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4 Reasons Emotionally Intelligent Leaders Impact the Bottom Line Think emotional intelligence is "fluffy" concept? Think again. Emotional intelligence is linked to star performance and business success.

By Sara Caroline Sabin Edited by Jessica Thomas

Opinions expressed by Entrepreneur contributors are their own.

Luis Alvarez | Getty Images

If you're a leader, chances are good you've been reading and hearing about emotional intelligence more often than normal lately. Emotional intelligence goes beyond empathy and listening to others. These qualities, while important, are not by themselves going to make you an effective leader. You need self-awareness, courage, the ability to tell people what they don't want to hear (but need to hear) in the right way, assertiveness and influence. If we have high EQ, not only do we tend to have more self-awareness and mastery of our own emotions, but we also have more social awareness and can adapt our communication style and language to suit our audience and build relationships.

Why should we care about emotional intelligence in a work environment? What impact does it really have on the bottom line?

According to a study by Development Dimensions International, which did a global leadership forecast study in 2011, with responses from 1,897 human resources professionals and 12,423 leaders from 74 countries, in the area of key metrics like financial performance, organizations with the highest quality leaders were 13 times more likely to outperform their industry competitors.

So, how does emotional intelligence contribute to high quality leadership?

The most effective leaders are all alike in one crucial way: They all have a high degree of what has come to be known as emotional intelligence. It's not that IQ and technical skills are irrelevant. They do matter, but...they are the entry-level requirements for executive positions. -Daniel Goleman

1. Emotional intelligence is linked to high performance

Travis Bradberry, an emotional intelligence expert, studied the emotional intelligence of personalities within the workplace, and discovered that emotional intelligence was the strongest predictor of high performance in all types of jobs. In a survey carried out by TalentSmart, of which Dr. Bradberry is co-founder, they found that:

  • 90 percent of the top performers were high in emotional intelligence, with a higher average income per year and an increase by one point of emotional intelligence contributing to as much as an extra $1,300 in annual salary.
  • 20 percent of low performers were high in emotional intelligence.
  • Emotional intelligence also accounted for up to 60 percent of the job performance for supervisors through CEOs.

High-performing leaders equates to better quality leadership and better results for the business.

Related Article: Why You Need Emotional Intelligence to Succeed in Business

2. There are relatively few leaders high in EQ in senior leadership positions

The interesting point is that despite emotional intelligence being linked to high performance, senior leadership does not often reflect this. Bradberry discovered a trend through measuring the emotional intelligence of 100,000 senior executives across industries in six continents.

The emotional intelligence of an executive rises as they climb managerial positions, peaking at manager level and dropping off significantly to the CEO position.

This means that most executives that are promoted have the least emotional intelligence, even though it's a strong predictor of performance and great leadership.

These statistics present a golden opportunity for companies that are looking to be future intelligent and competitive by recognizing, developing and supporting leaders to become more emotionally intelligent, and then helping them to rise to the top of the company.

Related Article: 5 Reasons Why Emotional Intelligence Is the Future of Work

3. Emotionally intelligent leaders lead higher performing teams

According to research by the Goleman EI, 80 percent of employees with poor manager relationships are disengaged, and 50 percent of former employees left to get away from their manager.

High employee turnover can be a huge cost to a business, and if the problem with the managers concerned is allowed to continue, then it might be difficult to recruit and retain going forward as well.

On the other hand, engaged employees who are inspired and motivated by a high-quality leader will perform at a higher level. Where employees feel that they are being treated with respect and feel listened to and understood, it creates loyalty and the sense of being one team.

One of the keys to being constantly innovative as a company is to encourage and champion appropriate ideas from your team. That will not happen unless a leader creates "psychological safety," an idea first introduced by Amy Edmondson, a Harvard professor, who says that this is necessary for employees to grow, improve and learn from their mistakes. If employees feel safe and think that their leaders are on their side, they will be more creative and productive.

4. Emotionally intelligent leaders know their customer

Brand loyalty is hard to come by. There are many contenders vying for the attention of customers, and unless there is a compelling reason to stay, customers don't care about who they use as much as we might think they do. We wouldn't have to spend so much time worrying about what the competition was doing if we were secure in the value and customer care that we were providing to our customers.

How about rather than seeing our customers as numbers, invoices and turnover, we started to understand what our customers really want, need and value? In other words, we start to see them on a very human level. If we are emotionally intelligent as leaders, we will have taken the time to listen and ask questions either directly to our customers or through listening to our frontline employees.

With the pace of technology accelerating rapidly, it's time for us to focus on the aspects of us that make us human. Our creativity, empathy, innovation and awareness. In the workplace of the future, our ability to capitalize upon this, and develop it in others, might ultimately lead to our company's success or failure.

The tangible bottom line benefits of emotional intelligence are there. It takes some effort to develop and hone EQ. By doing so, you will continue to reap the benefits tomorrow and in the years to come.

Related Article: At Work, Emotional Intelligence Pays

Sara Caroline Sabin

Transformational Leadership & Business Coach

Sara Sabin is an entrepreneur and a transformational coach. Sabin works with leaders who want to make a big impact. She coaches them to shift into their powerful leadership identity, create an empowered team culture and approach business challenges in a unique way to build a thriving business.

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