Emotional intelligence: What's the ROI?

How can you make the case for developing your emotional intelligence and your team's? Consider these payoffs for time and money spent on increasing emotional intelligence
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On its surface, the case for developing emotional intelligence in leaders makes sense – who wouldn't want to work for an emotionally intelligent boss? On paper, however, it can be trickier. Can we really point to any difference that leaders with higher levels of emotional intelligence make to the bottom line of an organization? Can we really say that there's a hard dollar return?

As with almost any kind of training and development program, it's tough to point at a program and say that it alone was the cause of a desired organizational outcome. There are simply too many moderating variables in the mix. But that doesn’t mean we shouldn’t take a long and hard look at what kind of ROI we can identify.

In the case of emotional intelligence training, consider these factors to determine if it's worth it to you. 

[ You don't have to like every coworker, but you do have to find ways to work effectively with them. Read also: Emotional intelligence: How to work with people you don’t like. ]

How to measure the ROI of emotional intelligence

Effective leadership development results in three well tested outcomes, all of which have potential hard dollar value returns: retention, discretionary effort, and engagement.

1. Retention

Study after study tells us that the most common reason people voluntarily leave a position is because of a bad boss or poor leadership – one recent study put that number at 57 percent. People don’t like working for or with someone who doesn’t treat them as an individual, takes credit for their work, micromanages them, or is dishonest. These are exactly the kinds of things that emotionally intelligent leaders don't do.

Instead, emotionally intelligent leaders tend to partner with direct reports in their own career development. They actively foster opportunities for their staff to be innovative and grow personally and professionally. Emotionally intelligent leaders recognize the importance to uphold their interpersonal agreements through honest and open communication, as well as through demonstrating their best efforts to fulfill commitments and taking ownership of any failures along the way. These behaviors, in turn, create a tangible partnership between leaders and their team members and strengthens the connection between employees and their employers.

[ What does a leader with high EQ look like? Read our related article: 8 powerful phrases of emotionally intelligent leaders.]

To determine retention ROI, think of it this way: How many dollars + HR person-hours (recruiting, onboarding, training, change management for disruption, etc) will you preserve if you successfully retain a skilled employee?

2. Discretionary effort

The difference in output/impact/creativity between those who do the minimum possible and those who work to their maximum potential is huge. We also know that the relationship with a person’s leader is a big predictor of whether this discretionary effort is forthcoming. Put simply, people will work harder when their boss is someone skilled at authentically establishing and maintaining meaningful relationships, which, as established above, is a key trait of emotionally intelligent leaders. 

To determine discretionary effort ROI, think of it this way: How much more productivity/creativity, in percentage terms, do you get from a team member who is displaying a high level of discretionary effort in comparison to one who is not? If its 25 percent (and my experience is that it is often higher than that), then the ROI calculation is easy.

3. Engagement

There is a great deal of data that supports engagement as a construct that provides desirable outcomes for organizations. It’s not by accident that effective leadership plays a role in almost every aspect of engagement measured by the world’s most popular employee engagement survey, the Gallup Q12. These measures include things like whether the employee understands the connection of their work to organizational mission, whether he/she receives clear expectations from leader, and if he/she receives recognition for their work, etc. These measures are all directly reflective of a leader’s practice of emotional intelligence.

To determine engagement ROI, think of it this way: How many more dollars could you capture through increased hours of efficient, goal-oriented, productive employee effort?

Bonus benefit: Emotional intelligence magnifies other development programs

In my experience, there is one additional benefit from developing emotional intelligence that is harder than those discussed above to quantify – it can increase the ROI from other leadership training programs.

Organizations spend a small fortune on leadership development efforts in areas like communication skills, conflict resolution, change management, and even running effective meetings. And they are often surprised at how little of this newly provided learning actually translates to the office or shop floor. I don’t think its surprising at all.

It doesn’t matter what you teach people, how well you teach it, how well the learner absorbs the information, or even how well they do in a role play scenario. If their underlying emotional intelligence is not sufficiently developed, they won’t have the willingness or ability to use those skills in real, potentially difficult, or conflictual situations. In this way, I see emotional intelligence as an enabler, and magnifier of ROI, from these other learning programs.

[ How does your emotional intelligence stack up? Emotional intelligence test: 5 self-evaluation tools for leaders ]

Making the link to ROI

So, can we make a link between the mechanisms discussed above – retention, discretionary effort, and engagement – and developing emotional intelligence in leaders? For me the answer comes down to one simple thing. Having asked literally thousands of leaders the question “what makes a great leader,” I have learned that in almost every instance, we judge great leaders and great leadership by their demonstrations of emotionally intelligent behavior.

If you want the outcomes associated with more effective leadership, you should start by giving leaders the tools to more effectively develop and understand their emotional intelligence. 

Editor's note: A version of this article originally appeared on The EQ Development Group.

Drew Bird, MSc, MA, and author of "The Leader’s Guide To Emotional Intelligence," is a coach, trainer, facilitator and speaker. He is founder of The EQ Development Group. Over 20 years in the IT industry has helped Drew understand first-hand the opportunities and challenges senior leaders face in this complex field.

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