At its simplest, empathy can be defined as the ability to understand other people’s emotions and feelings. It helps us understand a person’s experience from their perspective. It encourages pro-social behaviour. Leaders first understand the other’s perspective and then respond. Whether in negotiation or to form leader-follower relationship, empathy is imperative to make decisions.

Toro, the lawn equipment manufacturer, is accustomed to lawsuits, due to the inherent hazards associated with using its machinery. During the late 1980s, the company was facing major financial troubles and put Ken Melrose in place as CEO. One of his first successes was reducing the company’s cost of lawsuits by implementing a new mediation policy, and invoking an important leadership trait: empathy.

Prior to Melrose’s tenure, Toro faced about 50 lawsuits every year involving serious injuries. He decided to switch to mediation to address product liability claims. This approach included sending a company representative to meet with people injured by Toro products, as well as their families. The objective was to see what went wrong, express the firm’s sympathy and attend to the family’s needs. One result of the new mediation policy was a 95% rate of resolving the company’s claims, along with significant cost savings.

Great leaders recognize problems and do what it takes to overcome them. They are open and empathetic and let their values guide their actions.

Leadership is the ability to not only understand and utilize one’s innate talents, but to also effectively leverage the natural strengths of one’s team to accomplish the mission. Leaders better whichever environment they are in and demonstrate great power to unite their team and empower them to achieve organisational goals. Leaders establish their efficiency certain set of traits, which we will discuss in this blog series.

Failure does not stop a leader; it works as a stimulus for him to do better. A leader envisions how he can transform an obstacle into an opportunity.With necessary skills at his disposal to do so,the leader bounces back from difficult circumstances.

When the organisation’s reputation is at stake, not all leaders are able to safeguard against sudden crisis that threatens financial well-being, reputation, or survival of the firm or some portion thereof.

Take the example of, PepsiCo’s can tampering rumors (1993)

The crisis: A syringe was allegedly found in a can of Diet Pepsi in Washington state. The following week, more than 50 reports of tampered Diet Pepsi cans sprung up across the country. It turned out to be a hoax.

How PepsiCo responded: Both PepsiCo and the FDA were confident that the reports were fabrications, so the company came out hard, defending itself staunchly against the accusations.

But PepsiCo didn’t make vague statements telling the public to simply trust it. The company produced four videos throughout the crisis, such as a comprehensive report on its soda canning process. The most compelling was a surveillance tape of a woman in a Colorado store putting a syringe into a can of Diet Pepsi behind the store clerk’s back.

PepsiCo North America CEO Craig Weatherup appeared on news stations armed not only with visual evidence of the bogus reports, but with the explicit support of the FDA. He appeared most notably on Nightline with FDA Commissioner David Kessler, and they both assured the public that Diet Pepsi was safe.

The result: The rumors fizzled out within two weeks following multiple arrests by the FDA for filing false reports. Diet Pepsi sales had fallen 2% during the crisis but recovered within a month.The situation required an aggressive defence because PepsiCo hadn’t done anything wrong. If the company remained quiet and complacent the damage could have been far worse.

It doesn’t take a slew of consumer data to support the argument that your regular customers are your rock. As such, taking care of them is not just the right thing to do. It’s also good for business.

Consider the case of regular Gaylord Opryland hotel customer Christina McMenemy, who stayed at the resort three years in a row for the annual BlissDom conference. During each stay McMenemy found herself entranced by one of the features in her hotel room—an alarm clock that played light music; as in, the kind that you’d experience in a highend spa.

McMenemy says, “You probably think I’m insane to obsess over a clock radio.” But, her rationale for her fondness for this item was that she had never slept better than she did while using it. For three years McMenemy tried to find the exact model clock from her hotel room, but to no avail. McMenemy had nearly given up hope when she messaged the company’s Twitter page during her most recent trip to Opryland.

@GaylordOpryland Where can I buy this Sharper Image clock radio in my room? None in stores have the “spa” sounds & I’ve never slept better!

Gaylord Opryland @GaylordOpryland

@mommystory Unfortunately, our version isn’t available to the public, but here is a Shaper Image alarm clock like it: http://amzn.to/ADMXzL .

Christina McMenemy @mommystory

@GaylordOpryland Yeah, that one doesn’t have the spa sound. Been looking for one after loving the 1 in my room for 3yr now at Blissdom. 🙁

Resigned to her fate, she attended the conference and let the alarm clock hunt go. But upon returning to her room she was surprised to find not one but two spa clocks and a letter with her name on it.

Opryland recognized an opportunity to make sure a long-time customer had one of the best experiences ever. And they didn’t just win a customer for life; they also bought plenty of goodwill with folks at the conference (and beyond) who subsequently heard about the story.

“You reaffirmed that there are still companies out there focused on great service, and you’ve made a lifelong fan out of me.” Christina McMenemy.