolerate low pay and poor working conditions. This sentiment emerged during the pandemic when frontline workers faced harassment and inadequate compensation. The overdue change in treating employees as assets and investing in their well-being is critical. Lastly, the Great Relocation is driven by the availability of remote and hybrid work, as well as the desire to align work with personal life goals. Many individuals are opting to live in locations that resonate with them and then finding work opportunities accordingly. Upwork estimates that around 19 to 20 million Americans are actively exploring this lifestyle.
Collectively, these trends contribute to the Great Reset and the emergence of an empowered workforce. To engage this workforce, leaders must recognize their sense of purpose, invest in their learning and future potential, and create caring and inclusive work environments. The changes leading to this transformation have been long overdue, and it is crucial to seize this moment for a better future. Addressing inequities and shifting the value proposition of work are vital aspects of this transition. Recognizing individual drivers and motivations and moving away from the always-on hustle culture are necessary steps towards a more engaged and sustainable workforce.
During this transition, businesses must embrace accountability and focus on building relationships, fostering a positive mindset, and creating a supportive culture. Treating employees as disposable will hinder long-term success. Layoffs should be the last resort, as retaining and engaging employees is key to organizational well-being. The work of the future will demand uncertainty, collaboration, and psychological safety. Establishing trust and providing a supportive work environment are essential for thriving in the face of technological advancements and evolving job requirements.
But the businesses that are going to do well are going to focus on a niche market that they can defend and treat people like the best assets they have, which they are. It's interesting how many different industries have assets like people, equipment, and machinery, and they align resources and budgets to maintain the hardware of their business. However, they don't align funding to grow and maintain their human assets or their team members. This is a big shift, and the costs can be significant. But the return on that investment needs to be understood by business owners, valued, promoted, and nurtured.
There are some best returns on corporate investments in their people that we discuss in the book. One aspect is looking at the cost of not investing in people, such as the cost of losing and replacing employees, training new hires, and the loss of productivity, continuity, and morale. It is more expensive to acquire someone after losing an employee than it is to retain them. However, we often pay more for new hires than for existing employees. Transparency around pay can help change this mindset. Some organizations are making pay transparency a requirement by law, and it will be a challenging journey. Another approach is implementing transparent pay bands, as seen in academia, where employees know their band and can assess if they are being fairly compensated.
Additionally, there are returns on investment in people that we don't fully know yet, similar to how we didn't know the returns when investing in technology. We need to overcome the reluctance to invest in humans when the returns may not be immediately apparent. The shift toward recognizing humans as the greatest source of value is underway. The value of companies on the S&P 500 is now 90% intangible, comprising ideas, patents, and human activity. This highlights the need to shift our thinking, mental models, and treatment of humans within organizations. We need to recognize humans as assets rather than liabilities and account for them differently.
For brick-and-mortar businesses that rely on a geographically located workforce, the shift can be both terrifying and wonderful. Empowering more of humanity is a massive change, and these businesses need to become customer-obsessed. They should focus on providing experiences that customers can't find elsewhere. This applies to bookstores, coffee shops, and any place where human interactions play a crucial role. By creating a unique and valuable customer experience, these businesses gain a significant competitive advantage.
Regarding culture and leadership, there are four key shifts that need to occur. First, there should be a shift in mindset from managing people to enabling their success. Leaders need to recognize that their role is to work for their people and support their success. The second shift is a cultural shift that moves away from pitting employees against each other and towards fostering collaboration and a sense of community. The third shift is an approach shift, moving from extrinsic pressure to intrinsic motivation. Leaders should focus on understanding and tapping into their employees' internal drive. The final shift is a behavioral one, where leaders prioritize inspiration, care, love, and belonging over domination, fear, and humiliation. By embracing these shifts, leaders can establish trust, psychological safety, and create an environment where employees thrive.
In terms of concrete tips for leading with empathy, leaders can start meetings by asking what's on their team members' minds, allowing everyone to express their thoughts and concerns. This practice helps create a connection and allows team members to share what is consuming their thoughts, whether work-related or personal. Additionally, leaders can show care and vulnerability by asking if there's any way they can help their team members. This demonstrates a genuine interest in their well-being. Finally, leaders should establish a feedback culture by asking for feedback and offering their own. This exchange fosters trust, shows a genuine interest in the success of team members, and establishes an empathetic leadership style.
Motivation, I have to get to know them as individuals, so I know how to motivate them. Now, Dan Pink proved years ago in his book "Drive" that intrinsic motivation is far superior to extrinsic pressure. But we need to learn that, especially if we want to get our people self-propelled and in touch with their own internal drive. The fourth shift is a change in behavior. We used to value leaders who were unquestioned experts and liked dominating, instilling fear, and even humiliation. However, that approach doesn't work anymore. As leaders, we need to turn toward effectiveness through inspiration, caring, love, and belonging. These are the four shifts: mindset, approach, culture, and behavior. They take us almost 180 degrees away from how we used to select leaders.
Heather, you've given us much to think about today. As our time comes to a close, can you share a concrete tip from your book that leaders can implement to start leading with empathy? Certainly. Whether you manage remote teams or in-person teams, our tendency is to jump into meetings and go through to-do lists, asking about progress. However, this isn't truly motivating. To establish a connection and create a more meaningful meeting, start by allowing everyone to share what's on their mind. Let them express their thoughts and what's consuming their focus at that moment, whether work-related or personal. By doing this, you allow them to get those thoughts out and provide an opportunity for deeper engagement. Additionally, ask them about their focus and then transition into discussing their work. As a leader, acknowledge that you're leading people with skills and knowledge you don't possess, and ask if they can help you in any way. This demonstrates care and vulnerability. The ultimate goal is to establish trust and psychological safety, and one way to do that is by displaying vulnerability, asking open-ended questions, and actively listening without interrupting. Right now, your team members are likely on the verge of burnout and may be dealing with mental health issues. Your primary job is to help them focus, thrive, and prioritize their well-being. Therefore, ask those two open-ended questions and inquire if there's anything you can do to support them. Create an open exchange of assistance. Lastly, establish a feedback culture by offering feedback and inviting them to provide feedback to help you improve and make them successful. By turning the tables and showing genuine care and interest, you establish trust and psychological safety as an empathetic leader.
It's a shift from positional authority to relational authority. Thank you so much, Heather. We truly enjoyed our time with you today. Thank you, Craig. I appreciate you having me on your show. I know you have many options for guests, and I'm grateful for the opportunity. To the audience, thank you for your time. Time is your only non-renewable resource. Let's remember that money is finite, but time is infinite, and we should make every moment count. Make meaningful investments in your life. If you want to connect with me, visit heathermcgowan.com to find information about my books and speaking engagements. I love engaging and learning from others, so feel free to connect with me on LinkedIn (Heather E. McGowan). I appreciate any input that helps me learn and grow. Thank you for your attention, and I look forward to connecting with you.
Our guest today has been Heather McGowan, an internationally known speaker, Future of Work strategist, and author of the book "The Empathy Advantage: Leading the Empowered Workforce." You can learn more about Heather, find links to her book and LinkedIn profile, and access her content on our webpage at businessownersradio.com.
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