What is the Impact of Social & Emotional Intelligence on a Business’s Financial Status?

Article Contributed by Guest Author Pam Watson Korbel

Larry Linschneider, CEO & Owner of Linschneider Construction Co. (LCC), has watched his highway construction business slowly decline since 2008 when the recession hit the United States.

During the last 18 months, new projects are starting at a rate of 1 per month versus an average of 2 per month previously.  Consequently, sales revenues are 60% of the norm and profit has slid 5 percentage points to 3% for the past year.

More importantly, work is not fun for Linschneider anymore.  His employees act like children so he stopped having staff meetings.  The managers who report directly to him lack motivation so he quit managing them.  The ‘yard’ where equipment and supplies are stored is messy and two safety incidents occurred there in the past three months.  Plus, at a time when it would make sense for Linschneider to be re-kindling relationships to take advantage of potential construction opportunities, he chooses to withdraw even more spending most of his time in his office on his computer.  And two ‘A Player’ executives with LCC are now shopping for jobs with the competition.

While the names, company and statistics have been changed in this scenario, it is all too common.  Unfortunately, Larry Linschneider and many of his executive peers have not read any of the current literature about the impact of emotional intelligence on a business firm’s financial status.  If Larry and other executives had this information, they would have learned:

  • Lack of personal awareness among leaders is the number one cause of declining and failing businesses.  Larry has given up all his personal power to the karma called the economy.
  • Employees take their cues from their leaders on how to act and as a consequence change their behavior to mirror the boss.  Larry’s job isn’t fun anymore because attitudes are contagious.
  • Research by Six Seconds shows that 76% of business issues are people and relationship related versus 24% technical and financial.  Yet, executives like Larry spend hours tweaking cash flow reports to improve profitability.
  • Sales in companies that put a high value on people and relationships internally and externally can be as high as 37% more.  Small and mid-sized companies that focus on high customer service still find opportunities during economic downturns.
  • Profit in these same companies runs 27% higher, largely due to a company’s ability to take work away from competitors who do not value service and loyalty.
  • Employees with high achievement motivation, empathy and self confidence are more productive than those with just high intelligence.
  • The Gallup Organization’s research shows that 75% of workers are disengaged in their jobs resulting from the lack of useful feedback, poor assignment of tasks, not seeing the value of their work and working in a negative work environment.  Retention of ‘A Players’ is critical during a recession because forward-thinking companies consider this a good time to steal them away.

The research on emotional intelligence and its impact on business is convincing: hard results can be derived with soft skills.  Do you get it?

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