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.