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The ROI of Emotional Intelligence at Work

A look at the financial impacts of upskilling your organization in EQ.

  • Emotional intelligence training can yield a 1484% return on investment for organizations.
  • Fifty percent of employees quit due to a bad manager, so emotional intelligence training can reduce employee turnover.
  • Emotional intelligence in executives has also been linked to higher profit-earning companies.

How we measure the value of non-technical training can feel like a woolly question, incapable of firm calculation.

You may wonder:

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EQ
Source: Headway/Unsplash
  • What is the practical value of emotional intelligence at work?
  • Should we focus on training leadership, or train the organization from top to bottom?
  • Aside from a nicer working environment, is there a financial incentive to growing organizational EQ?

While the benefits of personal development training have historically been difficult to translate into cold, hard cash, research shows a clear (and sizable) financial benefit across industries of all shapes and sizes.

Particularly when it comes to emotional intelligence training, which can yield a whopping 1484% return on investment.

1. Retention & Turnover

Multiple studies have shown that emotional intelligence decreases turnover, which can be a major source of financial savings (1, 2).

The reason is pretty straightforward: In organizations where managers are trained to elevate their social skills, empathy, and self-regulation, employees report higher levels of job satisfaction, greater organizational commitment, and less turnover intention.

A 2020 poll by Zippia found 64% of workers say they think about quitting their job, with 15% planning to do so in the next 3 months (3). (Two of the most common reasons cited were an unsupportive boss and an unpleasant work environment.) A similar poll conducted by Gallup found that 50% of employees have left a job explicitly because of a manager (4).

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Employee and manager
Source: Mimi Thian/Unsplash

“[A supportive culture] is especially important for employees who are working in a fast-changing and competitive environment such as the information technology-related industries” (5).

The cost of losing an employee depends on the industry and role they occupy. However, researchers Paul and Kee list lost “training cost, replacement cost, vacancy cost, and separation cost,” as well as “recruitment cost,” interim coverage cost, and new employee training cost among the expenses associated with losing a single employee (6).

2. Productivity & Performance

When workplaces offer a supportive and psychologically safe environment, not only does employee experience improve, performance, productivity, and outcomes do as well (7, 8).

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Productive team
Source: Brooke Cagle/Unsplash

Workplaces that highlight the importance of emotional intelligence find employees work harder and are more creative in their jobs. One study found that productivity increased a whopping 40% when HR implemented EIC (emotional intelligence competency)-based programs (2).

The quality of our performance at work is also linked to EQ. In a study on the emotional intelligence of leaders, researchers found 93% of the competencies predicting performance were from emotional intelligence clusters (9).

3. Brand value

There’s also a case for emotional intelligence when it comes to elevating the quality of a company’s brand. Entrepreneurs and public-facing CEOs, in particular, benefit from emotional competencies.

Harvard Business Review found that 44% of a company’s market value and 45% of its corporate reputation are attributable to its Chief Executive’s reputation.

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Brand value and executive reputation
Source: Hunters Race/Unsplash

Emotional intelligence allows leaders to accurately perceive others’ needs, practice self-regulation, effectively manage social connections, and communicate effectively.

For entrepreneurs, EQ not only improves brand value, it is also essential for network development, funding acquisition, decision-making, adaptability, “signaling legitimacy,” and opportunity recognition, making it “a stronger predictor of success than IQ” (10).

4. Engagement

Gallup describes engagement as the state of being emotionally connected to a workplace, which in turn yields enthusiasm, participation, and commitment to one’s employer and one's work.

Given that managers’ behaviors — such as communication and empathy — account for up to 70% of variance in engagement,” it may not be surprising that 2/3 of Americans polled hate their jobs (11, 12).

Gabby K/Pexels
The cost of disengagement
Source: Gabby K/Pexels

Globally, this number jumps to 85% (13).

The economic impact on variables like innovation and growth, Gallup suggests, are diminished when “the majority of employees are indifferent [and] sleepwalking through their workday.”

5. Profit

The revenue and profits of an organization are linked directly to its emotional intelligence capability.

In the study mentioned above, researchers put the ROI of emotional intelligence training at nearly 1500% (2).

Daria Shevtsova/Pexels
The value of emotional intelligence at work
Source: Daria Shevtsova/Pexels

Studies show that giving leaders and employees the tools to practice emotional intelligence at work can drive or diminish not only the organization's culture, but also its bottom line: its growth, revenue, and profits. (8, 14).

One study found that “executives w/higher levels of empathy, [and] self‐regard … were more likely to yield high profit‐earning companies, and better able to manage growth, manage others, train and retain employees” (15). In other words, when leaders can manage relationships, work well with others, and adapt to change, the company is more likely to thrive, both culturally and economically (16).

One of the most effective ways to mitigate turnover; increase productivity, brand value, and engagement; and drive profit is to upskill leaders and managers in emotional intelligence competency training programs.

For a complimentary analysis of your organization's emotional intelligence, click here.

References

1) Brunetto, Yvonne, et al. "Emotional intelligence, job satisfaction, well‐being and engagement: explaining organisational commitment and turnover intentions in policing." Human Resource Management Journal 22.4 (2012): 428-441.

2) Spencer, L. M. “The Economic Value of Emotional Intelligence Competencies and EIC-Based HR Programs.” In The Emotionally Intelligent Workplace: How to Select for, Measure, and Improve Emotional Intelligence in Individuals, Groups, and Organizations. San Francisco: Jossey-Bass., 2000.

3) Morris, Kathy. “Survey: Why Do People Quit Their Jobs?” Zippia (blog), October 22, 2020. https://www.zippia.com/advice/survey-why-workers-quit-job/.

4) Snyder, Benjamin. “Half Of Us Have Quit Our Job Because of a Bad Boss.” Fortune, April 2, 2015. https://fortune.com/2015/04/02/quit-reasons/.

5) Mohammad, Falahat Nejadmahani, et al. "Emotional Intelligence and Turnover Intention." International Journal of Academic Research 6.4 (2014).

6) Paul, Gadi Dung, and Daisy Mui Hung Kee. "HR, Workplace Bullying, and Turnover Intention: The role of Work Engagement." Journal of Environmental Treatment Techniques 8.1 (2020): 23-27.)

7) Carmeli, Abraham. “The Relationship between Emotional Intelligence and Work Attitudes, Behavior and Outcomes: An Examination among Senior Managers.” Journal of Managerial Psychology 18, no. 8 (January 1, 2003): 788–813. https://doi.org/10.1108/02683940310511881.

8) Chin, Susan, R.N. Anantharaman, and David Tong. “The Roles of Emotional Intelligence and Spiritual Intelligence at the Workplace.” Journal of Human Resources Management Research, January 15, 2011, 1–9. https://doi.org/10.5171/2011.582992.

9) Boyatzis, Richard E. “Using Tipping Points of Emotional Intelligence and Cognitive Competencies to Predict Financial Performance of Leaders.” Psicothema 18 (2006): 124–31.)

10. Vlahakis, George. “Entrepreneurs Benefit More from Emotional Intelligence than Other Competencies, Such as IQ.” Kelley School of Business, January 28, 2021. https://blog.kelley.iu.edu/2021/01/28/entrepreneurs-benefit-more-from-e….

11. Harter, Jim, and Amy Adkins. “Employees Want a Lot More From Their Managers.” Gallup, April 8, 2015. https://www.gallup.com/workplace/236570/employees-lot-managers.aspx.

12. Schwantes, Marcel. “Why Do People Quit Their Jobs, Exactly? Here’s the Entire Reason, Summed Up in 1 Sentence.” Inc.com, May 30, 2017. https://www.inc.com/marcel-schwantes/why-do-people-really-quit-their-jo….

13. Clifton, Jim. “The World’s Broken Workplace.” Gallup.com, June 13, 2017. https://news.gallup.com/opinion/chairman/212045/world-broken-workplace….

14. Langhorn, Steve. “How Emotional Intelligence Can Improve Management Performance.” International Journal of Contemporary Hospitality Management 16, no. 4 (January 1, 2004): 220–30. https://doi.org/10.1108/09596110410537379.

15. Stein, Steven J., Peter Papadogiannis, Jeremy A. Yip, and Gill Sitarenios. “Emotional Intelligence of Leaders: A Profile of Top Executives.” Leadership & Organization Development Journal 30, no. 1 (January 1, 2009): 87–101. https://doi.org/10.1108/01437730910927115.

16. Cherniss, Cary. “The Business Case for Emotional Intelligence.” Rutgers University, 1999

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