Corporate leaders adept at intelligently using their emotions and working well with others can drive financial gains for their companies.
In a longitudinal study that examined financial contribution from leaders in an international consulting company, Richard Boyatzis from Case Western Reserve University's departments of organizational behavior and psychology applied a tipping point analysis (a component of complexity theory) to determine how much emotional and social intelligence behavior (EI and SI) a person needs to show to "tip" them into being outstanding. He tested EI and SI as seen by people around these leaders and then related it to revenue growth and profit. He found it plays a big role.
Cognitive competencies made a difference but no where near as great as the impact of EI and SI. "While brain power is always important in leadership," Boyatzis said, "but it is a threshold requirement. More of it does not insure better performance. In fact, above a satisfactory level, more cognitive intelligence often distracts a person from performance in most jobs."
The researcher followed 43 leaders of a multinational consulting company who were senior partners over seven financial periods to see if the gains were explained by the emotional, social, and cognitive competencies exhibited by the partners. On average the outstanding leaders, who exhibited at least 11 emotional and social competencies above the tipping point, contributed 192% more gross profit per senior partner per year than the other senior partners below the tipping point. This compared to a 50% greater contribution of gross profit from those above the tipping point in cognitive competencies as compared to their colleagues below the tipping point.
Co-author of the emotional intelligence books—Primal Leadership and Resonant Leadership, Boyatzis reported the study's results in the article, "Using tipping points of emotional intelligence and cognitive competencies to predict financial performance of leaders," in the current issue of the European journal, Psicothema.
"Emotional competency research will drive new insights into performance of leaders and how to develop it," stated Boyatzis. "By using advances in complexity theory, the tipping point analysis makes the results both more context sensitive and more predictive at the same time."
He added, "The tipping point theory applied to emotional competencies not only can predict but is a better way to forecast financial performance of company leaders."
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