DOLLARS AND SENSE: HOW EI FEELS TO YOUR BOTTOM LINE

Raise the topic of emotional intelligence to a room full of business leaders, and a surprising number will respond with a dismissive eye-roll, as though you’ve suggested a group hug: Isn’t it enough that we run our businesses effectively, and provide our people with paying jobs?  Do we have to go all touchy-feely too? Of course you don’t – as long as you don’t mind losing money. Otherwise, you’d better address your EIQ, because there’s nothing touchy-feely about its impact on your bottom line.

How much impact are we talking about? At L’Oreal, sales agents selected on the basis of certain emotional competencies significantly outsold salespeople selected by using the company’s old selection procedure. 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 a 63 per cent lower rate of turnover during the first year than those selected in the typical way.

And those results aren’t unique to L’Oreal. AT&T participated in a large, cross-industry study that found in all levels of management (from line supervisors to senior executives) increased emotional intelligence measured through the company’s Emotional Intelligence Appraisal accounted for 20 per cent more productivity than low EI leaders. Of top performers, 91 per cent were high in EI, while only 26 per cent of low performers were high in EI. The US Air Force reduced recruiter turnover from 35 percent annually to 5 per cent annually by selecting candidates high in emotional intelligence, creating a total cost savings of $3 million per year on a $10,000 investment.

Without EI, disaster can occur, as it did a decade ago when America Online merged with Time Warner in a deal valued at a stunning $350 billion. To call the transaction the worst in history, as it is now taught in business schools, does not begin to tell the story of how some of the brightest minds in technology and media collaborated to produce such a debacle. Stephen M. Case, a co-founder of AOL and Time Warner chief executive Gerald M. Levin did not have the ability to figure out how to blend old media and new media culture. They were like different species—in fact, like species that were natural enemies. There are many reasons for the demise of this merger but one so intrinsic that it seems to have gone unaddressed: Mergers are a unique situation culturally, and demand a high degree of EI to get the newly-minted team pulling in the same direction.

During a merger or acquisition you have to manage culture in a different way. A common mistake is to confuse culture with people and to lump the cultural planning in with the people-planning stream of an integration team. There are two sets of ‘people’ challenges involved that come together during a merger, and each needs outstanding leadership and emotional intelligence to navigate successfully. In this case, the latter was non-existent. This isn’t the kind of history you want to make, is it?

Business is a battleground, and emotional intelligence is vital in terms of deployment, whether we’re talking about leading your troops to war or heading an organization. How emotionally involved people are during a meeting or during a battle can be seen from the harmony of their movements, in how they talk and interact with each other. Emotional intelligence will help you to guide your team safely through change, in the same way it would guide an officer in deploying a soldier through unfamiliar terrain. Emotional intelligence is imperative in understanding and controlling your team to get through the multiple struggles we experience on a daily basis. Ignore it at your peril.