Companies are facing a growing disconnect between how leaders view workplace culture and how employees experience it.
While executives overwhelmingly say empathy is essential to business success, new research from Businessolver finds rising reports of toxic workplaces, co-worker intimidation and declining psychological safety. The findings suggest some organizations may be achieving short-term performance gains while accumulating longer-term workforce risks.
Businessolver’s 2026 State of Workplace Empathy study, conducted by Edelman Data & Intelligence, surveyed more than 300 C-suite executives and 1,000 employees across six industries. The report identifies what the company calls an “empathy paradox” in which leaders recognize the importance of empathy but may struggle to translate that belief into workplace practices.
See also: From buzzword to business advantage: Making empathy real at work
Among executives who described their company culture as toxic, 70% reported significant financial growth over the past year, compared with 36% of executives in non-toxic organizations. The findings challenge the assumption that healthier cultures always produce stronger immediate financial results. Instead, Businessolver said the data may point to risks that take longer to surface.
“In 11 years of studying empathy, we’ve never seen results like these,” Businessolver President and CEO Jon Shanahan wrote in the report. “The numbers don’t add up.”
Executives still place high value on empathy
Executives continue to place a high value on empathy. Ninety-eight percent of C-suite leaders said they are empathetic leaders, 97% said their organizations are empathetic and 90% said empathy improves financial and business outcomes.
But employee experiences tell a different story.
Forty percent of employees said their workplace is toxic, an 18-percentage-point increase year over year. Among CEOs, 33% described their workplace as toxic, up 25 percentage points from the prior year.
Co-worker intimidation also emerged as a growing concern. Thirty-four percent of executives and 33% of employees overall reported co-worker intimidation. Among executives in toxic organizations, that figure climbed to 73%.
The research also found that some organizations may be prioritizing cost discipline and efficiency in ways that affect employee experience. Executives in toxic cultures were 2.6 times more likely to report layoffs and twice as likely to report cuts to employee benefits compared with leaders at non-toxic organizations.
Nearly 30% of CEOs said the primary motivation behind AI investment was cost savings through reduced headcount, adding pressure as companies navigate AI adoption and workforce changes.
“AI will change jobs and economic pressure will force hard decisions,” Shanahan wrote. “These are challenges but also opportunities to produce stronger, more resilient companies—not just more efficient ones.”
Trust in leadership hasn’t dropped much
Despite rising toxicity concerns, Businessolver found that employee trust in leadership has not yet collapsed. The report describes this as another paradox: Employees may maintain trust even while questioning workplace culture.
Among employees who described their organization as both empathetic and toxic, 80% said they still trusted their leaders and 84% said their employer emphasized wellbeing.
However, when toxicity and a lack of empathy occur together, employee confidence declines sharply. Businessolver found trust, psychological safety and connection to leadership deteriorate when employees believe their organizations lack empathy.
The report suggests that cultural risks may appear before they show up in financial results. Employees are increasingly willing to prioritize workplace culture, with 66% saying they would accept lower pay to work for a more empathetic employer. That figure rose to 73% among employees in toxic workplaces.
Businessolver said the findings suggest empathy is increasingly tied to retention, trust and long-term organizational sustainability.
“In the end, culture has a long memory, and employees have the final say on if growth is sustainable,” Shanahan wrote.
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