Leadership and EI, The Keys to Driving ROI and Organizational Performance

“Executives and managers who have better relationships with people are exposed to more information and more thorough information. As a result, they can make better informed decisions. When you reframe EQ and you move beyond the hype of the phrase, you have to ask the naysayers, do you really think that relationships are unimportant? People want to be around, work for, and walk through hell for people who give them regard,
respect, recognition, and appreciation.”

—Roger Pearman,
Founder and CEO,

Leadership Performance Systems

Definition of Key Terms

Leadership Development
The implementation of activities that enhance the quality of leadership for an individual or within an organization, such as workshops, executive coaching, job rotations or assessments.

Emotional Intelligence
Also referred to as EI or EQ, refers to a set of emotional and social skills that
influence the way individual contributors perceive and express themselves,
develop and maintain social relationships, cope with challenges, and use
emotional information in an effective and meaningful way.

Financial Performance
Indicators of an organization’s business results, such as revenue, expenses and profit. In the survey research reported here, financial performance is measured as an organization’s revenue growth rate in the past fiscal year.

High-Performance Culture
An organizational culture in which individual contributors and managers act in systematic ways that encourage positive financial performance. Well-developed Emotional Intelligence is a critical part of a high-performance culture.

The Breadth and Depth of Emotional Intelligence

As early as the 1920s, psychologists proposed the existence of an emotional facet of intelligence. American psychologist Edward Thorndike called it “social intelligence,” or the ability to get along with others. In 1983, Howard Gardner at Harvard University published a groundbreaking work that paved the way for modern research into multiple types of intelligences. Around this time, and into the early 1990s, researchers such as Reuven Bar-On, Jack Mayer, Peter Salovey, and David Caruso were busy developing and testing scientific measures of Emotional Intelligence.

After the release of Daniel Goleman’s book Emotional Intelligence: Why It Can Matter More Than IQ in 1995, the principles of emotional and social intelligence became more mainstream and are now widely recognized as being an important factor in a person’s success.1 Alongside this now-popular construct is the demand for a valid and reliable way to measure EI: helping to engrain measurable development in the individual while also creating tangible ties to organizational outcomes. EI is no longer simply “a good thing to know about.” As we explore in this study, EI measures have embedded themselves into many organizational practices, including leadership development.

Dr. Margareta Sjölund from Kandidata Asia explains one of the prominent reasons for this shift and new approach. “Leaders today have to do more with less. They need to streamline information and processes in the face of increased communication and outsourced talent,” she said. “As a leader, you have to make people want to work with you. Understanding people, recognizing their wants and needs and capitalizing on that information effectively requires Emotional Intelligence, no matter where in the world you are. The necessity of human connection is universal.”

Further scientific and anecdotal evidence about the significance and rationale of using Emotional Intelligence in organizations is abundant. One recent Inc. Magazine article states “If leadership is mainly engaged in human relations, then leadership, at its core, is largely about emotions,” noting that Chip Conley of Joie de Vivre Hotels goes so far as to refer to the CEO as the “Chief Emotions Officer.”2 Another author advises in Forbes that leaders must become more emotionally intelligent “to be more effective and efficient at maximizing outcomes and desired results,”3 and an Organizational Dynamics article states that “….To be an effective leader, manager or professional, a person needs to understand and skillfully manage his emotions appropriately based on each person or situation and understand the emotional cues of others in order to effectively interact with others.”4

“The necessity of human
connection is universal”

Developing the next generation of corporate leaders is a key concern for HR executives today given the tenuous upturn in the economy and increasing departures of organizational leaders. In fact, after retaining and rewarding top employees, a 2012 Society for Human Resources Management survey found the second-greatest concern facing HR executives is the development of next generation leaders.5 With the generational exit of the baby boomers, steep learning curves for incoming executives, and tight Training & Development budgets, getting leadership development “right” is essential. “More than any other time in history, we have more generations and cultures having to work together. A manager could easily have three or four ethnicities and generations on their team, and understanding the needs of each of those groups requires [a high degree of] Emotional Intelligence,” Roger Pearman from Leadership Performance Systems said. “You simply cannot be successful in today’s environment without having the skills and understanding to communicate effectively cross-generationally and cross-culturally. Working with and through people is critical.”

Of the many topic areas leadership development can address, how can HR executives be sure that Emotional Intelligence isn’t just another “flavor of the month,” and that it will have a real, measurable business impact? This research addresses that very question, along with the corollary challenge of implementation—how can organizations incorporate Emotional Intelligence frameworks in their development programs and methods to build a high performance culture?