In today’s business world, the way the board and C-suite measures up against the organisation’s target operating model is becoming increasingly important. This model – which many boards will be agreeing on right about now for 2024 – is a blueprint for desired leadership qualities and business goals. But what should these qualities – at least the softer skills – be, and how should they be measured?

During the pandemic, there was a real focus on empathy and people-centric leadership. However, a couple of years has almost passed and a shift is taking place, with a growing number of CEOs pushing for a return to office work.

A survey of HR professionals earlier this year found that more than 30% of people perceive a lack of empathy in their CEO. This trend poses significant concerns, especially for businesses aiming to attract and retain top talent. High performers seek environments that offer work-life integration and freedom of expression.

Continue reading to explore the complexities of measuring leadership effectiveness, empathy and efficiency, and understand the implications of these metrics on your organisation’s success and employee wellbeing.

How do you measure effectiveness, empathy and efficiency?

Saying that you are effective, empathetic and efficient is one thing; quantifying these traits is quite another. The fact is that leadership behaviours are essential, and their measurement is just as (if not more) important as the harder business measures.

For business leaders, these attributes can’t just be buzzwords; they are essential elements of a successful leadership model. The real challenge lies in effectively measuring these qualities against your target operating model.

Jackie O’Leary, a leadership coach and mentor at Lead to Succeed, says: “Leaders and aspiring leaders often ask me about the attributes needed to be successful. My answer: many of the key ones relate to their behaviours. Authenticity and humility are high on the list, as is the courage to welcome challenges and seek different perspectives. Recent Institute of Leadership research noted that while trust in leaders is essential for effectiveness, trust in leadership at all levels (based on their Index) has not improved over the past 15 years and in many cases has fallen slightly. The stark conclusion – too many organisations and individuals are failing to invest sufficiently in measuring and developing behaviours, rather than just technical skills and business knowledge.”

The lack of proper metrics can lead to a disconnect between leadership intent and impact. Effective leaders shine in times of crisis by making strategic decisions and communicating empathetically and supporting their teams. Empathy in particular is linked to higher employee engagement and satisfaction, and empathetic leaders foster a positive and collaborative work environment.

So, how to measure these three skills? It requires a mix of qualitative and quantitative metrics. Here are three or four ideas for measuring effectiveness, empathy and efficiency:

Measuring effectiveness

1. Track leaders’ performance against specific, measurable goals set at the beginning of the year. These could include targets related to revenue growth, project completion, team performance or strategic objectives. Evaluate their success in crisis management situations: how well did they navigate unexpected challenges or market shifts?
2. Implement 360-degree feedback mechanisms that include evaluations from team members, peers and other leaders. This feedback should focus on their ability to meet departmental objectives, mentorship quality and decision-making skills.
3. Assess how many new ideas or solutions the leader has successfully implemented. This can include process improvements, product innovations or strategies that positively impacted the business.

How to measure empathy

1. Use regular employee surveys to gauge the team’s morale, satisfaction and engagement levels. High scores in these areas often correlate with empathetic leadership. Related to this, you could also monitor turnover rates within teams. Lower turnover can indicate a supportive and empathetic work environment and leader.
2. Evaluate the leader’s approach to conflict resolution and feedback. How effectively do they handle interpersonal conflicts? Are they able to maintain a positive team environment while addressing issues?
3. Measure their team members’ career development. This can include mentorship programmes, training initiatives or advocating for team members’ promotions.

Measuring efficiency

1. Look at how leaders manage resources, including budgetary efficiency and optimal use of human resources. Efficient leaders achieve goals within or under budget and time constraints.
2. Assess the number and impact of process optimisations implemented. Efficient leaders tend to streamline workflows, reducing time and cost while maintaining or improving quality.
3. Track the timely completion of projects under their leadership. Efficient leaders tend to deliver projects on schedule, meeting or exceeding expected outcomes.
4. Evaluate how effectively the leader integrates new technologies or tools to enhance team productivity.

Assessing effectiveness, empathy and efficiency through a combination of data-driven metrics and qualitative feedback, you’ll gain a comprehensive understanding of your leaders’ performance across these skills.

How do you measure when reviewing year-end bonuses?

Measuring these three soft skills should also impact year-end bonuses.

When you consider how leaders have demonstrated their effectiveness, empathy and efficiency against your target operating model, they should be scored accordingly and their bonus aligned with actual leadership performance.

One of the ways I’ve seen this done effectively is when empathy is represented either as its own behaviour or as part of a behaviour in an organisation’s competency framework. Those behaviours are then included in the performance scorecard and people are measured on them in terms of the ‘how’, over and above the ‘what’.

This is often done through 360-degree behavioural feedback for performance or through assessments – for example, interviews, psychometric assessments, scenario-based assessments, mentoring and customer feedback.

You could look at these approaches when you measure empathy for performance bonuses:

• Collate feedback from both team members and other leaders to gather different perspectives on interpersonal skills
• Ask for examples of situations in which leaders demonstrated empathy, understood the emotions of others and took appropriate action
• Develop scenarios relevant to their role and ask them how they would respond in situations that require empathy
• Consider customer feedback that mentions positive interactions that demonstrate a person’s understanding and responsiveness to their concerns
• Provide a structured questionnaire (or ask open-ended questions) that prompt self-reflection and identify areas for improvement
• Encourage people to document instances in which leaders demonstrated empathy

How do you measure ESG, DE&I and CSR against your target operating model?

There’s also a real challenge in measuring ESG (environmental, social and governance), DE&I (diversity, equity and inclusion) and CSR (corporate social responsibility) against your target operating model and how leaders integrate them into their strategic decision-making and everyday practices.

The links between empathy and ESG and DE&I especially are clear: it’s such a fundamental behaviour for both. You have to empathise with your community and customers to be able to land your ESG strategies with impact, and everyone has to empathise with people who are both like you and different to you to truly drive your DE&I agenda forward.

Here are some suggestions:

Environmental impact metrics

1. Evaluate leaders based on their success in implementing policies or initiatives that result in measurable reductions in the company’s carbon footprint.
2. Measure effectiveness in integrating sustainable practices within their department or across the company, like waste reduction, energy-saving measures or sustainable sourcing.

Social impact metrics

1. Assess leaders based on the development and impact of community outreach programmes. Metrics could include community service hours logged by employees, projects initiated or partnerships with local organisations.
2. How effective are leaders in implementing and maintainingemployee wellbeing programmes that address mental health, work-life balance and overall employee satisfaction?

Governance metrics

1. Track adherence to ethical guidelines and success in promoting a culture of integrity. This could involve monitoring compliance with regulations, transparency in reporting and handling ethical dilemmas.
2. Measure leaders on how effectively they identify, assess and mitigate risks, including financial, operational and reputational risks.

Diversity, equity and inclusion metrics

1. What are your leaders’ track records in hiring and promoting a diverse workforce? Metrics can include diversity percentages in new hires, promotions and leadership roles.
2. Measure the impact of initiatives aimed at fostering an inclusive workplace. This could mean assessing participation rates in DE&I training programmes and surveys measuring employee perceptions of inclusivity.
3. Look at each department’s performance in maintaining or achieving pay equity across different genders, races and other demographic groups.

Thinking outside box

ESG, CSR and DE&I are all relatively new – so now’s the time to think creatively about how we can measure leaders against them.

• Thinking about creative approaches to sustainability, like implementing cutting-edge green technologies or developing new products with a lower environmental impact.
• Evaluate leaders’ efforts in advocating for the company’s ESG, DE&I and CSR initiatives on social media platforms, measuring reach and engagement.
• Assess how effectively leaders collaborate with other departments to embed CSR into the company’s core operations, beyond just token gestures.

These metrics push the envelope by holding leaders accountable not just for traditional business outcomes, but for how their actions align with and advance your company’s values and societal commitments. This approach also ensures that leadership performance is evaluated in a holistic way, reflective of their multifaceted role.

I’ve written before about executive pay and how much of a hot topic it is in boardrooms. In the UK, we’re leading the way in incorporating ESG considerations, challenging leaders executives to develop innovative, eco-friendly ESG pathways that contribute to the broader business strategy and strengthen business culture and DE&I.

How Hanover can help

At Hanover, we partner with businesses to develop leadership effectiveness, empathy, efficiency and broader corporate responsibilities like ESG and DE&I.

If you’re navigating the complexities of leadership assessment and development, contact me directly and let’s discuss how we can work together to shape a leadership model that both meets your business objectives and fosters a progressive, inclusive and high-performing organisational culture.

I’d like to thank my colleagues Brent Herman and Elle Robinson for their contributions to this article. They can also be contacted directly for support on building diversity strategies in your organisation.