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'The Age of the Authoritarian Leader is Over': How Empathy Fuels PayPal's Culture

PayPal HR leader says the company's focus on empathy and listening has sparked important changes to the company's pay, perks and management style


A man giving a speech into a microphone.
​Kausik Rajgopal, PayPal's executive vice president for people and sourcing

​When the U.S. Supreme Court's nine justices gather to deliberate on a case, they always follow an unwritten rule: No justice in the room speaks twice until every justice has spoken once. It is a principle that PayPal, the global financial technology company, has recently borrowed as a management tool for its 30,000 employees.

"We have adopted that as inspiration for our managers to bring inclusion alive on a day-to-day basis with their teams," said Kausik Rajgopal, PayPal's executive vice president for people and sourcing. "Whether it's an online video conference or a hybrid meeting, we encourage managers to make sure that everybody speaks once before anybody speaks twice."

Rajgopal says this listening tool is an example of PayPal's push to create a workplace culture rooted in empathy. Among the company's four values—empathy, inclusion, collaboration and innovation—he says empathy underpins them all. That's because inclusion and collaboration are related to empathy for each other as colleagues, and innovation is impossible without empathy for the customer.

"Empathy is incredibly important and foundational. It's the basis for all human connection," said Rajgopal, who was recently named the winner of the Ram Charan HR Innovations Award at the SHRM Executive Network Tharseō Awards Gala in Chicago.

"I believe that the age of the authoritarian leader is over. This model of the leader as somebody who knows the answers, who is imperturbable and that's the way they inspire—that's no longer relevant," Rajgopal said. "We are now in the age of the empathetic leader who can inspire by showing vulnerability and by connecting not just on successes but also on failures, not just on strengths but also on the flaws. And, in so doing, that makes them more human."

There are many definitions of empathy, but Rajgopal says the most beneficial definition in a workplace setting is having the capacity to see that we could have been born as each other.

"It's not just 'standing in your shoes' in a particular situation—that's pretty common," he said. "It's stepping back and saying, 'I could have been born as you. Let me see if I can connect with the situation that you're experiencing.'"

Listening Leads to 20 Percent Disposable Income Goal

Rajgopal also sees the ability to listen to employees and respond to their needs as a key piece of building a successfully empathetic culture.

Even before the COVID-19 pandemic, PayPal was hearing about employees who were financially stressed and living paycheck-to-paycheck, even though the company was paying its employee at or above the market rate. The company gathered a dozen such employees at its headquarters, who explained one by one how they were struggling. That was followed by a survey on employees' financial health, which showed that about 60 percent of PayPal's employees had a net disposable income—after food, housing, health and such costs—of between 4 percent and 6 percent.

"So we took that on as a challenge and we defined a metric called EDI, which stands for employee disposable income," Rajgopal said. "We set a threshold of 20 percent of their overall pay as disposable income." To get to that goal, the company took a variety of actions, including cutting employees' health insurance contributions by more than 50 percent and raising compensation levels by an average of 7 percent.   

"This is something we've taken on as an enduring commitment," he added. "We believe that if employees in large companies are themselves more financially stable, all kinds of good things flow from that for customers of those companies, for communities and for society more broadly."

On Wellness Days, PayPal Goes Dark

Flexibility in work location and work hours are great, but when the e-mails from colleagues keep flying 24/7, it's hard to enjoy that perk.

As PayPal went all-remote during the pandemic, managers aimed to ease stress and burnout by occasionally calling for "no-work" days or half-days off in their departments. But those well-intentioned efforts often fell apart because employees were still getting pinged all day long by PayPal employees in other departments who didn't have the day off.

The result? PayPal created Global Wellness Days, during which they shut down the entire company on four separate Fridays this year. On the company's first wellness day, Rajgopal was sure someone would e-mail him. "But it was silence, and it was great," he said.

"One of my favorite things to do is go on LinkedIn after a wellness day and see what people did. Someone visited aging parents. Someone saw an old friend. Someone just curled up with a good book," Rajgopal said. "These are forms of wealth that we as humans sometimes during the course of our lives put the back burner."


In His Own Words: Kausik Rajgopal

​Why PayPal's HR Leader Takes 'Balcony Time' Every Friday Afternoon

"One of my favorite books about leadership is Leadership Without Easy Answers by Ron Heifetz (Harvard University Press, 1998). He says that great leaders have the capacity to both be in the dance and on the balcony. And I found that to be such a wonderful metaphor for striking the balance between being very tactical in the day-to-day and being strategic.

"So you're in the dance. And, let's be honest, much of the HR function is about being very tactical. But as a leader in the function, you have to find a way to force yourself to get on the balcony to see the big picture. And there are some very simple devices you can you use.

"For example, I think anyone who is a leader in the HR function should schedule 30 minutes of 'balcony time' at least once a week. Because, otherwise, the risk is that your calendar is swamped with things you have to do. You have no time to step back and reflect on the lessons learned, what you could have done differently, what you did well and what you can build on.

"I did that on the advice of a mentor 15 years ago, and it's been transformational in my life. So every Friday afternoon I have balcony time. I started out with 30 minutes, but it was so good that I now do it for an hour.

"It's the last thing I do as I wind up at the end of a week. I journal and I look back over the key interactions and the key meetings. I think about what I regret, what I could have done different. I think about what I was proud of. I think about what I learned. It's forcing me every week to have some personal reflection and growth time. I think that's a mechanism that can really be powerful to help to help leaders strike that strategic balance." 

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