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Download the full The Heart of Performance: The Business Case for Emotional Intelligence from Joshua Freedman and the Institute for Organizational Performance

The Case for EQ: Do Feelings Go To The Bottom Line?

Joshua Freedman

While there are many measures business success, ultimately a company is measured by its ability to sustain profitability. If emotional intelligence is of material value to your business, it's going to show up on the bottom line.

Profitability comes from bringing in more money than you spend; you can't cut your way to sustainable profit, nor can you sustain profit with mushrooming costs. But what makes your business profitable? What allows you to bring in more than you spend?

Most people point to sales and customer satisfaction as two of the most essential factors for the top line; if you can sell and create satisfied customers, they come back, they refer others, and money keeps coming in. Likewise, some basic areas for controlling costs are reducing turnover while increasing safety and productivity.

So the question is, "Does emotional intelligence help boost sales, improve customer satisfaction, reduce turnover, increase safety, and enhance productivity?"

Sales

When I ask sales people in all kinds of businesses for the key to their effectiveness, the first answer is "relationships." So if emotional intelligence is essential to building good relationships, and good relationships are essential to sales, it's no wonder that high EQ is a powerful force in improving sales. When the US Airforce selected recruiters (who are essentially salespeople) based on high EQ, they saved $2.7 million in a year (Richard Handley, 1999). Likewise, when L'Oreal used EQ to select sales agents, they gained over $2.5 million (Spencer, McClelland, & Kelner, 1997).

Customer Satisfaction

There's no question that a quality product is a powerful way to keep customers satisfied -- but it's not enough. In fact, most customers leave vendors for emotional reasons -- they don't like how they are treated or they don't have a good relationship with the vendor. The Forum Corporation on Manufacturing and Service Companies found that 70% of the reasons for losing customers and clients are EQ-related (1989 - 1995).

Turnover

In the same study at L'Oreal cited above, the "EQ Sales Agents" had 63% less turnover during the first year. In the same vein, 75% of careers are derailed for reasons related to emotional competencies, including inability to handle interpersonal problems; unsatisfactory team leadership during times of difficulty or conflict; or inability to adapt to change or elicit trust (The Center for Creative Leadership, 1994).

Safety

After supervisors in a manufacturing plant received training in emotional competencies, lost-time accidents were reduced by 50 percent, formal grievances were reduced from an average of 15 per year to 3 per year, and the plant exceeded productivity goals by $250,000 (Pesuric & Byham, 1996).

Productivity

Optimism is one of the fundamental skills in our EQ model. Optimists are more motivated, more successful, have higher levels of achievement, plus significantly better physical and mental health (Seligman, 1991). Trust is another outcome of relationships between people practicing their emotional intelligence skills -- and 50% of time wasted in business is due to lack of trust (John O. Whitney, Director, Deming Center for Quality Management).

In addition, organizations where people are practicing emotional intelligence are the kinds of places great people want to work. In Marcus Buckingham's Gallup research, he found only 26% of the workforce is engaged -- caring, connected, committed. Yet organizations with greater engagement are 40% more profitable.

Your organization may already be a place where people are practicing emotional intelligence skills and getting these unprecedented advantages -- if not, perhaps it's time to make it a focus?



About the Author

Joshua Freedman is the Director of Programs for Six Seconds EQ Network, an organization helping to lead the global movement to bring emotional intelligence into organizations, schools, and communities. Josh is also the Chairman of the International NexusEQ Conferences and the Editor of 'EQ Today' magazine. He can be reached by email at josh@6seconds.org; For more information about Josh, visit his web site: www.jmfreedman.com

When your organization is ready to implement emotional intelligence training, call Six Seconds EQ Network to assist you in making it part of your organizational culture. In addition to assessments and measures, we know how to teach your people to improve their emotional competence -- and to teach your leaders and trainers to teach others. For more resources on emotional intelligence, visit us online: www.6seconds.org


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