A recent study from the University of Massachusetts Amherst suggests that hospitality businesses showing care and empathy towards employees during crises can gain significant brand loyalty and future business from customers with strong ethical values.

The research indicates that companies facing external crises, like natural disasters or global pandemics, can build goodwill with empathetic customers by supporting their employees. Customers who value ethics over profits are more likely to support businesses that prioritize ethical actions in stabilizing operations after a crisis.

The right approach

For instance, during the COVID-19 pandemic, hospitality companies that chose to cut executive pay rather than laying off or furloughing employees were found to receive increased brand support, positive word-of-mouth, and future purchase intentions from customers with high ethical ideals. This approach has the potential to create a loyal and profitable customer base over the long term.

“Customers are supporting brands that they believe in,” the researchers explain. “These customers can be the most loyal, which then equates to better positive word-of-mouth, more purchasing and greater overall support for that brand.”

The study suggests that companies engaging in more altruistic efforts did not see similar positive outcomes among customers with lower ethical ideals. Interestingly, companies that chose to lay off employees instead of implementing alternative cost-cutting measures did not experience reputational damage from that decision.

Short and long-term

“Our findings provide a clear message that hospitality firms need to look at both the short-term and long-term consequences of their actions,” the authors explain. “You have to save the money so your business can stay afloat, but also understand that not taking care of your employees, particularly at the expense of keeping CEO pay high, may affect your long-term brand support.”

The researchers emphasize that their findings support the age-old saying, “heroes rise in tough times.” In this context, consumers seem to value corporate efforts to protect employees more during challenging times, recognizing the hardship faced by companies themselves.

“It’s harder to quantify employee productivity and emotions, but hospitality is a team sport, and business is a team sport, so you have to have great employees and need to support your employees for your business to be successful,” they conclude.