Navigating Unprecedented Times: How Managers’ Empathetic Adjustments in a Crisis Influence Employee Effort in a Competitive Environment

Abstract

When organizational crises arise, one way that managers can help employees cope is to provide empathetic adjustments, where managers adjust downward performance expectations for all employees while communicating the adjustment with empathy. In a competitive environment, we explore whether providing an empathetic adjustment to employees during a crisis affects their postcrisis effort. We conduct an experiment and observe that an empathetic adjustment significantly improves the postcrisis effort of top and bottom performers. The increase in postcrisis effort of top performers can be attributed to the effect of the adjustment, whereas the increase in postcrisis effort of bottom performers can be attributed to the effect of empathy. In a supplemental survey, we find a range of positive effects of empathetic adjustment, including increased engagement, reduced burnout, and lower turnover intentions. Data Availability: Data are available from the authors upon request. JEL Classifications: G31; G32; G33; M21.