Why More 'Emotional Intelligence' Means More Money for Entrepreneurs
While marketing tactics abound for fueling growth for startups and big-name brands alike, many entrepreneurs ultimately succeed or fail based almost entirely on their skills and personality.
This doesn’t refer just to industry knowledge. Instead, business is built on relationships -- especially in the startup world. To succeed, entrepreneurs must also hone their emotional intelligence, or “EQ.”
Psychology Today defines EQ as “the ability to identify and manage one’s own emotions, as well as the emotions of others.” And people steeped in it understand how to control their emotions in a way that enhances, rather than detracts from, their problem-solving abilities. In fact, a test of workplace skills by TalentSmart determined that, "Emotional intelligence is the strongest predictor of performance, explaining a full 58 percent of success in all types of jobs.”
Self-awareness improves decision-making.
A key element of emotional intelligence is self-awareness, in other words being consistently aware of your feelings so you can keep them under control and understand how they affect you in your day-to-day work.
In a phone conversation, Daniel Puder, founder and CEO of My Life My Power Institute, highlighted just how important it is to manage one’s own emotions. “Any time you lose control of your emotions, you’re going to make a mistake," he said. "I’ve seen this both in my [management marketing analytics] career and in my nonprofit work. When you let an emotional reaction cloud your decision-making process, your perception is distorted. As a result, you make mistakes you wouldn’t otherwise make.”
What Puder referred to was a scenario in which when a setback occurs, someone with high emotional intelligence is accountable for his or her feelings and finds appropriate ways to express any frustration felt. An EQ individual understands that while you can’t control everything that affects your business, your reaction will impact what comes next.
Someone with high emotional intelligence won't be distraught by an early entrepreneurial failure. Instead, he or she will actively look for ways to bounce back.
Com Mirza, who today runs a nine-figure company, notably failed with his first eight companies and lost millions of dollars in investments. Writing for Entrepreneur, he explained, “I stopped getting angry and frustrated; I started getting proactive and resourceful. I stopped doing business haphazardly; I started building an efficient, accurate system to take back control of my life.” This emotionally intelligent approach helped Mirza turn things around and launch a successful business.
Self-awareness also helps you avoid impulsive decision-making.
Though we entrepreneurs are generally more willing to take risks than the average person, any decision should still be seen as a calculated risk. By not letting extreme positive or negative emotions cloud your judgment, you can take a step back, look at the bigger picture and make a more rational decision.
Strong EQ also breeds optimism and resiliency, vital traits for navigating the ups and downs that come with running a business. I’ve found that learning to control my own emotions helps me avoid slipping into an unproductive funk when problems arise, allowing me to instead search for meaningful solutions. This more innovative approach helps me find the solutions that keep me in business.
Of course, there is a difference between managing your emotions and suppressing them. As Anton Chumak Andryakov wrote for Entrepreneur, “No matter what the emotion is, you must remember to keep it balanced, authentic to you and the situation, and you must be proactive and not reactive with it. Don’t be a robot; and go show some emotion.” Expressing feelings appropriately is a key part of emotional intelligence -- especially when you interact with others.
Learn to understand others better.
Social awareness and relationship management are crucial outward-facing components of emotional intelligence, especially in terms of customer relationships.
Business conversations, after all, are key to networking and closing sales.
Of course, such conversations are truly effective only when you understand the pain points of the person you are speaking with. Being genuine and honest in your conversations -- admitting, for example, when you don’t know the answer -- may seem like basic tips, but they are essential for building rapport and empathy with sales prospects.
When you display empathy, customers will open up to you, becoming more willing to share their experiences. As a result, you’ll gain key insights, allowing you to fine-tune your sales pitch or better adapt your products and services to meet customers' needs. With these key elements in place, higher sales results are sure to follow.
A great example of this is JetBlue’s “Flight Etiquette” videos. Though humorous in nature, these videos show that the brand understands the inconveniences that occur when other passengers aren’t courteous. By empathizing with customers’ pain points, JetBlue gets its desired messages across while bolstering its brand image as a customer-service oriented business.
Social awareness and relationship management also come into play when you're building your company’s team. Emotional intelligence helps you establish a positive culture that encourages employees to give their best effort.
By keeping your cool when things go wrong and always treating team members with respect, you foster loyalty and reduce employee turnover. A Deloitte study described by the Huffington Post found that the costs associated with losing a single employee can exceed twice that individual’s annual salary. In contrast, a study by Initiative One Leadership Institute described by Entrepreneur found that workers are "400 percent less likely to leave a job if they have a high EQ manager.”
Big savings result when you improve your EQ.
Emotional intelligence is just as crucial for managing and retaining remote employees. As Rebecca Knight wrote in an article for the Harvard Business Review, “Managers must put in extra effort to cultivate a positive team dynamic and ensure remote workers feel connected to other colleagues … Concentrate on what you and your direct reports have in common -- organizational goals and objectives, for example.”
Then, use consistent communication and positive reinforcement to enhance the team dynamic.
Making the change.
As with any other skill, emotional intelligence isn’t something that comes naturally to everyone. That’s okay. Practicing key EQ attributes and learning to take a proactive role in controlling your emotional state will help you improve these crucial skills over time.
Though you may not notice an immediate change to your bottom line, controlling your emotions and working to better empathize with others will ultimately guide your business efforts in the right direction.