Emotional Intelligence - the Business Case

Emotional Intelligence (EI) is critical in business. The emotions that leaders, employees, and customers feel impact the bottom line of companies and the effectiveness of government and non-profit organizations.

In their Harvard Business Review article, "The Service-Profit Chain," Hesket et. al. identified a chain of factors driving profitability in a company. Their factors revealed that effective leadership is critical to profitability. The emotions that leaders experience impact the climate and culture of an organization as a whole. More specifically, leaders' emotions impact

- What employees feel
- The satisfaction employees experience with their company and their work
- How loyal they are and their willingness to give extra effort.
- How productive and efficient they are.

How employees feel and perform their work impact how customers feel, how satisfied they are with both products and services, and ultimately how loyal a customer is to the company or organization. And how loyal customers are has a direct impact on the bottom line and profitability of an organization.

Notice that the foundational element in this set of relationships is leadership. It does not say CEO or Executive Vice President or Director. It says leaders. The in-charge person in every work team, every manager, and every individual in the organization is a leader. Self-leadership is one of the most important factors to focus on in skill development. Whether at work or at home, self-leadership is the internal ability to lead oneself to make the best decisions or choices throughout the day moment-to-moment.

Both positive and negative emotions impact everyone in organizations and the customers they serve. For example, negative emotions may result in poor performance, high stress, increased conflict, low morale, lack of trust and teamwork, more errors, poor quality, increased turnover and more. In turn, these problems may decrease customer satisfaction and increase customer complaints and defection. Ultimately, profitability can be negatively impacted.

Impact:

We can discover the significant impact negative emotions can have on the organization by asking a few questions relating to these problems:

- Which of these problems have you experienced in your organization?
- What is the impact on performance, business objectives, and key initiatives?
- What could your organization achieve if these problems were minimized?

Value of Developing Emotional Competence:

The critical value of developing the Emotional Competence of leaders is supported by additional research. Daniel Goleman, author of Emotional Intelligence, examined competency studies of 200 large global companies and reported the following results in the Nov./Dec., 1998 Harvard Business Review:

"When I calculated the ratio of technical skills, IQ, and emotional intelligence as ingredients of excellent performance, emotional intelligence proved to be twice as important as the others for jobs at all levels."

His conclusions about senior leaders were even more telling...

"When I compared star performers with average ones in senior leadership positions, nearly 90% of the difference in their profiles was attributable to emotional intelligence factors rather than cognitive abilities."

Impact on the Bottom Line:

Several studies reveal a direct impact of the organization's leadership on its bottom line. In the same HBR article (see above), Goleman shares the following findings:

"David McClelland found that when senior managers had a critical mass of emotional intelligence capabilities, their divisions outperformed yearly earnings goals by 20%. Division leaders without that critical mass under performed by almost the same amount."

In his book Primal Leadership, Goleman, et. al. provides further evidence of the impact of emotional intelligence on the organization's profitability:

"A study found that the more positive the overall moods of people in the top management team, the more cooperatively they worked together - and the better the company's business results."

"In a study of nineteen insurance companies, the climate created by the CEOs among their direct reports predicted the business performance
of the entire organization: In 75% of the cases, climate alone accurately sorted companies into high versus low profits and growth." (Cited in Primal Leadership - research by David McClelland, "Identifying Competencies with Behavior-Event Interviews," Psychological Science 9, 1998 and David Williams, "Leadership for the 21st Century," Life Insurance Leadership Study, 1995.)

The Results:

The effects of EI skill development are far-reaching. They go beyond just leadership competencies or management skills. It's difficult to identify any other organizational improvement intervention that has the potential to positively impact so many organizational problems concurrently. EI skill-building training enhances and complements other values-based and principle-centered programs by providing practical "how-to's." EI skills are foundations skills enabling people to improve the "how" of achieving results.

EI training results can be significant. During post-program impact interviews, participants have reported improvements that range from 15% to 35% increased teamwork, 20% to 35% increase in personal productivity, 20% to 40% reduction in stress and worry, and similar improvements in personal motivation, management of emotional reactiveness, work/life balance, creativity and more.

Author's Bio

Byron Stock

Specializing in the area of Emotional Intelligence skill-building, Byron Stock is devoted to making work a place where people flourish and productivity improves. Typical improvements in personal goals range from 30% to 50%. Learn about Byron’s quick, easy, proven techniques to harness the power of your Emotional Intelligence in his new book, SMART EMOTIONS for Busy Business People available through his website http://www.ByronStock.com

Employee Feedback: Your Key to Satisfied Employees

Suppose you had your choice of three meal plans for one week ... which would you choose?

Plan #1: No food from Sunday morning through Saturday afternoon. But for Saturday dinner, you must eat a lavish 5-course meal.

Plan #2: Each day you can have donuts for breakfast, your choice from the company's snack vending machine for lunch, and greasy fast food on the way home.

Plan #3: Each day, you can have a healthy breakfast, lunch, and dinner.

With Plan #1, you'll starve. Plan #2 will leave you unhealthy and fatigued. Only with Plan #3 will you have energy and strength to work and live - and enjoy both.

Just as your body needs regular, nutritious feeding to be healthy, your employees need regular, effective feedback to reach their highest potential. Yet in the corporate environment, leaders often feed their employees on the equivalent of Plan #1 or Plan #2 …... and then wonder why they fail to perform.

Plan #1 looks like this in the business world: I'm not going to give you any feedback (positive or negative) all year. At your yearly performance appraisal, you'll have no idea what I'm going to say. I'm either going to praise and affirm you, or I'm going to run roughshod over you ... regardless, you're going to get a year's worth of feedback in one sitting. I hope you can stomach it. See you next year.

Plan #2 isn't much better: I'll talk to you throughout the year, but my comments won't really be helpful. I'll be general in what I say so you can't pin down specific behaviors I like or don't like. I'll attack your personality rather than correcting your work habits. I'll accuse you with huge sweeping statements. Your yearly performance appraisal will be more of the same, leaving you somewhat queasy and nauseous, and uncertain how you can possibly find the strength to go on. Or even uncertain as to why you should.

You can see how both Plan #1 and Plan #2 leave employees edgy, unmotivated, and demoralized. Put simply, performance cannot improve on this kind of diet.

So how do you implement a healthy Plan #3 feedback approach?

First, you need to be aware. As an executive, manager, or supervisor, you have to be informed and knowledgeable about what your staff is doing and how they are performing on an individual level.

Second, you need to be proactive. In the same way that eating well takes effort to plan and shop and cook, providing effective feedback also takes a proactive mindset. You must look for specific opportunities to affirm or correct behavior. You have to provide feedback in a timely manner. You need to set up regular times for manager-employee dialogue throughout the year. It has been said that "Nothing in a yearly review should come as a surprise."

Third, you need to be skilled. Listen carefully here: Just as people aren't born knowing how to cook, giving feedback effectively is not an innate skill. It must be learned. Healthy feedback starts with a solid, specific, descriptive, non-judgmental feedback statement. You have to know when and how to give reinforcing feedback vs. redirecting feedback. You must understand how to follow through to ensure real, lasting change.

The result? It's simple - and quantifiable: Employees who work for aware, proactive, skilled leaders respond with improved performance, increased communication, and soaring job satisfaction. Isn't that worth time and effort on your part?

Don't starve your employees. Don't give them fast food. Feed them what they need - every day.

Author's Bio

Timothy I. Thomas

Timothy I. Thomas is the President and CEO of Makarios Consulting, LLC, a leadership development and business consulting firm. Makarios Consulting specializes in interactive training and one-on-one coaching in progressive organizations in order to equip and empower their leaders to maximize their own leadership skills and inspire others to accomplish extraordinary business results. Timothy Thomas is the author of Creating All-Star Performers: The Power of Effective Feedback, now available for immediate download at www.MakariosConsulting.com.