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BUSINESS SENSE

Business Case for Emotional Intelligence

The single most determining factor which distinguishes star performers in every field, from entry level to top executive positions is not IQ, qualification or technical expertise, but it is a quality Daniel Goleman calls Emotional Intelligence.

  • Self awareness
  • Self confidence
  • Self control
  • Commitment, integrity
  • Ability to communicate and influence
  • To initiate and accept change
  • These competencies are at a premium in today's job market
  • The higher up the leadership ladder you go, the more vital these skills become.
  • Corporate training must therefore change to incorporate EI if it is to be effective
  • Unlike IQ, Emotional Competence can be cultivated and strengthened at any stage of life

Research

Competency research in over 200 companies and organizations worldwide suggests that about one third of the difference between average and top performers is due to technical skill and cognitive ability while two-thirds is due to emotional competence (Goleman, 1998). A study of 130 executives found that how well people handled their own emotions determined how much people around them preferred to deal with them (Walter V. Clarke Associates, 1997).For 515 senior executives analyzed by the search firm Egon Zehnder International, those who were primarily strong in emotional intelligence were more likely to succeed than those who were strongest in either relevant previous experience or IQ. The study included executives in Latin America, Germany, and Japan, and the results were almost identical in all three cultures.

The level of Self-Confidence was in fact a stronger predictor of performance than the level of skill or previous training (Saks, 1995). In a sixty-year study of more than one thousand high-IQ men and women tracked from early childhood to retirement, those who possessed Self-Confidence during their early years were most successful in their careers (Holahan & Sears, 1995).Outstanding leaders integrate emotional realities into what they see and so instill strategy with meaning and resonance. Emotions are contagious, particularly when exhibited by those at the top ...Goleman The emotional tone set by a leader tends to ripple outward with remarkable power (Bachman, 1988). Team members tend to share moods, both good and bad-with better moods improving performance (Totterdell, Kellett, Teuchmann, & Briner, 1998). The evidence suggests that emotionally intelligent leadership is key to creating a working climate that nurtures employees and encourages them to give their best. That enthusiasm, in turn, pays off in improved business performance. (Williams, 1994). The data showing the crucial role EI skills play in career success make a compelling case for re-envisioning higher education in order to give these capabilities their place in a well-rounded curriculum. In top leadership positions, over four-fifths of the difference is due to emotional competence.

Increased Sales, Reduced Turnover at Loreal

At LOreal, sales agents selected on the basis of certain emotional competencies significantly out sold salespeople selected using the companys old selection procedure. In the most complex jobs (insurance salespeople, account managers), a top performer is 127 percent more productive than an average performer (Hunter, Schmidt, & Judiesch, 1990). On an annual basis, salespeople selected on the basis of emotional competence sold $91,370 more than other salespeople did, for a net revenue increase of $2,558,360. Salespeople selected on the basis of emotional competence also had 63% less turnover during the first year than those selected in the typical way (Spencer & Spencer, 1993; Spencer, McClelland, & Kelner, 1997).

Increased Sales at Life Insurance Company

In a national insurance company, insurance sales agents who were weak in emotional competencies such as self-confidence, initiative, and empathy sold policies with an average premium of $54,000. Those who were very strong in at least 5 of 8 key emotional competencies sold policies worth $114,000 (Hay/McBer Research and Innovation Group, 1997).

Attrition

In a large beverage firm, using standard methods to hire division presidents, 50% left within two years, mostly because of poor performance. When they started selecting based on emotional competencies such as initiative, self-confidence, and leadership, only 6% left in two years. The executives selected based on emotional competence were far more likely to perform in the top third based on salary bonuses for performance of the divisions they led: 87% were in the top third. In addition, division leaders with these competencies outperformed their targets by 15 to 20 percent. Those who lacked them under-performed by almost 20% (McClelland, 1999).

Preventing Executive Derailment

Research by the Center for Creative Leadership has found that the primary causes of derailment in executives involve deficits in emotional competence. The three primary ones are difficulty in handling change, not being able to work well in a team, and poor interpersonal relations. Social Skills Training for Supervisors Leads to Productivity Gains in Manufacturing 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. After training: lost-time accidents were reduced by 50 percent formal grievances were reduced from an average of 15 per year to 3 per year the plant exceeded productivity goals by $250,000 (Pesuric & Byham, 1996). In another manufacturing plant where supervisors received similar training: production increased 17 percent. There was no such increase in production for a group of matched supervisors who were not trained (Porras & Anderson, 1981).

Accurate Self-Assessment Leads to Superior Performance in Managers

One of the foundations of emotional competence -- accurate self-assessment -- was associated with superior performance among several hundred managers from 12 different organizations (Boyatzis, 1982).

Self-Regulation Produces Success in Store Managers

Another emotional competence, the ability to handle stress, was linked to success as a store manager in a retail chain. The most successful store managers were those best able to handle stress. Success was based on net profits, sales per square foot, sales per employee, and per dollar inventory investment (Lusch & Serpkeuci, 1990).

Learned Optimism Generates Greater Sales in Life Insurance

Optimism is another emotional competence that leads to increased productivity. New salesmen at Met Life who scored high on a test of "learned optimism" sold 37 percent more life insurance in their first two years than pessimists (Seligman, 1990). A study of 130 executives found that how well people handled their own emotions determined how much people around them preferred to deal with them (Walter V. Clarke Associates, 1997). Emotional Competence Helps Computer Sales Reps to Finish Training Successfully For sales reps at a computer company, those hired based on their emotional competence were 90% more likely to finish their training than those hired on other criteria (Hay/McBer Research and Innovation Group, 1997). Emotional Competence Reduces the Drop-out Rate in Sales At a national furniture retailer, sales people hired based on emotional competence had half the dropout rate during their first year (Hay/McBer Research and Innovation Group, 1997).

Emotional Intelligence Leads to Success in Top Executives Around the World

For 515 senior executives analyzed by the search firm Egon Zehnder International, those who were primarily strong in emotional intelligence were more likely to succeed than those who were strongest in either relevant previous experience or IQ. In other words, emotional intelligence was a better predictor of success than either relevant previous experience or high IQ. More specifically, the executive was high in emotional intelligence in 74 percent of the successes and only in 24 percent of the failures. The study included executives in Latin America, Germany, and Japan, and the results were almost identical in all three cultures.

References

  • Boyatzis, R. (1982). The competent manager: A model for effective performance. New York: John Wiley and Sons.
  • Goleman, D. (1998). Working with emotional intelligence. New York: Bantam.
  • Hay/McBer Research and Innovation Group (1997). This research was provided to Daniel Goleman and is reported in his book (Goleman, 1998).
  • Hunter, J. E., Schmidt, F. L., & Judiesch, M. K. (1990). Individual Differences in Output Variability as a Function of Job Complexity. Journal of Applied Psychology, 75, 28-42.
  • Lusch, R. F., & Serpkeuci, R. (1990). Personal differences, job tension, job outcomes, and store performance: A study of retail managers. Journal of Marketing.
  • McClelland, D. C. (1999). Identifying competencies with behavioral-event interviews. Psychological Science, 9(5), 331-339.
  • Pesuric, A., & Byham, W. (1996, July). The new look in behavior modeling. Training and Development, 25-33.
  • Porras, J. I., & Anderson, B. (1981). Improving managerial effectiveness through modeling-based training. Organizational Dynamics, 9, 60-77.
  • Richman, L. S. (1994, May 16). How to get ahead in America. Fortune, 46-54.
  • Seligman, M. E. P. (1990). Learned optimism. New York: Knopf.
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