CHAPTER 2
The Business Connection
“If you are working for a company that is not enthusiastic, energetic, creative, clever, curious, and just plain fun, you've got troubles, serious troubles.”
—TOM PETERS, MANAGEMENT GURU
Up until now, the emotional intelligence movement has been largely driven by business and industry, where leaders have been quick to recognize the benefits of higher emotional intelligence levels in their managers and employees. Simply put, there is a direct connection between an employee's level of EI and his or her productivity. Being able to effectively work with others in an organization is one of the most sought-after skills in any organization. When employers are asked to name the top skills they look for in employees, people skills always rank at the top. Although technical skills can be taught, it is much more difficult to change someone's attitude or people-relationship skills.
The challenges facing business today are huge. Studies and statistics show that many companies are a far cry from the ideal type of workplace described by management guru Tom Peters. According to an article in Psychology Today, up to 40 percent of employee turnover is related to stress and up to a million workers per day are off due to problems that can be linked to stress. The estimated cost of this loss of productivity to the U.S. economy is estimated to be close to $200 billion. The Yale School of Management completed a survey that found 24 percent of the working population reported that they were chronically angry at work. With these kinds of realities facing the workplace today, it is little wonder that companies are desperately looking for ways to create healthier, better functioning work environments.
From an employer perspective, the results are no more promising. In Working with Emotional Intelligence, Daniel Goleman reveals the results of a survey of U.S. employers that showed they struggle to find the right type of employees. Forty percent of employees had trouble working with colleagues and less than 20 percent had the work habit and discipline needed for entry-level jobs. Employers increasingly complain about the lack of people skills in the people they hire. Giving younger employees feedback at evaluation time has been a problem, as many seem to view constructive criticism as an attack on them personally and become angry. This problem is not confined to new employees and youth. To become successful in the 1960s and 1970s, it was required that one attend the right schools and obtain good marks. As a result many executives have risen to high positions without having developed good emotional intelligence and find their careers have peaked or even deconstructed.
Emotions in the Workplace
As early as 1935, Australian psychologist Edgar Doll expounded on his theory that emotions motivated and drove us to achieve. They were therefore an important part of our working lives as well as our lives outside of work. Our understanding of emotions at the time was not advanced enough for the world to be ready to hear his pronouncements. It would take decades before Doll's ideas became widely accepted.
Not that many years ago, it was expected that our emotions had no place in the workplace and that we checked them at the door once we arrived at work. One of the reasons given for excluding women from the workforce was that they were too emotional, which would prevent them from functioning effectively in the workplace. Although that view seems antiquated today, it was only today's baby boom generation of females who became integrated into the workforce in a major way. The idea that our emotions have no place in the workplace sounds about as obsolete as the idea that smoking has no relationship to cancer. However, many workplaces are uncomfortable with the idea that our emotions are part of who we are and affect everything we do. They seem to still operate under the notion that it is possible to keep emotions outside of work. Success in business basically comes down to our ability to form effective relationships with others. These others include our colleagues, managers, employees, and customers. The companies that are able to form the best relationships, both internally among their employees and externally with customers and suppliers, are the most successful.
I am not sure if Herb Kelleher and the founders of Southwest Airlines had ever heard of Edgar Doll when they struggled against all odds to start a fledgling airline in Texas in 1971. What they knew, however, was what it took to motivate people in the workplace. From the beginning, their belief was that your people give as good as they get. If you genuinely care for your employees, put them before anything else, they will repay you with amazing loyalty and effort. The end result is a highly successful organization.
Case Study: Southwest Airlines
An example of a company that has done an excellent job of tapping into emotional intelligence to create a dynamic, fun-loving, family-oriented work environment is Southwest Airlines. This organization has been widely studied as an example of how to create a healthy work culture. The reason that Southwest Airlines receives the attention it does is because not only is it a great place to work but it is also a highly successful organization that just so happens to be a socially responsible employer that genuinely cares for its employees.
The success of the airline, however, is what garners so much attention from business circles. Founded in 1971 as a short haul carrier based out of Love Field in Dallas, its financial success story has been truly remarkable. Since 1973, it has shown a profit every year while most other airlines were unable to string together more than a couple of years of profit in a very turbulent, changeable industry. Even after the September 11, 2001 terrorist attacks, when other airlines suffered, Southwest expanded its market share. While other airlines laid off thousands of staff, Southwest, as it has consistently managed to do, kept its entire staff. This was in keeping with the airline's tradition of looking after its people.
The business press has noticed and frequently commented on the success of Southwest. Fortune magazine called it “the most successful airline in history.”1
Although this maverick airline has been able to achieve its success through many innovative and create methods, it is the people aspect of the company that will be focused on in this book. Southwest has consistently had lower turnover rates than other competitors and has consistently scored higher on employee satisfaction surveys. For three years in a row, it has been included in Fortune magazine's list of the “100 Best Companies to Work For in America.” Many companies have attempted to emulate Southwest's business practices. Ultimately, however, the people who work for an organization are what make it work. The success of any organization depends on the relationships it develops among management, staff, customers, and suppliers. Emulating business practices is a relatively easy task compared with building a culture that creates a family of loyal, dedicated, hardworking employees who genuinely care for their jobs, each other, and the customers whom they serve.
After the massive layoffs that took place with other airlines after September 11, 2001, one longtime Southwest airline employee remarked that it was not surprising that his airline did not let anyone go. He told the reporter interviewing him that it was part of the culture that they did whatever they had to do to look after their people. Such a culture does not come about by accident, but by consistently applying principles and actions over time that show staff they are cared about and allows them to use and develop their potential.
All aspects of our lives are interrelated. What happens at home affects how we perform at work and what happens at work affects our home lives. Yet, many workplaces continue to operate as if it is possible to separate our work lives from everything else that is going on in our world.
Southwest Airlines recognizes the interconnectedness of all areas of life and makes an effort to bring the families of their employees into their workplace. Family picnics and events are held regularly and birthdays, weddings, and births are celebrated. Whenever possible, family members are invited to learn more about the workplace and what the employees do there. While other companies pay lip service to their staff being part of a family, Southwest Airlines has a committee, called the Culture Committee, whose role is to come up with ways to make employees and their families feel like they are part of the organization. It is also recognized that there is also a danger of an employee spending so much time focused on work that his or her family will suffer. Employees can use work as a means of refuge from an unhappy family situation. Companies such as Southwest Airlines that recognize the importance of a work-life balance end up with happier, more productive employees.
The Secret to Great Leadership
“Trust men and they will be true to you; treat them greatly and they will show themselves great.”
—RALPH WALDO EMERSON, AMERICAN ESSAYIST, PHILOSOPHER, AND POET
Robin Sharma, after presenting to business audiences, is often asked about a statement that he makes indicating that we are all leaders. He replies that one thing that separates the best companies from the rest is the rate at which high-performing companies develop leaders. They develop them faster than everyone else.2 Although not everyone will lead the entire organization, every single employee is a leader in his or her own sphere of influence.
In these companies, every person on the staff is empowered to act like a leader. They are encouraged to take ownership of their areas of responsibility and raise their performance up to a level of excellence. They see to it that employees are committed to superb service and see change as an opportunity to do things better.
Charles Schwab has the distinction of being one of the first CEOs in business to earn over a million dollars a year as the first president of United States Steel. Although this amount may seem puny by today's standards, this was back in 1921 when fifty dollars a week was considered to be a good salary.
In his timeless bestseller How to Win Friends & Influence People, Dale Carnegie interviewed Schwab. According to Schwab:
I consider my ability to arouse enthusiasm among my people the greatest asset I possess, and the way to develop the best that is in a person is by appreciation and encouragement.
There is nothing else that kills the ambitions of a person as much as criticism from superiors. I never criticize anyone. I believe in giving a person incentive to work. So I am anxious to praise but loath to find fault. If I like anything, I am hearty in my approbation and lavish in my praise.3
That is what Schwab did. But what do average people do? The exact opposite. If they don't like something, they bawl out their subordinates, but if they do like it, they say nothing. As the old couplet says: “Once I did bad that I hear ever/Twice I did good, but that I hear never.”4
I admit, when I first read about Southwest Airlines, I became teary eyed. I believe deep down that we all want to be able to give our all and have dreams of finding an organization that deserves everything that we have to give. In other words, it's finding an organization that we willingly give everything for because they will give everything for us.
Whether at work or at home, we all have a need to be loved and cared about. It is a basic human need. Southwest recognizes that our work effects our home and vice versa. We cannot separate people into segments; we have a responsibility to look after the whole person. In Lessons in Loyalty, former Southwest executive Lorraine Grubbs-West explains her organization's philosophy:
At Southwest Airlines, employees are accepted and treated as “whole people.” Its leaders realize their employees' personal lives cannot be separated from their work lives, nor do they want that to happen. Personal challenges affect people, and Southwest's leaders realize it is unreasonable to expect people to stifle life's difficult circumstances for the sake of their jobs.5
Recruiting
One of the chief areas where companies have used emotional intelligence is in recruiting new employees. Human resources departments have incorporated EI concepts into their interviewing questions, and some have used versions of tests developed to assess EI. Recruiting, interviewing, and choosing the right people have always been challenges for organizations. Despite tools developed to help human resources people make better decisions, the selection process is still hit or miss at the best of times. As human resources people develop better and more effective methods of screening for and interviewing applicants, job seekers are becoming more sophisticated in their approach to interviews. The more evolved interviewing processes become, the more adept interviewees become at giving the answers that human resources people are looking for. In other words, there will always be people who will be able to “snow” the people interviewing them. As interviewing processes become more advanced, so will the ability of the people who will always be looking for ways to “beat” the system. Another factor that is making selection more difficult is the increasing frustration that human resources people are feeling in getting adequate reference checks. After a number of highly publicized cases of former employees successfully suing their former employers for giving them bad references, human resources people have become very cautious about what information they give out.
Often the information is so limited that it is of little use to the person asking the questions. Afraid of lawsuits, organizations are becoming very shy about giving out information about former employees that would put them in a negative light. Yet, this is exactly the type of information that human resources people need to make the right decisions.
Although many organizations claim that they hire for attitude and train for skills, Southwest Airlines really does. How they are able to do this is not well understood or widely practiced. When Southwest opened a new operation in Raleigh, North Carolina, the company approached a local recruiting agency and told them Southwest was hiring for attitude and training for skills. At first, this philosophy stumped the agency, which continued to ask what skills the airline was looking for. Southwest decided that the best way to get the idea across to the recruiters was to have them spend some time with Southwest employees. After doing so, the recruiters had a clear picture of what kind of people Southwest was searching for. Southwest believes that actions speak louder than words. As a result, many unsuitable candidates are screened out before they go for the formal interview. Before the interview, potential employees visit different areas of the organization and talk to staff involved in various functions. Unbeknownst to the job seeker, this is actually part of the interview. They are being observed to see how well they interact with others and to determine how well they fit into the Southwest culture. Any sign of rudeness or arrogance to any employee is noted and becomes a disqualifier, regardless of the qualifications that the person may have to do the job.
A story went around about a highly qualified military pilot who had applied for work and was being shown around the work site. During his rounds he was rude to an administrative person and displayed arrogance to one of the maintenance people. As a result, he was not hired despite his impressive technical qualifications.
Southwest puts very high value on interpersonal relationships—that is, the ability of people to get along with one another. In many cases, applicants will disqualify themselves, realizing that they do not fit into the culture. Invariably, hiring mistakes do happen, even with the best screening and intentions. In many cases, individuals themselves feel out of place in the Southwest environment and look for work elsewhere. In other cases, human resources acts quickly and removes the person, allowing him or her as much dignity and self-respect as possible. Southwest's consist record of lower turnover and higher employee satisfaction ratings compared with other airlines is a good indicator that they are getting their hiring practices right a great deal of the time.
Humans are incredibly complicated, making the job of human resources vastly challenging. The value of coming up with a better way to assess how someone will perform in a job is huge. The cost of hiring the wrong people is so debilitating to organizations that any development that promises to increase the odds of hiring better staff was bound to receive intense interest.
The Soft Stuff Is Important
Six Seconds, an international not-for-profit organization, completed a report on workplace issues in 1997. Researchers interviewed 135 organizations ranging in size from 20 to 10,000. Leaders, from executives to team leaders, were asked to identify the major challenges that workplaces today face.
They found that the “soft” people-related issues, such as finding and keeping talent, were three times more serious than issues unrelated to people, such as finance.
The results indicated that emotional intelligence and feelings both within and outside the organization were among the most important strengths an organization had for overcoming challenges and reaching their goals. Recruiting and keeping good people, as well as letting go of people who were a bad fit, were seen as a top priority for three-quarters of those interviewed. The same number indicated that creating a positive work culture was very important. The vast majority of the leaders interviewed said that team members' feelings were either essential or highly important when it came to dealing with issues that the organization faced. When the researchers asked about the feelings and attitudes of people outside of the organization, they received similar results. An overwhelming majority of those surveyed said they felt that EQ was essential or highly important in dealing with the main challenges that the organization faced. None of the respondents indicated that it was “not important” and only a small number rated it as “less than highly important.”
Companies and corporations have not simply jumped on the EI bandwagon because it sounded good or was the flavor of the month in human resources development circles. There is solid and compelling research showing a strong relationship between performance levels and EI competencies. This relationship, of course, directly affects the bottom line. A number of studies have shown a strong relationship between EI and performance levels at the workplace and job success. All of the following studies can be found online at the website of the Consortium for Research on Emotional Intelligence (www.eiconsortium.org).
In one study of more than three hundred top-level executives from fifteen global companies, research showed that strong emotional competencies distinguished star performers from average ones. It was discovered in jobs considered to be of medium complexity, such as sales clerks and mechanics, that top performers were twelve times more productive than those at the bottom and 85 percent more productive than the average performer. In the most complex jobs, such as insurance salespeople and account managers, top performers were 127 percent more productive than an average performer. Research in more than two hundred companies and corporations worldwide suggested that about one-third of the differences were due to technical skills and cognitive ability while the remaining two-thirds were due to emotional competence.6 In top leadership positions, it was found that over four-fifths of the difference was due to emotional competence. When L'Oréal began selecting salespeople on the basis of certain emotional competencies, they did a cross comparison of the staff they hired using this method versus those hired using the old standard selection procedure. It was found that those selected using emotional competence sold on average over $91,000 annually more than those hired by using traditional methods. It was also found that they had 63 percent less turnover than the group hired using the former method. A national insurance company compared the performance of sales agents with different levels of emotional competencies. Those who were very strong in at least five of eight areas of key emotional competencies sold $114,000 worth of insurance versus $54,000 worth sold by those weak in those competencies.7
Team-building and staff development programs have also benefited. Just a few of the major corporations that have used EI are IBM, American Express, and AT&T.
In 2000 Daniel Goleman co-authored another EI book, called Primal Leadership. EI has become firmly established in many corporate and government leadership programs. You would be hard pressed today to find a major leadership program in North America that does not incorporate EI principles.
Notes
1. Katrina Brooker, “The Chairman of the Board Looks Back,” Fortune Magazine (May 28, 2001).
2. Robin Sharma, Greatness Guide Book 2 (New York: HarperCollins, 2007), p. 38.
3. Dale Carnegie, How to Win Friends & Influence People (New York: Simon & Schuster, 1971), p. 24.
4. Ibid.
5. Lorraine Grubbs-West, Lessons in Loyalty: How Southwest Airlines Does It—An Insider's View (Dallas: CornerStone Leadership Institute, 2005), p. 84.
6. Consortium for Research on Emotional Intelligence, www.eiconsortium.org.
7. Hay/McBer Research and Innovation Group, 1997.