Coaching Emotional Intelligence – The Business Case for Human Capital

December 10, 2012 | By

(Based on original article by BRENDA SMITH, MBA, CPEC)


Adam Smith is playing his hand a bit differently these days. The invisible force that shapes the interplay of markets of the world wasn’t ready to find it flat (Friedman, 2005). Despite this new business landscape, organizations and the leaders that drive them have held to a Working Strategy based on traditional economic efficiencies and intellectual paradigms of the past; a Winning Strategy is needed to integrate operational effectiveness and emotionally intelligent leadership to achieve the same fiscal metrics. Traditional organizational structures are challenged to find managers that can be transformed into leaders who then galvanize employees to innovate and translate this to ever-higher value for customers. The profit motive continues to drive our economy, yet the means to get there have changed. Coaching emotional intelligence is the catalyst to transform leaders and their organizations from Working Strategy into a Winning Strategy.

The Working Strategy: Efficiency and Productivity

Both individuals and organizations have Working Strategies. They result from successful decisions, familiar language and paradigms that held true in the past that have become the basis for future decisions. Habitual responses, and years of thinking in a groove burn neural pathways that steadily perceive the world as it was, not as it is. Over the years, this forms a solid foundation of doing more of what has always been done yet expecting different results. Some call this insanity. It’s more efficient for the brain of the organization and the mind of the leader to work familiar shortcuts through conditioned thinking. This fixed biology is similar for organizations as well as for the individuals that comprise it. But sticking with nostalgia, or arrogance of the past, will not bode well for the future in a competitive, global marketplace.

The Working Strategy of business has been to drive shareholder value in one of two ways: by increasing revenues or cutting costs. Corporate thinking, pressured by quarterly results, often drives short-term thinking such that companies manage not their assets but expenses to meet the expectations of the Street. Layoffs, budget cuts, cancelled trainings and divestitures were cost saving strategies to boost quarterly profits. This short-term thinking had employees paying the price as shareholder value superseded employee value. This hard-wired Working Strategy goes back to the Industrial Age, when people contributed their backs to build physical plant. At the end of a day on the production line, workers had produced a physical product. Money was compensation, and the individual earned his wage. Organizations had centralized structures and leadership was influenced by military hierarchies where management exercised top-down command and control for the efficient deployment of resources. Human Resources operated as a cost centre and staff function which managed people issues and viewed training as an end, and coaching as remedial at best. There was a language barrier, not to mention a firewall, between HR and finance. These structures worked for a largely unempowered, obedient labour force with routine skills in pursuit of cash compensation, a gold watch and a secure pension.

A dearth of leadership today might be attributed to this footprint of the past. ‘Manager’ was a term coined in this era to drive efficiency down the organization, and evaluate how much, how many and when widgets were produced. The Human Resources department followed suit as a policy-making staff position for people issues which, when necessary, dispensed with them as dictated. People were fungible in a world where lowest cost to market was the key differentiating factor. Similarly, the linear academic training of the MBA became entrĂ©e into leadership, serving to propagate multiple theories on how business gets to the bottom line: buy low, sell high, collect early and pay late. The message was be efficient, manage scarce resources and make a net gain from your venture, perpetuating the strategy of driving revenues and cutting costs. Great business minds became habituated into this efficiency focus; systems, language, formulas and metrics perpetuated the repertoire. If something didn’t work, resources were manipulated, as were the environment or policy and procedure, rather than considering how the individual at the helm might be the variable that needed to change. Such was the Working Strategy. And it only worked to a point.

Why The Working Strategy doesn’t work

Change is hard; transitions are messy. The management prototype of industrialization stayed with us as we evolved. The Information Age saw businesses identifying the knowledge people held and valuing their mental-manufacturing capacity. As technology became a means, not only an end, organizations extended globally and got flatter, and employees defected to sexier companies with surnames. Fixed corporate pensions gave way to portable 401k plans and a lifetime career path started to average 3-4 different employers. Today one baby boomer turns 62 every 20 seconds; Gen X and Y feel highly confident that better opportunities await them as they seek a whole different experience at work. These generations, perhaps the most affluent of the post-WWII period, want to learn and grow through their careers. They want their work to have meaning. And to get it, they’ll likely change jobs every 18-24 months for a renewed learning experience (Towers Perrin, 2006). Couple this with a global workplace, virtual teams and Google-esque employee perks and the challenge of organizations attracting people and retaining them creates a supply-side advantage to employees. An increasingly specialized, educated and autonomous workforce is rattling existing corporate structures. Consequently, the C-suite is transitioning to a new way of thinking, a new language, way of differentiating, investing and leading in this global marketplace that challenges our mental models.

We need a new paradigm to address a new definition of value. Automation and off-shoring are moving rote and routine tasks to the lowest cost geography (Friedman, 2005). As a result, Adam Smith’s ‘invisible hand’ is asking for higher order thinking and value creation from employers and employees to satisfy customers. It’s asking for employee creativity, innovation, strategic thinking and extra effort toward producing meaningful service experiences for customers. That means that employers must create more value, resources and richness for employees or lose out to the new Employer of Choice in the market who will. This requires leadership influence at every level of the organization. When companies do succeed in becoming highly differentiated for their employees (and therefore for their customers), the market will reflect this premium value.

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Filed in: Coaching, Leadership, Personal Development

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