Emotional Intelligence: Today's Constrained Resource

What holds your company back from doing its best? If you knew the precise sticking point, you could fix it. Then your company could soar.

Imagine this: In a moment of poorly controlled impulse, you agree to bake 14 cherry pies for your company picnic. You have lots of cherries, lots of crusts, an oven that holds seven pies, but only one pie pan. That lone pie pan is your constrained resource. It will control how fast you get done.

Your company faces a similar problem. It begins with raw materials, whether those are steel, glass, and wood, or paper, ink and ideas. You put those materials through all the production processes necessary to create your finished product. One resource is in shortest supply. It constrains your productivity and profit. Strengthening that resource is the key to making quantum leaps in your productivity. However, identifying the resource in shortest supply is not always easy. Looking at the prevailing constrained resources in history can provide important clues.

When our country was young, we had an agrarian based economy. The constraint on economic growth was the relatively small amount of food that farmers grew per acre. This constrained economic development because there was a limit to the number of non-farm workers an area could feed. As farmers became able to grow more food per acre, more people could engage in other economic pursuits.

Once an area had produced all the goods needed by its own people, there was little point in producing more unless outside markets could be developed. Transportation to take goods to these new markets became the constraining resource. The railroad was born. Those who controlled railways became enormously wealthy because the greatest potential for economic growth always hinges on leveraging the most constrained resource.

With good transportation systems, the economy faced a new problem. New markets meant that demand could outstrip supply. Companies needed capital to increase their production capacity. Capital became the most constrained resource because companies could only grow as fast as the capital at their disposal would permit. Financiers became the center of wealth.

Today, many companies have the capital they need (although more is always appreciated). What many companies lack are people with the skills and knowledge to handle the sophisticated production processes of the twenty-first century. We have become a knowledge based economy. Our most constrained resource is talent. To illustrate, many companies are desperate for employees with solid computer skills. It is a sellers market. Salaries are exploding.

A growing body of business research is proving another set of skills to outstrip even technical knowledge in value. These critical skill sets, sometimes called emotional intelligence, include emotional and interpersonal competencies. They have been found to matter more to success, personal and company wide, than intelligence itself.

Consider simple optimism. One study showed that optimistic life insurance sales people sold 37% more life insurance in their first two years than their pessimistic colleagues. In other words, expecting to do well helps you do well. It makes sense and data supports it. The good news is that optimism is a skill that can be learned. It can be learned at any age by anyone who is willing to do so.

Another study looked at supervisors in a manufacturing plant who were effectively trained in the interpersonal skills of listening and helping direct reports to solve problems. Results: lost time accidents were reduced by 50%, grievances dropped by 80%, and productivity goals were significantly exceeded.

As the complexity of a job increases, the impact of interpersonal skills and emotional competencies soars. Research at the top executive level compared highly successful leaders with leaders who achieved average results. How were these leaders different? 75% of the difference in achievement came from superior emotional and interpersonal skills. Highly successful leaders were better at such things as influencing others to do their best, creating teams that functioned outstandingly, maintaining their self confidence under stress, and being aware of what others around them were feeling. What is the impact on the bottom line? Highly successful leaders provided 127% more economic value to their company than average leaders.

Now let’s think about your company’s constrained resource. In today’s economy, it is most likely to be the emotional and interpersonal skills required in a maturing society. To handle the complex tasks in today’s economy, skills such as self awareness, self control, strong commitment to a cause, understanding others, and being able to elicit the best from those around us are essential.

To assess your company, ask such things as: What is my turnover rate? Am I losing my best employees, i.e., am I training employees for my competitors? How motivated are my employees? Are supervisors and managers held in high regard or mistrusted? Do employees cooperate to get the job done or do they sabotage each other’s work for political advantage? What are my competitors doing about emotional intelligence?

If your answers suggest that interpersonal and emotional skills are your company’s current most constrained resource, read this column regularly in the Kalamazoo Gazette. It will help your company know how to build the personal and interpersonal skills required to flourish in today’s economy.

Dana C. Ackley, Ph.D., is founder and CEO of EQ Leader, Inc.. He can be reached 774-1927, or by e-mail at dana.ackley@eqleader.net.