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

“Emotional Intelligence is absolutely not a passing fad. No matter what leadership model you are looking at or using, we see that EI competencies improve the bottom-line. Energy and emotions are contagious, and there is a body of science that demonstrates that. CEOs often come in with their arms folded and have to learn that understanding and applying emotions is a critical—and often lacking—skill.”

—Bob Anderson, CEO, 1Hero Sports

Impact of Emotional Intelligence on Leadership Development

The argument that Emotional Intelligence is a critical component of effective leadership is an intuitive and persuasive one. Executives who possess higher levels of specific EI attributes (empathy, self-regard, reality testing and problem solving) were more likely to yield higher profit earnings.9 As Bill George succinctly put it, “I have never seen leaders fail for lack of raw intelligence, but have observed […] more than a hundred who have failed for lack of […] Emotional Intelligence.”10

But does individual leadership effectiveness translate to an organization’s bottom
line, and if so, how? Following the work of others,11 we hypothesized that a leader’s
Emotional Intelligence impacts workplace norms and plays a part in creating a
high-performance culture, which impacts an organization’s financial performance

(see Fig. 9).

Fig. 9: Emotional Intelligence at Work in Organizations

Indeed, we find in our research that organizations that value and widely use Emotional Intelligence are 3.2x more likely than other organizations to have effective overall leadership development efforts (see Fig. 10 & 11). There is a 31 percentage point gap in effectiveness between organizations in which Emotional Intelligence is valued versus those in which it is not. Additionally, organizations that integrate Emotional Intelligence in at least two different ways are 25% more likely to report extremely effective leadership development. Only 15% of organizations that do not widely implement EI report having effective Leadership Development—versus 40% of organizations that do widely implement EI. These many differences are large and worthy of a discussion about what outcomes an organizational focus on EQ can result in.

Effective methods of integrating Emotional Intelligence include:

  • Using assessments that evaluate an individual’s Emotional Intelligence level
  • Incorporating Emotional intelligence as a topic in Training & Development courses
  • Including improvements in Emotional Intelligence as an objective for leadership/executive coaching

Fig. 10: The Impact Valuing EI has on Effective Leadership Development

Figure 10 shows that organizations that
value Emotional Intelligence are 3x more
likely to experience effective Leadership Development.

Fig. 11: The Impact Integrating EI has on Effective Leadership Development

Figure 11 demonstrates that organizations
that widely integrate Emotional Intelligence
are 25% more likely to report effective
Leadership Development.

“Investing in training and better understanding of what it means to be a leader is critical. We do it at MHS and we do it heavily. If you invest in these activities with entry level employees, they are made aware of their potential immediately; that is an empowering prospect.”

—Dr. Steven Stein, Chief ExecutiVe Officer, MHS

Looking at those specific ways that EI can be integrated within organizational initiatives
demonstrates even more clearly the ROI that can be experienced (see Fig. 12). An organization that address and implements EQ in multiple dimensions can expect its leaders to behave in a way that reflects specific emotionally intelligent traits such as empathy, self-regard, stress tolerance, optimism and interpersonal skills, among others. Our data found that implementing Emotional Intelligence within organizational practices is associated with higher overall organizational performance on all of the Emotional Intelligence traits we measured.

Each instance examined—using Emotional Intelligence assessments for individual evaluations, to assign roles and responsibilities, as a Training & Development course topic, and as a coaching objective—positively impacts an organizations’ overall performance on Emotional Intelligence competencies. The greatest impact occurs when organizations incorporate Emotional Intelligence in leadership coaching, producing a 36% gap in EI performance between organizations that do and do not deploy it in this way.

Fig. 12: Impact of EI Integration on Overall EI Performance

Figure 12 demonstrates the positive performance experienced by organizations that incorporate Emotional Intelligence. Companies that use EI assessments, incorporate EI as a coaching objective, as a training and development topic, and/or as a method to influence roles can expect higher organizational performance as a result.

Finally, while it is important to acknowledge that many different factors influence revenue growth in any given organization, our data finds that organizations that use assessments to track or measure Emotional Intelligence are more likely to report positive revenue growth rates than other organizations (see Fig. 13). Specifically, of organizations that measure EQ with assessments, 72% report positive revenue growth over the prior year. By contrast, only 56% of organizations that don’t measure EI with assessments report positive growth. Organizations that measure EI in this way report 16% more positive revenue growth, further making the case for comprehensively integrating Emotional Intelligence in business.

Fig. 13: Impact of EI Assessments on Revenue Growth

Figure 13 displays the percentage of respondents who report positive revenue growth and
whether or not they use EI assessments.