Is there a link between emotional intelligence and financial performance?
While emotional intelligence is becoming increasingly valued in today's workplaces, measuring the actual return on investment from employees with this trait is still a grey area.
However, new research suggests that there is indeed a connection between the level of self-awareness – one of the cornerstones of emotional intelligence – in a company's leader and its financial performance.
The Korn/Ferry Institute conducted assessments on almost 7,000 professionals from nearly 500 publicly traded companies, the results of which are published in its 'A Better Return on Self-Awareness' whitepaper. The analysis centred around whether high levels of self-awareness, a characteristic commonly found in the top business leaders, correlates with better financial results.
Korn/Ferry focused on the rate of return (ROR) on stock as the primary financial measure in its study. On the other hand, self-awareness was measured according to the number of leadership “blind spots” the subjects had, which was measured by recording the disparities in the results of two separate parts of a self-assessment test.
The results are quite clear-cut and seem to suggest that companies with more self-aware individuals tend to perform better financially. According to the results, employees from the poorly performing organisations had 20 per cent more blind spots than those at “financially strong” companies.
Meanwhile, workers at these poorer performing companies were found to be 79 per cent more likely to have lower levels of self-awareness than those at firms with a better ROR.
The stock performance of the companies that were assessed was tracked over an extensive 30-month period, during which employees at the financially stronger firms “consistently outperformed” those at the less-able organisations.