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The Business Case for Emotional Intelligence
by Dr. J P Pawliw-Fry

The following 14 points, compiled by Cary Cherniss, build a case for how emotional intelligence contributes to the bottom line in organizations. This data comes from a variety of sources and makes the business case for the use of emotional intelligence in your organization.
  1. Learned Optimism Generates Greater Sales in Life Insurance
    Optimism is another emotional competence that leads to increased productivity. New salesmen at Met Life who scored high on a test of "learned optimism" sold 37 percent more life insurance in their first two years than pessimists (Seligman, 1990). A study of 130 executives found that how well people handled their own emotions determined how much people around them preferred to deal with them (Walter V. Clarke Associates, 1997).
  2. Top Performers are More Productive … and it’s emotional competence that makes them that way
    In jobs of medium complexity (sales clerks, mechanics), 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 (insurance salespeople, account managers), 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.
  3. Increased Sales, Reduced Turnover at L’Oreal
    At L’Oreal, sales agents selected on the basis of certain emotional competencies - including learned optimism - significantly out sold salespeople selected using the company’s old selection procedure. In the most complex jobs (insurance salespeople, account managers), a top performer is 127 percent more productive than an average performer (Hunter, Schmidt, & Judiesch, 1990). 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 63% less turnover during the first year than those selected in the typical way (Spencer & Spencer, 1993; Spencer, McClelland, & Kelner, 1997).
  4. Increased Sales at Life Insurance Company
    In a national insurance company, insurance sales agents who were weak in emotional competencies such as self-confidence, learned optimism, initiative, and empathy sold policies with an average premium of $54,000. Those who were very strong in at least 5 of 8 key emotional competencies sold policies worth $114,000 (Hay/McBer Research and Innovation Group, 1997).
  5. Improved Executive Performance in a Multinational Beverage Firm
    In a large beverage firm, using standard methods to hire division presidents, 50% left within two years, mostly because of poor performance. When they started selecting based on emotional competencies such as initiative, self-confidence, and leadership, only 6% left in two years. The executives selected based on emotional competence were far more likely to perform in the top third based on salary bonuses for performance of the divisions they led: 87% were in the top third. In addition, division leaders with these competencies outperformed their targets by 15 to 20 percent. Those who lacked them under-performed by almost 20% (McClelland, 1999).
  6. Preventing Executive Derailment
    Research by the Center for Creative Leadership has found that the primary causes of derailment in executives involve deficits in emotional competence. The three primary ones are difficulty in handling change, not being able to work well in a team, and poor interpersonal relations.
  7. Social Skills Training for Supervisors Leads to Productivity Gains in Manufacturing
    After supervisors in a manufacturing plant received training in emotional competencies such as how to listen better and help employees resolve problems on their own. After training: lost-time accidents were reduced by 50 percent formal grievances were reduced from an average of 15 per year to 3 per year the plant exceeded productivity goals by $250,000 (Pesuric & Byham, 1996). In another manufacturing plant where supervisors received similar training: production increased 17 percent. There was no such increase in production for a group of matched supervisors who were not trained (Porras & Anderson, 1981).
  8. Accurate Self-Assessment Leads to Superior Performance in Managers
    One of the foundations of emotional competence -- accurate self-assessment -- was associated with superior performance among several hundred managers from 12 different organizations (Boyatzis, 1982).
  9. Self-Regulation Produces Success in Store Managers
    Another emotional competence, the ability to handle stress, was linked to success as a store manager in a retail chain. The most successful store managers were those best able to handle stress. Success was based on net profits, sales per square foot, sales per employee, and per dollar inventory investment (Lusch & Serpkeuci, 1990).
  10. Emotional Competence Helps Computer Sales Reps to Finish Training Successfully
    For sales reps at a computer company, those hired based on their emotional competence were 90% more likely to finish their training than those hired on other criteria (Hay/McBer Research and Innovation Group, 1997).
  11. Emotional Competence Reduces the Drop-out Rate in Sales
    At a national furniture retailer, sales people hired based on emotional competence had half the dropout rate during their first year (Hay/McBer Research and Innovation Group, 1997).
  12. Emotional Intelligence Leads to Success in Top Executives Around the World
    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. In other words, emotional intelligence was a better predictor of success than either relevant previous experience or high IQ. More specifically, the executive was high in emotional intelligence in 74 percent of the successes and only in 24 percent of the failures.
The study included executives in Latin America, Germany, and Japan, and the results were almost identical in all three cultures.

Copyright Dr. Pawliw-Fry. All Rights Reserved.

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