Recently, a friend approached me and posed this question, "Do you think that if the leaders of Enron Corp., WorldCom Inc. and the venerable Andersen accounting firm, were emotionally intelligent, that they would have made the same destructive decisions that resulted in such detrimental consequences for their companies?"
The collapse of such celebrated names has raised fundamental doubts about integrity, and yet this question about emotionally intelligent (EI) competencies and ethical leadership raises intriguing possibilities.
Daniel Goleman, author of "Emotional Intelligence" (Bantam, 1995), "Working with Emotional Intelligence" (Bantam,1998) and "Primal Leadership" (Harvard Business School Press, 2002), collected data from 188 recruitment and leadership development companies that identified, trained and promoted people into leadership positions.
His analysis indicated that EI was twice as important as IQ and technical skills combined, as an indicator of excellent performance. The higher the rank of a person considered to be a star performer, the more emotional intelligence capabilities were identified as the reason for his or her effectiveness.
Goleman and his colleagues identified five components of emotional intelligence:
Self-awareness: The ability to recognize and understand your moods, emotions and drives as well as their effect on others.
Self-regulation: The ability to control or redirect disruptive impulses and moods as well as the ability to suspend judgment, to think before acting.
Motivation: A passion to work for reasons that go beyond money or status and a propensity to pursue goals with energy and persistence.
Empathy: The ability to understand the emotional makeup of other people and the skill in treating people according to their emotional reactions.
Social skill: Proficiency in managing relationships and building networks and an ability to find common ground and build rapport.
It is difficult to imagine that leaders who possess these qualities could make the same decisions that resulted in the demise of their organizations. Had the leaders of Enron, WorldCom Inc. and Andersen had the ability for self-awareness and self- regulation, I wonder if they would have elected to create financial smoke screens, "doctor the books," etc.
If these leaders had a passion to work for reasons other than money and status, what difference would that passion have made in their behavior and decision-making?
If the leaders of these companies learned the skill of empathy, understanding the emotional makeup of other people, and looked to find common ground, how could they choose to make decisions that had the potential to destroy the livelihood of their employees and destroy the confidence of their stakeholders?
We know that there is a clear business case for assessing and coaching emotional intelligence competencies in the workplace.
Cary Cherniss, Ph.D., chairman of the Consortium for Research on Emotional Intelligence in Organizations, compiled a number of scenarios that validate the significance of emotional intelligence to the bottom line.
Included in his report are the following: In jobs of medium complexity, a top performer is 12 times more productive than those at the bottom and 85 percent more productive than an average performer. In the most complex jobs, a top performer is 127 percent more productive than an average performer (Hunter, Schmidt, & Judiesch, 1990).
Competency research in over 200 companies and organizations worldwide suggests that about one-third of this difference is due to technical skill and cognitive ability, while two-thirds is due to emotional competence (Goleman, 1998). In top leadership positions, over four-fifths of the difference is due to emotional competence.
After supervisors in a manufacturing plant were taught emotional competencies such as how to listen and help employees resolve problems on their own, lost-time accidents were reduced by 50 percent, formal grievances were reduced from an average of 15 per year to three per year, and the plant exceeded productivity goals by $250,000 (Pesuric & Byham, 1996).
In another manufacturing plant where supervisors received similar coaching, production increased 17 percent. There was no such increase in production for a group of matched supervisors who did not have coaching (Porras & Anderson, 1981).
For 515 senior executives analyzed by the search firm Egon Zehnder International, those who were primarily strong in emotional intelligence were more likely to succeed than those who were strongest in either relevant previous experience or IQ. The study included executives in Latin America, Germany and Japan, and the results were almost identical in all three cultures.
I appreciate the complexities of our human condition. I don’t assume that there is one simple way to assess which leaders have the capacity for ethical decision-making.
However, in addition to the business case for EI, perhaps assessing the emotional intelligence of leaders could offer an important lens for understanding their view of the world and the potential decisions they may make.
I suspect that there were indicators long before the leaders of Enron, WorldCom Inc. and the like, ever ended up in the CEO suite. What difference would it have made in each of those companies if their leaders had strong emotional intelligence?
Karen Vernal is president of Milwaukee-based Vernal Management Consultants LLC (www.vernalmgmt.com), which is the only Midwest leadership consulting firm certified in emotional intelligence by the Institute for Health and Human Potential. She can be reached at (414) 271-5148.
April 15, 2005, Small Business Times, Milwaukee, WI
