Keep them with kindness.

Compassion as a management strategy — as opposed to ruling with an iron fist — has been shown to boost employee trust, loyalty and retention. “Compassionate leaders create a positive and caring workplace culture,” psychologist Emma Seppala, a researcher at Yale and Stanford Universities and author of “The Happiness Track,” told Moneyish in an email. “The result, research shows, is a workplace that is more productive, more creative, that has less turnover, and whose clients have better results. It leads to a better bottom line.”

Meanwhile, research shows that leaders who express negative emotions are viewed as less effective. “Being tough and uncompromising isn’t a good motivational strategy over time,” said Leah Weiss, a Stanford Graduate School of Business lecturer who teaches the course “Leading with Mindfulness and Compassion.” And while you might save money in the short term by treating people poorly, she added, failure to respond to people’s personal or family crises can have long-term financial implications. “People will leave,” she said. “People who stay will be less engaged.” (The median cost of turnover for jobs aside from executives and physicians, per a 2012 Center for American Progress report, is about 21% of an employee’s annual salary.)

“Although it may seem to people that being compassionate makes you ‘soft’ and may lead to decreased motivation among employees, the opposite is true,” Seppala said. “Employees will work harder for a leader that cares and will also be more loyal.” (LinkedIn CEO Jeff Weiner, a vocal advocate for managing compassionately, argued in a tweet last fall that a “big misconception about managing compassionately is that it’s a ‘soft’ skill. Most compassionate people I know are typically the strongest.”)

Plus, Seppala said, research shows people prefer working somewhere they’re happy over simply earning a bigger paycheck — “and if you probe further, a ‘happy’ workplace is one that is characterized by positive social relationships.” “Another study shows that your boss literally impacts your heart health — leaders that are harsh have employees with greater risk for cardiovascular problems!” she added.

So how is compassion defined? To Seppala, it’s “noticing when another person is suffering, and being moved to do something about it to help them.” (Empathy, she clarifies, is “the ability to feel or perceive another person’s emotions” — for example, feeling sad when your friend is sad.) Weiss similarly says compassion is “the recognition of suffering” and a willingness to engage with it. In a workplace context, she said, it’s a question of “how a workplace can be humanized and recognize the full humanity of employees” in a way that’s beneficial to both the employees and the organization.

And compassion doesn’t mean always saying “yes” or letting poor performance slide, Weiss added. “Whatever you’re doing, whether you’re doing it in a firm way or giving strong feedback, you’re doing it not out of retribution or malice for the individual,” she said. “You’re doing it in a way that’s respectful of their dignity, and also is really clear about the needs of the organization in that situation.”

Weiss, who manages people through the business school, her own consulting and coaching work, and the Compassion Institute, says she takes a minute in the beginning of a conversation to see how that person is doing — and strives to be transparent about what’s going on in her own life. “(It’s) reminding people where you’re coming from; you’re aware of where they’re coming from,” she said. “I know when people’s kids are sick; I know when their spouse is traveling.”

Some bosses have taken that vulnerability to new heights: Codecademy co-founder and CEO Zach Sims’ “red-yellow-green” system lets employees voice their current personal and professional states during team meetings or one-on-ones. For example, Sims told Moneyish, an employee might say he’s “red” on a personal note due to a sick child that kept him up late; someone might be “yellow” professionally because they’re trying to juggle 10 projects at once.

“Usually what happens as a result of that (is) people can be more sensitive to how someone’s feeling … or can be compassionate and offer to help,” Sims said. “It’s definitely not an excuse mechanism — it’s definitely much more of giving more context to people’s actions, so that you know how to properly interpret and construe them.”

Others channel compassion toward workers’ mental health. Carolyn Slaski, vice chair of talent at EY Americas (formerly Ernst and Young), touts her company’s awareness and education campaign to support colleagues with addiction and mental illness. “EY is built on a culture of caring, and we know that all our professionals can make a difference by being better informed and learning how to support colleagues who may be struggling,” Slaski told Moneyish in an email.

Brittany Roring, who telecommutes to her office manager job at the Harrisville, Utah real-estate investing company Creation Utah LLC, says her boss has created a culture of compassion. “I have worked in some toxic workplaces and I’d dread going to work,” she said. “There’s just none of that going on with us because we all just have a mutual respect. … I can focus and get my work done because it’s just a nice, calm environment.”

Roring recalls watching her manager go “above and beyond the call of duty” in helping clients find new apartments after purchasing their homes — and says he changed her mindset in how she approached the business. “As a company, we’re thinking, ‘Who can we help today?’ — not ‘What house can we buy today?’” she said. The boss’s reaction to underperforming employees, Roring added, wasn’t to berate them during a staff meeting — but to institute a voluntary, book club-style initiative in which workers read and discuss motivational books like “7 Habits of Highly Effective People.”

How might you, as a manager, get into the compassion game? Seppala and Weiss have some tips:

First, know your employees as people, Seppala said. Do they have kids? Any personal challenges? “Ask about their well-being before you ask about their work products,” she said. “Invite them to let you know when things are difficult.”

Create a culture that values well-being. “When someone is going through a difficult time in their lives, your workplace culture should encourage that they be supported — even if that means extra time off,” Seppala said. And make sure your company isn’t just paying lip service to well-being: “Ensure that you as a leader are modeling for your employees: Take care of yourself and encourage them to do the same,” she added.

Stay present. This might mean closing your laptop during meetings, Weiss said. “We have to recognize other people’s suffering, which we cannot do if we’re not present with them; if we’re distracted.” Learn to listen and ask follow-up questions instead of prematurely jumping in to solve someone’s problem, she added.

Institute an open-door policy at all levels of the hierarchy, welcoming anyone to come talk to you. “This will ensure that you have a good feeling for your workplace culture,” Seppala said. “It will also help people feel included.”

Check in at the start of meetings and ask what everyone has on their mind. “It could be another project; it could be something about their life,” Weiss said. “Just have a quick go around … (It) gives you more context for how they’re filtering the information.”

Ensure that all voices are heard equally by focusing on diversity and inclusivity protocols. “Not only will your employees feel happier, greater trust and psychological safety,” Seppala said, “you will also be fostering a culture of creativity and innovation because people will feel free to share their novel ideas.” Recognize and point out when people have contributed or been overlooked, added Weiss.

Give praise where it’s due. “You value the work of your employees,” Seppala said. “Make sure they know that.”