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Emotionally Intelligent Leadership

As leaders around the world have learned about emotional intelligence, many have immediately seen how these concepts could improve critical areas of people-performance. World-leading organizations from American Express to Federal Express, from the US Air Force to Sheraton are experimenting with emotional intelligence as a component of competitive advantage.

The Harvard Business Review (HBR), one of the most prestigious sources of business-best-practice, has released several articles on emotional intelligence. Their 1997 article by psychologist and author Daniel Goleman ranks as their most requested article ever. This popularity led the HBR to re-examine the data on emotional intelligence again in 2003. Their conclusion:

“In hard times, the soft stuff often goes away. But emotional intelligence, it turns out, isn’t so soft. If emotional obliviousness jeopardizes your ability to perform, fend off aggressors, or be compassionate in a crisis, no amount of attention to the bottom line will protect your career. Emotional intelligence isn’t a luxury you can dispense with in tough times. It’s a basic tool that, deployed with finesse, is the key to professional success.”[i]

Your organization is made of people, processes, and property. For a long time, “common wisdom” has been that returns come from investing in the latter two. Yet, in the last decades, new research has challenged that assumption and is increasingly proving that a company’s people are the differentiating factor.

In fact, for most businesses, products and property yield little competitive advantage. You develop a new process, and in a week your competitor replicates it. You increase efficiency and lower product cost, and next month a better version is being produced more cheaply in another country. You invest in specialized equipment – and so does the guy down the street.

So where can today’s businesses find competitive advantage? With a mobile workforce, globalization, and on-demand information, products and property are not enough. Exceptional organizations are investing in their relationships with customers, employees, and leaders – and over the next decades the people side will increasingly become the only meaningful competitive advantage. And if emotional intelligence helps build customer and employee loyalty, helps people innovate and perform, helps leaders build value, then these competencies are essential for world-class performance.

Emotional intelligence affects employee performance in multiple avenues. The employee’s own EQ, the interaction between the employee, and the emotional tone – or climate – all significantly affect the way employees feel about work, and the effectiveness of the work they do.

The Six Seconds team and I worked with the Sheraton Studio City in Orlando in a very challenging business situation. They had experienced very high levels of executive turnover, their guest satisfaction scores were suffering, and they were losing market share. A new General Manager, Grant Bannen, came in, and we engaged in a year-long project to improve performance. As Grant said, employees needed more “bounce in their step,” so we used the Organizational Vital Signs measure ( [http://www.EQperformance.com/ovs.php] ) to identify specific areas where the climate was not conducive. Then we conducted a series of emotional intelligence trainings to foster dialogue, increase awareness of the emotional drivers of performance, and increase the team’s competence in managing the emotional-side of staff. In total the executive team had just over 20 hours of training, selected individuals had a combined total of under 20 hours of coaching, and the line staff had between 2 and 8 hours of EQ training.

The results were a dramatic increase in guest satisfaction and market share, and a significant reduction in turnover.[ii] The customer experience was so remarkable that the hotel group began sending their VIPs to this 3-star hotel rather than the 5-star they own. We held our 4th NexusEQ Conference at the Sheraton Studio City and the comments were the most positive we’ve had at any hotel. One delegate shared this story about an interaction that came to typify the Sheraton Studio City line staff: “I asked someone from the hotel where I could get a chocolate bar. She asked me what I liked, then told me she’d be right back. It turns out she went across the street and bought me one – unbelievable!”

A focus on emotional intelligence changes the way employees relate to customers. That improves customer loyalty, and it increases sales. At L’Oreal, sales agents selected on the basis of certain emotional competencies significantly outsold salespeople selected using the company’s standard selection procedure. 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.[iii]

Joseph Hee-Woo Jae, at Ateneo de Manila University in the Philippines, evaluated 100 university-educated, front-line employees at a major Asian bank. He found that while IQ scores had almost no predictive value (correlation of .07 with performance, or under .5%), EQ scores predicted 27% of job performance.[iv]

In a landmark study showing how emotional intelligence predicts real-world performance, David Rosette assessed leaders in the Australian Tax Office using a range of assessment tools, performance metrics, and ratings by employees. Emotional intelligence predicted 25% of high performance, compared to cognitive ability that predicted less than 2%, and a test of personality that predicted nothing.[v]

In one of the UK’s largest restaurant groups, there was clear evidence that emotionally intelligent leaders were more effective. Managers high in emotional intelligence had restaurants that outperformed others with increased guest satisfaction, lower turnover, and 34% greater profit growth.[vi]

Drawing on your emotional assets, understanding what makes you tick, staying fully awake on a daily basis are all facilitated by emotional intelligence. Perhaps that’s why emotionally intelligent leaders are simply more effective at running businesses.

Tags: American Express, Competitive Advantage, Critical Areas, Emotionally Intelligent Leadership, US Air Force

Value of Marketing Through Downturn

I know the anxiety is rising for many of you as the economy falters. I know it is tempting to begin the slashing process of your expenses. And, I know that marketing is one of those areas that typical gets the brunt of those budget cuts. I understand…but you must resist!

Sure, you should always be doing everything you can to maximize your marketing resources. That’s true, even in a good economy. But history shows us that now is just not the time to curb your marketing efforts.

Here are some of the facts from past recessions:

1970 recession year – American Business Press (ABP) and Meldrum & Fewsmith study showed that “sales and profits can be maintained and increased in recession years and [in the years] immediately following by those who are willing to maintain an aggressive marketing posture, while others adopt the philosophy of cutting back on promotional efforts when sales appear to be harder to get.” 1

1974-1975 recession years – ABP/Meldurm & Fewsmith 1979 study covering 1974/1975 and its post-recession years found that “Companies which did not cut marketing expenditures experienced higher sales and net income during those two years and the two years following than those companies which cut in either or both recession years.” 2

1981-1982 recession years McGraw-Hill Research’s Laboratory of Advertising Performance studied recessions in the United States. Following the 1981-1982 recessions, it analyzed the performance of some 600 industrial companies during that economic downturn. It found that “business-to-business firms that maintained or increased their marketing expenditures during the 1981-1982 recession averaged significantly higher sales growth both during the recession and for the following three years than those which eliminated or decreased marketing. 3

Cahners and Strategic Planning Institute (SPI) produced their report, “Media Advertising When Your Market Is In a Recession.” It disclosed, “During a recessionary period, average businesses do experience a slightly lower rate of return relative to normal times. However, expansion times do not generate a higher level of profits than normal periods as might be expected.” This phenomenon was explained by an analysis of changes in market share.

“During recessionary periods,” said the Cahners/SPI report, “these businesses tended to gain a greater share of market. The underlying reason is that competitors, especially smaller marginal ones, are less willing or able to defend against the aggressive firms.” The study then pointed out that businesses that increased media advertising expenditures during the recessionary period “gained an average of 1.5 points of market share.” 4

1990-1991 recession years – Management Review asked AMA member firms about spending during the 1990-1991 recession. “Fortune follows the brave,” it announced, noting that the data showed that most firms that raised their marketing budgets enjoyed gains in market share. Among the magazine’s sample, 15 percent reported “greatly decreased” ad budgets. Advertising was “somewhat cut” by 29 percent. “The keys to gaining market share in a recession,” concluded Management Review” seem to be spending money and adding to staff. Firms that increased their budgets and took on new people were twice as likely to pick up market share. 5

Beyond the statistics, why might it be more important than ever to market despite economic downturn? Strong consideration should be given to the idea that marketing plays a more critical role now than it did during previous recessions. While marketing’s role was once more informational than brand identity building, and considering that never more than today has the clutter factor been so great, relationships between customers and brands are critical. Relationship marketing has surged to the top of effective marketing campaigns as a means to keep an appropriate level of share of mind for purchase loyalty. Marketing serves to foster and maintain consumer-brand relationships. 6

The effect on profits. From the Harvard Business Review, “Advertising as an anti recession tool,” comes the effect of cutting advertising on the bottom line. “The rationale that a company can afford a cutback in advertising because everybody else is cutting back [is fallacious]. Rather than wait for business to return to normal, top executives should cash in on the opportunity that the rival companies are creating for them. The company courageous enough to stay in the fight when everyone else is playing safe can bring about a dramatic change in market position.” In addition, the article points out “Advertising should be regarded not as a drain on profits but as a contributor to profits, not as an unavoidable expense but as a means of achieving objectives. Ad budgets should be related to the company’s goals instead of to last year’s sales or to next year’s promises.” 7

REFERENCES:

“How Advertising in Recession Periods Affects Sales,” American Business Press, Inc., 1979
ABP/Meldrum & Fewsmith study, 1979
McGraw-Hill Research. Laboratory of Advertising Performance Report 5262 New York: McGraw-Hill, 1986.
Kijewski, Dr. Valerie. “Media Advertising When Your Market Is in a Recession,” Cahners Advertising Research Report. The Strategic Planning Institute, 1982
Greenburg, Eric Rolfe. “Fortune Follows the Brave,” Management Review, January 1993
Khermouch, Gerry. “Why Advertising Matters More Than Ever,” Business Week, August 2001
Dhalla, Nairman K. “Advertising as an anti recession tool,” Harvard Business Review, Jan.-Feb. 1980

Go-To-Market Strategies is a resource center for sales and marketing professionals and business leaders. Our tools, templates, and services help companies achieve big aspirations with limited budgets.

Tags: Aggressive Marketing, American Business Press, Business Firms, Economic Downturn, Marketing Efforts, Marketing Resources, Mcgraw Hill, Media Advertising, Period Average, Strategic Planning Institute

Internet and Cable TV

The internet and cable TV offers access to almost limitless sources of information. But instead of making this easier to understand current affairs, it tends to cloud the issues. And that is why you need to be reading a source that not only reports the news, but analyzes what it means and that source is the Harvard Business Review. The Harvard Business Review does beyond simply providing the who, what, and where and delves deeply into the why.

As a reader of this periodical you will begin to develop a deeper understanding of the underlying currents of thoughts and influence that control current affairs. Instead of just looking at details, you will begin to see how the pieces fit together and you will be able to understand the big picture a little bit better.

This enhanced understanding will also allow you to apply this analysis yourself to other events as they happen because you will be able to see where they fit into the larger trends and patterns. This is satisfying as an individual citizen in the global community, but equally importantly it can provide a huge advantage to you in business.

The periodical is associated with Harvard University and all of the respect and prestige that that association infers. The publication is respected to the point that it does not report the news, it shapes it by the ideas it puts forth. It is read by the most powerful people in the world and influences their thoughts and perceptions as does any reliable trustworthy source that we turn too for a respected opinion.

When you know what the world leaders are reading, then you know what direction policy and other political and social movements are apt to head in. There are few publications if any who are held to a higher standard and the Harvard Business Review justly earns its reputation and deserves the respect it garners.

The Harvard Business Review is also convenient because in addition to print formats, it can also be read online or you can download articles to your computer or eBook reader to read at your leisure. To make sure you are always up to date, you can also access the mobile version of the site on your smart phone where the formatting is simplified to allow for easy navigation and reading on a small screen.

If you prefer, you can have links and updates sent to your phone through emails, texts or even Twitter as the Harvard Business Review makes use of all the latest technology to keep you informed. The Harvard Business Review also offers its subscribers audio and video that can be downloaded from the site or found on YouTube so that you can have an interactive media experience as well as print.

Business people will find that the Harvard Business Review is a tool that they cannot do without. It will give you an edge over the competition and improve your ability to think critically about the world around you.

Tags: Current Affairs, Direction Plicy, Internet and Cable TV, Little Bit, Plitical and Social