The Business and Career Case for Emotional Intelligence

By Sowmya Ramanathan

First described in a 1990 paper by two psychology professors, the concept of EQ was popularized by then New York Times reporter Daniel Goleman’s 1995 book, Emotional Intelligence. It has gradually been embraced by educators looking for a framework to educate the whole child while improving academic results. Over the last decade the business community has moved to embrace the phenomenon as well.

The more an organization demonstrates care for its customers and employees, the argument goes, led by Harvard Business School, the greater its potential for uninterrupted growth, higher profits, improved products and happier employees. Empathy may, in fact, be the most underappreciated and overlooked strategic business tactic

One analysis of more than 300 top level executives from 15 global companies showed that six emotional competencies distinguished star performers from average: influence, team leadership, organizational awareness, self-confidence, achievement drive, and leadership.

Back as far as the 1990s, a large beverage firm was using standard methods to hire division presidents. 50% left within two years, mostly because of poor performance. When the company started hiring based on emotional competencies such as initiative, self-confidence, and leadership, only 6% left in two years.

The executives selected based on EQ were far more likely to perform in the top third: 87% were in the top third. Division leaders with these competencies outperformed their targets by 15 to 20%. Those who lacked emotional competencies under-performed those with these competencies by almost 20%. (McClelland, 1999).

Many companies and organizations have now prioritized social and emotional skills – high EQ – in their hiring practices. Others have brought the learning directly to current employees, with social-emotional  learning experts training staffers.

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The US Air Force used the EQ-I (Emotional Quotient Inventory, Multi-Health Systems, Toronto) to select recruiters and found that the most successful recruiters scored significantly higher in the emotional competencies of assertiveness, empathy, happiness and emotional self-awareness.

The Air Force also found that by using EQ-I to select recruiters, they increased their ability to predict successful recruiters by nearly three-fold. The immediate gain was a saving of $3 million annually.

Google has become a leader – and promoter – of EQ in the workplace as more important than IQ. It even publishes its own research as the link demonstrates.

Singtel is a large telecommunications company in Asia Pacific. It runs a large number of different training and (talent) development programs for staff. Three out of seven of these leadership programs embrace emotional intelligence training for senior executives.

Once these very technically competent people recognized the power of tapping into social and emotional skills, they negotiated some very successful outcomes. Almost immediately there was a 19% improvement in leadership engagement, a 6% increase in employee engagement and a 6% increase in customer focus amongst staff (independently measured by engagement metrics such as the Gallup tools). These represent remarkable changes in a very short period of time.

Talentforce, a group that studies EQ, found a 90% correlation between high EQ and high performance, while only 20% of the lowest performers they studied were high in emotional intelligence.

American Express financial managers completed the Emotional Competence training program were compared to managers who had not. During the year following training, the trained managers grew their businesses by 18.1% compared to 16.2% of those whose managers were untrained.

Boeing Australia, having committed to building a culture of engaged workers, undertook a leadership development program based on the Emotional Capital model and found a direct correlation between the quality of leadership skills and the staff attrition rate.

PepsiCo found that executives with high EQs were 10% more productive, had 87% less turnover, brought $3.75M more value to the company, and increased ROI by 1000%.

And it’s not just at the executive level:

L’Oreal found that salespeople with a high EQ sold $2.5M more than others.

Other examples:

After supervisors in a manufacturing plant received training in emotional competencies such as how to listen better and help employees resolve problems on their own, lost-time accidents were reduced by 50%, formal grievances were reduced from an average of 15 per year to 3 per year, and the plant exceeded productivity goals by $250,000 (Pesuric & Byham, 1996).

In another manufacturing plant where supervisors received similar training, production increased by 17%. There was no such increase in production for a group of matched supervisors who were not trained (Porras & Anderson, 1981).

The way forward

People want to believe in something bigger than themselves. To attract and retain the most talented people is the most important strategic issue for every company today and tomorrow and to do so organizations must focus on building exceptional workplace cultures where passionate people can innovate and drive change.

This is the way forward – building emotional capital will build your business.