The importance of emotional intelligence in business

According to Kim Morris Lee, director of organizational effectiveness at the University of Illinois, when the U.S. Air Force started considering emotional intelligence during their selection of recruits, their financial loss through recruiting people who weren’t suitable for the military branch went down by a huge 92 percent.

With such a compelling result, you’d think emotional intelligence would be on top of the agenda for every organization, but surprisingly it seems that many haven’t yet embraced its virtues.

Understanding exactly what emotional intelligence is, and the benefits it brings, may be what’s needed.

How did the term emotional intelligence (EI) emerge?

It was Daniel Goleman’s book, Emotional Intelligence: Why it can matter more than IQ that put EI on the map in the mid-1990s (following Peter Salovey and John Mayer’s studies five years before), though the term had actually been coined first in the 1970s in a doctoral dissertation by Wayne Payne. Signs of a type of acumen other than cognitive intelligence (IQ) had emerged much earlier, however, in the 1920s, when psychologist Edward Thorndike studied what he termed social intelligence: the ability to understand and manage men and women and girls, to act wisely in human relations.

Going back much further, the demands of living together cooperatively drove our need for emotional intelligence, as our brain development proves. According to the Smithsonian, the human brain had a growth spurt between two million and 800,000 years ago, when early humans started to move around the globe and interact with others. Growth was even greater (doubling the brain in size) between then and 200,000 years ago when these early humans began living together in larger, more complex groups and communities. For the first time, they now had to learn to manage multiple relationships and communicate with language. This all required a greater mental capacity and therefore a larger brain. Interestingly, this social development (which is related to emotional quotient, or EQ) stimulated far more brain growth than previous societal developments such as learning to make and use tools (which is IQ-related).

What exactly does emotional intelligence entail?

There are differing models for EI, but they broadly encompass two main areas:

The ability to understand and manage ourselves and our emotions in any situation. Understanding what made us who we are today (values, beliefs, experiences) and what triggers us to react to a situation or conversation. Learning to feel and interpret the emotions that come over us, knowing how to manage them and how to adapt our behavior accordingly. Being motivated to set and achieve our goals, and having self-compassion and self-control.

The ability to understand and manage relationships in any situation. Using empathy to relate to other people, understand their emotions and predicaments and adapt our behavior around those. Understanding the wider business needs and collaborating with others through teamwork. Helping other people develop through coaching, influencing and inspiring.

To this mix I would also add “caring” and “kindness.” You could say that whether a person is caring not is usually part of their personality, which, like our IQ and unlike EQ, is pretty much fixed very early on in life. However, through building our EQ skills, along with self-compassion, our softer qualities are given the chance to surface naturally. As Nelson Mandela said, “No one is born hating another person because of the colour of his skin, or his background, or his religion. People must learn to hate, and if they can learn to hate, they can be taught to love, for love comes more naturally to the human heart than its opposite.”

Why is EI so important in business?

If these abilities aren’t evidence enough of the importance of EI to an individual’s business relationships and performance, then the statistics are. For a so-called “soft” skill, a remarkable amount of research measures the impact of a high EQ compared to a low EQ. The overwhelming evidence: The higher a person’s EQ, the more likely they are to perform well. TalentSmart states, “Of all the people we’ve studied at work, we’ve found that 90 percent of top performers are also high in emotional intelligence…. Just 20 percent of bottom performers are high in EI . You can be a top performer without emotional intelligence, but the chances are slim.

And the higher proportion of high EQ-ers in an organization, the more successful the organization is likely to be. Kim Morris Lee backs this up: “When senior managers had high emotional intelligence capabilities, their divisions outperformed yearly earnings goals by 20 percent.

And all this leads to financial benefits for individuals. As Travis Bradberry, author of Emotional Intelligence 2.0 writes, “Naturally, people with a high degree of emotional intelligence make more money—an average of $29,000 more per year than people with a low degree of emotional intelligence. The link between emotional intelligence and earnings is so direct that every point increase in emotional intelligence adds $1,300 to an annual salary.”

And the same goes for the aggregate of EQ in organizations. Professors Malcolm Higgs and Victor Dulewicz concluded through their research, as published in their book Making Sense of Emotional Intelligence, that the aspects in a corporate strategy that involve emotional intelligence are equally as important to performance results as the rational aspects.

emotional intelligence

Investing in EI training improved individuals’ EI by 18 percent…. Conservative estimates suggest that [this] would lead to a 150 percent increase in pre-tax profits.”

Added to this is the increase in the automation of jobs. According to the BBC, an Oxford University and Deloitte study found that 35 percent of jobs in the U.K. and 47 percent of jobs in the U.S. are in danger of being replaced by automation and robots in the next 20 years.

Thankfully, some skills cannot be replicated by an automated machine (yet), and it’s these skills that will make the perfect partnership in the future between robots and their human colleagues; skills that already link with high performance, but that in the future will also ensure maintaining jobs for people as opposed to robots. These important skills include good judgment, creativity and–you guessed it–emotional intelligence.

Written by Penelope Newton-Hurley for CW Magazine.