Emotional intelligence (EI) is the most neglected of all the essential attributes of business leaders. Emotional intelligence is an acquired skill, yet only a tiny proportion of CEOs have systems and practices to expand their EI. Leaders with high levels of emotional intelligence are self-aware, excellent listeners, and empathetic.
Some CEOs would rather spend an extra hour at the gym bulking up their arm muscles than growing their EI muscles. Others would rather spend another hour watching the news to see what’s happening in the external world than dedicate that time to connecting with what’s happening in their inner world. However, EI is a critical trait that requires time, attention, and commitment — and the most successful CEOs have high levels of it.
This article is part one of a two-part series on EI. I share why EI is an essential attribute for CEOs, explain why they generally neglect it, and emphasize why the new business environment requires reprioritizing it. The second part will focus on how leaders can expand their EI.
What Makes Emotional Intelligence the Secret Power of CEO Success?
The notion that charismatic extroverts should lead companies runs in the face of Jim Collins' findings in “Good to Great,” one of the most acclaimed studies in business. In his book, Collins demonstrates that what the most successful companies have in common is the type of leader at the helm. These CEOs exhibit what he calls Level-5 Leadership. Level 5 Leaders are soft-spoken individuals with a keen ability to listen to their teams, nurture their teams' best attributes and strengths, and earn their teams' respect.
Level 5 Leaders are the most effective at working with proactive people because proactive people don't need a leader that does all the talking. Instead, they need a leader who asks the right questions and inspires others to identify the answers and solve problems with the zeal that only those with some ownership over decisions can feel. As Wharton professor Adam Grant points out, introverted leaders are more effective in leading proactive employees, and extroverts are more effective in leading reactive individuals. Pairing an extroverted leader with a proactive team, he says, can hurt, not just hinder, the company's performance.
In “The Seven-Day Weekend,” Ricardo Semler, a Brazilian CEO, explains the method he used to build his business conglomerate from $4 million to over $200 million in annual revenue during the '80s and '90s. His book shows that for those willing to take a chance, there is a better way to run the workplace, which brings out the best in people by trusting them to make decisions.
Giving employees the power to make decisions has notable benefits:
Increases job and life satisfaction
Improves productivity and performance
Enhances work-life balance and wellbeing
Provides the space to reconnect with purpose, cultivate creativity, strengthen meaningful relationships, rest, and restore energy
Reduces burnout, absenteeism, and turnover
When employees have decision-making authority, they feel more motivated to act, and the most proactive individuals rise to leadership positions. Companies with proactive employees have a much higher chance of scaling than those with reactive workers. That's because companies that scale will continue to have one CEO, but the employee roster will grow. The only way to scale sustainably is for the team to be proactive and for the CEO to be an emotionally intelligent leader.
The argument for top-down leadership is that this creates faster team alignment since only one person commands the direction. The opposite is true. Team alignment is robust when people have a voice, feel heard, and understand why leaders make strategic decisions — after considering diverse perspectives. Effective leaders create team alignment by setting clear goals and giving their employees latitude to make the decisions required to meet those goals.
In this new era, EI is critical beyond organizational management. It is imperative for consumers and communities. Companies wanting to acquire customers and maintain loyalty must address human factors based on consumer and employee emotions. Consumers are asking companies to be more than just money-making machines. They expect businesses to contribute to the world. These consumer trends have led Boards of Directors to ask their CEOs to invest more money into DEI (Diversity, Equity & Inclusion). Forces beyond the control of CEOs are forcing them to understand the new business landscape.
Why have CEOs Relegated Emotional Intelligence?
Three reasons help explain the insufficient attention dedicated to EI.
1. The Educational Paradigm
Recent studies on the prevailing approach adopted by top-rated business schools in the US show that MBA programs are intentionally biased toward recruiting extroverts over introverts. These programs teach future CEOs to speak often, promote themselves constantly, and make decisions quickly. They also methodically teach the virtues of extroverts, such as exuding confidence when speaking in public and making quick decisions. Critical leadership skills like listening to others, bringing out the best in others, and taking time to contemplate the perspective of others take the back seat, which is a problematic approach to leadership.
Susan Cain's book “Quiet: The Power of Introverts in a World That Can’t Stop Talking,” explains the recruiting and educational methods of Harvard Business School (HBS), which favor extroverts. It is noteworthy that HBS graduates are in one of the top three executive roles of more than a third of Fortune 500 companies. Cain argues that focusing on extrovert-type leadership is a disservice to educating the business decision-makers of today's world.
2. The Rambunctious Examples on Display
Another reason EI has been neglected stems from today's leadership archetype, established by the prominent personalities that have dominated our business news media over the past 20 years. Men with big personalities like Steve Jobs (Apple), Bill Gates (Microsoft), Jeff Bezos (Amazon), Sergey Brin (Google), and Elon Musk (Tesla & SpaceX) have led the five most revered companies of our time. And yet, their personal stories all share workaholic types who lost their work-life balance, resulting in an erosion of family and even premature death.
You can't blame business leaders who strive for success by emulating these five men. US business culture has taught them that emotional intelligence is a nice-to-have but hardly an essential trait. The CEO archetype of the Information/Tech Revolution that started in the 1970s was in a rush to establish prominence in a new market before someone else claimed a dominant position. In this context, work-life balance became impossible, and there was no time to prioritize the development of emotional intelligence.
3. The Gender Gap
Another reason why CEOs ignore emotional intelligence is that men have traditionally occupied business leadership roles. Although there is a trend elevating more and more women to leadership roles, less than 9% of Fortune 500 companies in the US have female CEOs.
In his landmark book, “Fierce Intimacy,” renowned psychologist Terence Real explains that men are taught from an early age to ignore their emotions. This approach has diminished their self-awareness and ability to empathize. The solution is for men to work on their EI and to level the playing field so more women serve in CEO roles.
The New Business Landscape Requires More EI from CEOs
The big-tech-business era of low to no emotional intelligence is over, and consolidation in the tech space has begun. An EY Report shows that VC-backed companies in the US raised $37 billion in Q3 2022, down from $60 billion in Q2 2022 and $77 billion in Q1 2022. The slashing of VC investment to less than 50% in six months is a glaring sign that investors don't think tech companies can grow as quickly in the coming years as they've done in the past.
The new business landscape is vastly different, and the commander leadership style is no longer successful. Even today's job market points to this. For the past 18 months, there have been twice as many job openings as people seeking work in the US, and companies are finding it more challenging than ever to attract talent. With inflation and interest rates at a 40-year high, where you'd expect massive unemployment, the opposite is true, with unemployment at an all-time low.
During the pandemic, many speculated that government checks to the unemployed were causing people to refrain from seeking new jobs. We've now gone 18 months without any such subsidies. People are back to work, but companies still can't get enough talent to fulfill their needs. The bottom line is that business leaders lacking EI will not be as effective in attracting talent.
While the pandemic undoubtedly accelerated the move toward remote work and flex work, the deeper trend is a change in what employees value in their jobs. What younger generations search for (significantly more than their parents) is working in environments that serve a higher purpose, with corporate cultures that give them the freedom to create and live a balanced life.
How Can You Expand Your Emotional Intelligence?
I'll answer this question in part two of the EI series. But here are a few actions to consider:
Connect with your body’s signals: We feel our emotions.
Learn to breathe: Intentional breathing is the quickest way to alter our emotions.
Rest well: Sleep restores our ability to connect with ourselves and others.
Listen actively: The shortest path to empathy is to listen with your full attention.
Open your mind: Listen to your heart and your conscience.
Keep a journal: Write down your feelings periodically.
Embrace solitude: Walk or sit in silence surrounded by a natural landscape.
Express gratitude: Give thanks through appreciation, peer groups, and/or journaling.
Join a peer advisory board: Gain clarity and diverse insights from peers.