Emotional Intelligence – What is it and why is it Important for your Business?

Jyoti Narain Blog Emotional Intelligence – What is it and why is it Important for your Business?

Undoubtedly, an effective leadership is critical for achieving business goals. In the modern workplace characterized by open communication and teamwork, a leader must understand their followers and know how to motivate them properly.

That’s why the business world has been paying an increased attention to “emotional intelligence”, a term first coined in the 1960s by researchers Peter Salovey and John Mayer. This ability has been recognized as an important one to succeeding as both a leader and an employee and achieving business goals more effectively.

For example, The Future of Jobs, a recent report published by the World Economic Forum, named emotional intelligence as one of the top 10 skills desired by employees by 2025.

In this article, let’s explore emotional intelligence more in-depth and define why it’s so important for your business.

What is Emotional Intelligence (EI)?

According to The Future of Jobs, emotional intelligence is defined as “being aware of others’ reaction and understanding why they react as they do.” Also, it’s the ability to identify and manage own emotions.

Daniel Coleman, one of the most prominent advocates of the concept who wrote Emotional Intelligence: Why it Can Matter More than IQ, define five crucial skills of emotional intelligence. They include:

Self-awareness – the ability to identify and understand emotions of other people and the ways how they impact others around them

Self-regulation – the ability to think before acting and manage impulses

Internal motivation – the drive to achieve goals for personal reasons, not for rewards and recognition

Empathy – the ability to identify and understand motivations of other people

Social skills – the ability to effectively manage relationships and build teams.

Why is emotional intelligence important for businesses?

So, the concept of emotional intelligence says that personal qualities such as the ones listed above strongly influence both personal and business success in the modern workplace.

“In terms of businesses, it can impact everyday decisions they make, including hiring, promoting, leading, and firing,” explains Mike Booker, an HR consultant. “On the other hand, in terms of personal success, a leader possessing emotional intelligence knows how to handle failures, motivate followers, and maintain self-control in critical situations.”

In fact, Jack Welch once said in an interview to the Wall Street Journal:

“A leader’s intelligence has to have a strong emotional component. He/she has to have high levels of self-awareness, maturity and self-control.”

Let’s begin by discussing how assessing emotional intelligence of your existing and potential employees could improve the performance of your business.

Benefits of emotional intelligence in the workplace

Multiple organisations use EQ to make important decisions, such as, hiring employees and deciding on pay rises. The World Economic Forum (2016) ranked emotional intelligence sixth in the top ten skills employees need by 2025 to succeed in the future workplace.

Other benefits of being an emotionally intelligent leader include:

  • Providing effective communication
  • Predicting staff reactions to negative news and aptly preparing for this
  • Effectively listening
  • Successfully managing difficult situations
  • Recognising potential mental health risks to staff
  • Making employees feel comfortable in sharing ideas and concerns with you
  • Remaining optimistic and having a positive attitude
  • Gaining trust and loyalty quickly which subsequently increases staff performance
  • Being empathetic and compassionate towards staff and clients
  • Remaining calm and handling pressure effectively
  • Being open to positive and negative feedback
  • Influencing and inspiring staff which helps when trying to gain support for future projects
  • Motivating yourself and your staff
  • Resolving conflict fairly
World Economic Forum skills ranking

World Economic Forum (2016) ranked emotional intelligence sixth in the top ten skills employees need by 2025.

The impact on emotional intelligence on employee performance

There are many ways in which emotional intelligence influences performance of employees, and the evidence of that influence is well-known. For example, business scholars have conducted a number of studies probing the topic and here’s what they found.

Earlier studies like this one from CareerBuilder found that 71 percent of employers (HR professionals and hiring managers) viewed emotional intelligence more important than IQ. When asked why they thought that way, employees with high EI:

  • Admit and learn from their mistakes
  • Possess excellent conflict resolution skills
  • Are more likely to remain calm under pressure
  • Tend to make more thought-out business decisions
  • Take criticism well
  • Keep emotions in check

These results are supported by more recent studies. For example, this 2017 study published in Human Performance Journal also found that emotional intelligence was a predictor of job performance in social jobs. Researchers also believed that emotional intelligence came naturally to some people, but could also be enhanced in others with training and performance.

Therefore, by assessing emotional intelligence in potential employees and improving these skills and abilities in the current ones, you may improve job performance of your workforce. You can find resources for testing and tips on developing emotional intelligence after the next section.


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