Why Emotional Intelligence is a Must Have Capability for Finance Leaders

Emotional intelligence, a convenient collective noun for key personal awareness, relationship-enhancing, and decision-making capabilities is increasingly prized in the business world.

CFOs and their organisations need to be aware that emotional intelligence is often overlooked in data driven functions like finance. However, for the reasons set out below, finance leaders need emotional intelligence just as much as other business executives.

What makes someone emotional intelligent? Self-awareness is the key capability. No self-awareness, no emotional intelligence. As a leadership expert and executive coach, I have seen this play out time and time again.

As well as self-awareness, other aspects of emotional intelligence include: empathy and awareness of others, authenticity, and the ability to reason and make decisions in an emotionally mature way.

The evidenced-based reasons why emotional intelligence is a must have capability for all finance leaders include the following:

Career progression

Emotional intelligence is significantly and positively related to salary, career adaptability, career decision-making, career commitment and satisfaction, and turnover intentions. Human resource managers who do not want to lose their talented finance professionals are well advised to offer appropriate, ongoing training in emotional intelligence. Studies have shown that provided an employee cares about improving their emotional intelligence, this is a capability which is definitely capable of enhancement.

Improved decision-making

By taking into account all of the emotional and human aspects of decisions, as well as financial considerations, better outcomes will be achieved for organisations. Complex finance decisions require data and analytics. But they also require an understanding of how the humans who will be impacted by the decisions are likely to react. Decision makers who are emotionally intelligent have empathy and the capability to foresee the likely human behavioural response to proposed decisions. This allows for a richer and more nuanced decision-making process which is not limited to financial data in spreadsheets. Moreover, it minimises the risk of poor outcomes and having to reverse direction at the implementation stage, perhaps at great cost.

Motivating and inspiring teams

A core function of leadership is to motivate and inspire teams of people and get them to move with enthusiasm towards organisational goals. Along the way, leaders need to be able to persuade and influence team members that the chosen strategy is worthwhile for individuals as well as the organisation. Finance leaders with emotional intelligence capability will have the ability to understand what drives and motivates their team members. Through humility, empathy and the ability to listen attentively to the views of other people, emotionally intelligent leaders can understand and address any potential roadblocks that may otherwise be preventing the achievement of strategic plans. Such leaders will have a toolkit of communication skills which will resonate with and inspire their teams to action.

Resilience

In the modern workplace, resilient employees are highly prized by employers. They are likely to be more productive and less likely to burn out. Of course, employers have a responsibility to assist their staff to be resilient by not overworking them and providing a psychologically safe and supportive work environment. However, employees need to play their part on the resilience front. Emotionally intelligent finance leaders will be more resilient than those not blessed with this capability. This is because a large part of workplace resilience revolves around the ability to build strong relationships and minimise disputes with colleagues, clients, regulators and others. Resilience plummets when relationships go off the rails. With appropriate emotional intelligence skills, and in particular empathy and social awareness, relationships and resilience can be preserved.

Competitive edge in the age of artificial intelligence

The recent and remarkable developments in AI are having a profound impact in the workplace, including in finance functions. Increasingly, AI-powered machines will take over many tasks previously performed by people. In this everchanging world, finance leaders will be expected to supervise AI tools, but will still be valued for the human experience, expertise, judgment and wisdom that machines are unlikely to match anytime soon. The finance leaders who will stand out in the Age of AI will be the emotionally intelligent ones, who have communication skills to deliver their judgment and wisdom in the most effective and cut-through manner.

Emotional intelligence is a must have capability for finance leaders: it delivers benefits to them and their employer organisations. Employers can assist their finance leaders by investing in programs and tools which help assess current levels of emotional intelligence and then provide training to enhance capabilities. As the Age of AI accelerates, finance leaders with strong levels of emotional intelligence will bring competitive advantage to themselves and their organisations.

About the Author – Tony Frost

Tony is author of The Professional: A Playbook to Unleash Your Potential and Futureproof Your Success is a highly sought-after speaker, executive coach, trainer and author who helps individuals and teams thrive in the age of complexity and artificial intelligence.

For more information visit www.frostleadership.com.au