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From a CEO’s mouth: Emotional intelligence matters most

Over the weekend I had dinner with a friend of mine who is a CEO of a diversified foods and investment firm based in New Zealand.

He’s a pretty successful chap. He has multiplied the turnover of the business he runs by a factor of six in under a decade. Now his job is to hire, motivate and sometimes fire the business unit managers who run the various parts of the company.

I asked him what the key factor is when he decides who to hire and fire. His response: It’s all about the balance of IQ and EQ (by which he meant emotional intelligence, also known as EI).

In your twenties and early thirties, you can go a long way on your IQ alone, he reckons. But by your mid-thirties, if you haven’t developed a real sense of EQ, and put it into practice for a while, you just can’t succeed.

Personal relationships are everything in an entrepreneurial and fast-growing business such as his.

Any unit boss who cannot develop and manage these well is out by 35 in his firm.

We’ve all read or heard of Daniel Goleman’s work in the area, more about him and others here.

Assessing people on how they relate to others is nothing new of course. Good managers and bosses have done it for centuries.

Ultimately you can make money and create little value (like many in finance) with IQ, but to build a real business, sustain successful relationships and motivate people, EQ/EI is what counts.

I suppose one of the main reasons we need a corporate responsibility movement/profession/occasionally dubious trade is because big companies have become so IQ focused (management by spreadsheet, MBA’s with Game Theory ideas, financial relationships with suppliers rather than personal)that they don’t take the time develop lasting relationships, internally and externally.

That’s the price of progress in a way: If we want big, globally minded companies to sustain our pensions and dividends and push down costs, that’s what happens. Fund managers demand it, lunch is for wimps, contracts become instead a limp handshake with a buyer in the foyer of Tesco’s HQ, etc etc.

My CEO friend believes those days of spreadsheet management alone are very much numbered. The next generation of business managers and heads are going to have have those softer skills to manage successfully in the coming years, in his view.

The world is becoming an ever more complex place. Opportunities to source goods will open up world-wide: So why should your customer buy from you, and you from them? Because you know and trust them. That’s worth more than a 0.5% discount in a volatile world, says my friend, who has done deals all over the world for decades.

I believe he is right. Time to look harder again at what we teach in business schools and universities.

1 Comment

  1. Great piece Toby, thanks, it struck a chord with me because 'soft' skills are inadvertently derided in management literature and culture. I wrote a recent post on a dozen ways to build a better corporate culture and I got some great feedback. Emotional intelligence and its impact on corporate culture is a tip of the iceberg leadership issue. Regards, Alexis

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