Emotional Intelligence

In our recent interview with Professor Richard Wilding of Cranfield School of Management he predicted that high levels of Emotional Intelligence will be essential for those managing the supply chains of the future. But what makes Emotional Intelligence so critical for creating high performance supply chains? Here Danielle Butler-Miles explores the rise of ‘soft skills’ in the supply chain and its expected impacts on the business.

Richard Wilding believes that as supply chains became more complicated and the need to collaborate increases, the requirement to manage relationships effectively will also rise in importance. So what does this mean for developing high performing supply chains? To answer this, we started doing some homework. We asked two key questions: How does Emotional Intelligence Quotient

(EQ) impact on businesses and business performance?

How do we develop EQ in our businesses?

The conclusions were not as simple as we expected. The good news is that all organisations can capitalise on this human potential with the right foundations.

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What is EQ?EQ can be easily defined as how well an individual understands and manages their own (and others’ emotions - the ability to communicate, motivate and organise people). The concept of Emotional Intelligence Quotient first came to popular prominence in 1995, although this built on work going as far back as the 1930’s. Since then there has been a range of definitions developed by academics and commercial organisations. Two of the most commonly quoted are summarised below.

Some measures suggest women are, on average, better than men at some forms of empathy and men do better than women when it comes to managing distressing emotions. Whenever you talk about such gender differences in behaviour, you are referring to two different Bell Curves, one for men and one for women that largely overlap. What this means is that any given man might be as good or better as any woman at empathy, and a woman as good as or better than a specific man at handling upsets.(3)

Psychologist Ruth Malloy at the Hay Group Boston studies excellence in leaders. She finds when you look at the stars - leaders in the top ten percent of business performance - gender differences in emotional intelligence wash out: The men are as good as the women, and the women as good as the men, across the board. (3)

Why is this important now? We all have the understanding that managing supply chains is becoming both more complex and volatile. Supply chains have become increasingly global, giving rise to greater risks in terms of their exposure to natural catastrophes, political issues, demands for natural resources and exchange rate fluctuations. This entails working with a wider range of stakeholders across many cultures and business disciplines. Globalisation poses risk challenges that we have not faced before. As an example towards the end of 2011, the Honda plant in Swindon, United Kingdom, closed due to floods in Thailand disrupting the supply of parts – production in Europe had also been hit.

Consumers now have almost perfect visibility of the options available to them meaning that customer loyalty has become extremely changeable. In addition to the market becoming increasingly complex, with shorter product lifecycles and more routes to market; it is little wonder that many supply chain managers seem to be permanently busy responding to almost daily changes in demand.

Managing relationships has always been important, but it is even more so in this complex environment.

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Mayer and Salovey considered four elements: (1)

Goleman developed a framework with 5 elements that define high levels of

emotional intelligence: (2)

The ability to perceive emotions in oneself and others

Self awareness. They are aware of theirs and others emotions. They are confident and trust their intuition.

The ability to generate, use and feel emotion to communicate feelings

Self regulation. The ability to control emotions and impulses. They think before they the act.

The ability to understand emotional feelings

Motivation. Highly motivated with the ability to take a long term view. They love a challenge.

The ability to regulate emotions in oneself so as to promote understanding

Empathy. The ability to understand the wants, needs and views of those around them.

Social skills. Good social skills and a ‘team player’. They help others develop, are excellent communicators and are good at building relationships.

How do they do it? We all know people who, in spite of everything, manage to glide serenely through this chaotic world. They rarely lose control, have the ability to calmly analyse any situation, make the right decisions and communicate clearly with their teams. In the literature, these people are described as having high levels of Emotional Intelligence Quotient. As a result, the whole subject of EQ has become the subject of a great deal of research in recent years.

Can we develop EQ? It would be easy to dismiss EQ as ‘just the way we are’. It is our personality. It is who we are. We react emotionally to situations based on our inherent values and experiences. It would therefore be difficult to ‘train’ a person to have a higher EQ. However, this is not the case. There are many different approaches available in the literature, but the Charted Institute of Personnel and Development describes two.

The first is based on Goleman and recognises that emotional learning involves changing the ways people think and act which are central to their personality and identity. People are likely to resist being told, for example, to control their temper or improve their interpersonal skills. Thus developing EQ requires different parts of the brain to be ‘retuned’. This takes time. Goleman says it takes at least two months to unlearn old behaviours and replace them with new ones. For this reason, at Unipart, when we implement ‘lean’ management techniques in a business, we always allow at least two months of ‘sustainment’ to ensure that the new behaviours, associated with the new processes, are firmly embedded.

The second is based on Higgs and Dulewicz take a different approach to developing EQ. They believe that some of the components can be learned by conventional teaching and coaching methods. These include sensitivity, influencing and self-awareness. Other competences such as motivation, resilience and consciousness need to be developed on an individual basis.

Some teaching organisations, such as Cranfield University, take a different approach again. On their executive courses they make extensive use of role play, including the use of actors to play out scenarios and then debrief students in a workshop environment. This then needs to be followed up to ensure that the new, learned behaviours are followed through to the workplace.

Some individuals are naturally gifted with EQ skills and the good news is that for those that are starting out on their EQ journey they can be developed further with training and coaching.

What is the impact of EQ on performance?The literature suggests that the answer to improving business performance is to invest in high levels of EQ. We either recruit on the basis of EQ or we invest in development programmes for our current staff (both male and female).

There is some evidence to suggest that high EQ enhances job performance. For example: Higgs and Dulewicz (4) demonstrated ‘a very clear relationship’ between EQ and managers’

career advancement over a seven year period. American financial advisors went through an EQ development programme and achieved sales

gains of 8% to 20%. (5)

Ten EQ competencies emerged as the distinguishing capabilities of successful teams in a German chemical company. (6)

It is interesting to note that typically, managers receive most of their training in technical skills that we traditionally measure in terms of Intelligence Quotient (IQ). Companies attending the Cranfield University executive development programme are recognising that they need a higher proportion of time spent addressing emotional intelligence - the ‘soft skills’.

It would appear that recruiting on the basis of high EQ (or development of these skills) will be good for both the individual and the business. The results will be a better supply chain, which operates at lower cost, offers better customer service and becomes more agile.

If only it were so simple.

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After supervisors in a manufacturing plant received training in emotional competencies such as how to listen better and help employees resolve problems on their own, lost-time accidents were reduced by 50 percent, formal grievances were reduced from an average of 15 per year to 3 per year, and the plant exceeded productivity goals by $250,000 (Pesuric & Byham, 1996). In another manufacturing plant where supervisors received similar training, production increased 17 percent. There was no such increase in production for a group of matched supervisors who were not trained (Porras & Anderson, 1981).

A Fortune 500 Company had utilized personality assessments for candidate selection for years with little results in reducing turnover in their sales force. After turning to an emotional intelligence-based selection assessment and EQ training and development program, they increased retention by 67 percent in the first year, which they calculated added $32 million to their bottom line in reduced turnover costs and increased sales revenues.

The Hay Group states that one study of 44 Fortune 500 companies found that salespeople with high EQ produced twice the revenue of those with average or below average scores. In another study, technical programmers demonstrating the top 10 percent of emotional intelligence competency were developing software three times faster than those with lower competency

While some case studies have demonstrated a direct link between EQ and business results, the relationship is more complex. High levels of EQ may not of themselves release business benefit. Rather, it is leaders with high EQ, which contribute to a wider culture of employee engagement and continuous improvement that create the conditions for high performance.

It starts with Emotionally Intelligent LeadershipSenior managers create the culture in an organisation. Often they have worked their way up through the business and this gives them one particular view on management (for example ‘command and control’), so you have to raise awareness of alternative approaches and the benefits of a collaborative workplace.

Without the right culture, the benefits of increased levels of EQ will not accrue. Individuals with the appropriate skills will run the risk of being ‘ground down’ by a corporate culture that does not encourage collaborative working or cross functional communications.

So what does a business need to do to establish the right culture? The answer to this lies at the top of the organisation, where the tone is set for allowing high levels of EQ to flourish. The key to increased personal and organisational performance is Self Awareness - knowing one’s internal states, preferences, resources and intuitions.

In short, what are needed are good, self-aware leaders willing to guide the organisation towards collaboration.

The conclusionHigh levels of EQ, whether inherent, or purposely developed, in both men and women, are key to managing any organisation. The skills of communication, motivation, organisation and engagement are essential for high performing supply chains. However, they are not sufficient in themselves. It is the leaders with the high EQ skills that are critical to drive the organisation to provide the strategy, vision, frameworks, environment and culture to support people engagement, shared learning and continuous improvement.

With these in place, then a business will have an engaged workforce, prepared to ‘go the extra mile’. The result will be improved business performance in terms of innovation, cost, agility and customer service.

(1) Mayer, J and Salovey, P. Four Branch Model (1997)(2) Goleman,D. The Consortium for Research on Emotional Intelligence in Organizations(3) http://www.psychologytoday.com/blog/the-brain-and-emotional-intelligence/201104/are-

women-more-emotionally-intelligent-men (4) Higgs, M. and Dulewicz V. (1999)(5) Golman, D. (1999) Working with emotional intelligence(6) Woodruffe, C. (2001) Promotional intelligence. People management. Vol 7 No. 1.

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For over 20 years Unipart has pioneered a way of engaging people in operational excellence and continuous improvement called The Unipart Way, Unipart’s approach of Performance Through Engagement has created a workforce that operates high performing businesses for itself and clients. Unipart’s successes can be attributed to emotionally intelligent leadership that is committed to employee wellbeing and engaging with them at every level of the organisation.

Unipart’s commitment to emotionally intelligent leadership can be summed up in 7 Fundamentals:

Be self-aware

Know your people really well

Show respect, be clear, be fair, be consistent

Give your people the opportunity to grow

Set stretching goals

Always follow through

Deposit more than you withdraw

The Unipart Way ensures every person’s focus is on delivering benefits that make a difference to the customer and the customer’s customer. It comes down to working to common values, alignment, and a focus on partnership / collaboration built on mutual openness, trust and respect.

For more information contact:Unipart Expert Practices

Unipart House, Garsington RoadCowley, Oxford

OX4 2PG

Tel: +44 (0) 1865 384690 uep.enquiries@unipart.co.uk

or visit our website:www.unipartlogistics.com/consulting