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.”

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