Economics and Emotions

The hackneyed expression "strictly business" would have us believe that business, at its core, is meant to be devoid of emotion. Anyone who has managed or worked in a team or negotiated a business deal knows that this could not be further from the truth. The prevailing wisdom says that difficult thoughts and feelings have no place at work and people, especially, managers should always be stoic, projecting confidence. But that goes against basic biology. Anyone who has dreamed of a burger and French fries while following a strict diet understands this phenomenon. 

Emotion is an inextricable aspect of the business world. The trick is learning how to manage it.  That's where emotional intelligence—the ability to reason with and about emotions to achieve goals—comes in. 

The concept is not new - how people manage themselves and relate to others is central to classic management theories. What's new is the data: There now exists at least 20 years' worth of empirical studies that tell us with precision just how much it matters for success.

The term emotional intelligence (EI) was first popularised in a 1995 book of the same name by US psychologist Daniel Goleman. Since then, numerous studies have demonstrated that EI matters twice as much as one's IQ or technical knowledge for achieving outstanding performance at work.    

Everyone has an inner stream of thoughts and feelings that include insecurity, doubt, jealousy and fear. The trouble arises when we get hooked by these internal chatters and allow them to complicate our decision-making process.  In the complex, fast-changing knowledge-based global economy, it is necessary for managers and employees to have the ability to stop that from happening. 

Ample research shows that emotional intelligence can help us relieve stress, reduce errors, become more efficient and innovative, and create organisational values. Our thought stream flows endlessly, and emotions change like the weather, but values can be called on in any situation in order to achieve shared goals like better quality or efficiency. 

Work is emotionally challenging. The security and comfort of relationships are interrupted - we are surrounded by hundreds or thousands of peers who know nothing about who we are as persons. Some new recruits may bring with them unresolved interpersonal difficulties from college days or family life, which complicates their adjustment to the new environment. On a deeper level, these are unexpected challenges to their identity. 

The rules for work are also changing. "These rules have little to do with what we were told was important in school; academic abilities are largely irrelevant to this standard," Daniel Goleman writes in his best-selling book. "The new measure takes for granted having enough intellectual ability and technical know-how to do our jobs; it focuses instead on personal qualities, such as initiative and empathy, adaptability and persuasiveness."

There's, however, certain common misunderstanding about the idea. Being emotionally intelligent is not the same as "being nice." It also does not mean giving free rein to feelings—"letting it all hang out." Rather, it means managing feelings so that they are expressed appropriately and effectively. 

And unlike IQ, which changes little after our formative years, studies show that, emotional intelligence can be learned and it continues to develop as we grow more adept at handling our own emotions and impulses, at motivating ourselves, and at honing our empathy and social adroitness. An ongoing education in emotions from kindergarten through university and training programmes for professionals based on the emerging field of emotion science can be helpful in this regard. 

Emotional intelligence is no passing fad or the management nostrum of the moment. The reason it needs to be taken seriously is simply because it works and there is data to back it up. In some countries, even medical schools are incorporating emotional intelligence into their training of doctors. Many companies in Singapore train managers on EI so that they can cope with diversity at the workplace. 

According to a senior professor of a prestigious business school, companies here are more concerned about IQ; they do not care much about EI. People at managerial levels must have some exposure to emotional intelligence, he opines. 

We need to wake up to the reality that business is done by people and for people. 

And people are emotional beings. 

The writer is an engineer-turned-journalist.