Beyond Insurance

Understanding your emotional intelligence (EI)

EI is a powerful predictor of success in work and personal life

By F. Scott Addis, CPCU, CRA

Successful people have many things in common, and one of the traits they share is a high degree of emotional intelligence (EI). So what is emotional intelligence, and why is it so important to you? In a nutshell, it represents your ability to comprehend emotions in yourself and others. It is your capacity to recognize feelings and use this knowledge to motivate, inspire and direct. Emotional intelligence has two components:

1. Understanding and managing your own emotions.

2. Understanding and promoting positive relationships with other people.

The concept was first identified in the 1930s as "social intelligence," or the ability to get along with others. Psychologists continued to develop the theory through the decades, and in 1995 it gained widespread attention with the publication of Emotional Intelligence: Why It Can Matter More Than IQ by Daniel Goleman, Ph.D.

What is the difference between IQ and EI?

Intelligence Quotient (IQ) and Emotional Intelligence (EI) are two separate and distinct aspects of who you are. They are completely independent of each other—you can't predict one simply by knowing the other. It is possible to have high emotional intelligence with a low IQ or conversely to have a high intelligence quotient and be clueless from an EI perspective. My wife, Bobbie, often uses the expression: "Some of the smartest people do the dumbest things." How true.

Does a high IQ help drive career success and performance? Surprisingly, the intelligence quotient is not so strongly correlated to achievement as you may assume. Emotional intelligence is a far more valuable predictor of success. Experts attribute to IQ only about 20% of the credit for life success. A high IQ is a key attribute of those who are selected for the initial pool of college applicants, job candidates and similar groups, but differences in IQ are not powerful predictors of success among those who make it past the initial intelligence threshold for their career.

In professions demanding the highest level of IQ—and therefore setting the intellect bar high for participation in the field—IQ has weak predictive power. A study of Harvard grads in professional disciplines found that entrance exam results (roughly equivalent to IQ) had no correlation or even a negative correlation to subsequent career success. In highly complex disciplines such as engineering and science, brilliance is not enough to be the best. Those who attain the highest ranks demonstrate not just intellectual ability but also the ability to work with, persuade and motivate others, as well as self-discipline, flexibility, and resilience. In other words, they have emotional intelligence.

Success in business requires more than smarts. You must be able to develop long-term relationships founded on mutual trust as well as your technical know-how. Goleman identifies five competencies that comprise EI:

1. Self-awareness: Knowing one's emotions

2. Self-regulation: Managing emotions

3. Motivation: Motivating oneself

4. Empathy: Recognizing emotions in others

5. Social Skills: Handling relationships

Leadership demands emotional intelligence

Many bright people have derailed their careers because they were deficient in emotional intelligence. While they possessed the academic intelligence required to be successful, they failed in leadership roles because they lacked the capacity to understand how their behavior and communication style affected their colleagues and subordinates. EI is a key building block in developing your self-awareness and self-confidence, and it is essential that you have both qualities. Your ability to recognize how others feel will enhance the level of trust and respect in the workplace.

Those who choose not to recognize the importance of EI will find it hard to lead. People who are not in touch with their own emotions and those of their associates often make judgment calls that are not in sync with their environment. The most critical mistake of a leader with low EI is the failure to be fully present and accessible. This behavior creates the perception of a leader who is aloof, disconnected and uncaring, which is a recipe for disaster in a business setting.

Let's take a look at the characteristics of the best and worst bosses:

Best Boss (High EI)

• Supportive

• Empathetic

• Has my back

• Fair

• Authentic

• Flexible

• Inspiring

• Gives back

Worst Boss (Low EI)

• Rigid

• Insincere

• Has to be right

• Judgmental

• Does not listen

• Self absorbed

• Does not provide positive feedback

The characteristics seen in the best bosses all require emotional intelligence, whereas those noted on the worst bosses list reflect a decided lack of EI. Also, those who exhibit "bad boss" behaviors are not in touch with how their actions are affecting others around them.

The rise and fall of Bernie Madoff

Bernie Madoff was born on April 29, 1938, in Queens, New York. His parents were Ralph and Sylvia Madoff. Ralph, the child of Polish immigrants, worked for many years as a plumber. Sylvia was a housewife and the daughter of Romanian and Australian immigrants. Ralph and Sylvia married in 1932, at the height of the Great Depression. After struggling financially for many years, in the 1950s they became involved in finance.

After graduating from high school in 1956, Madoff headed to the University of Alabama, where he stayed for one year before transferring to Hofstra University on Long Island. In 1959 he married high school sweetheart Ruth, who was attending Queens College with a focus on finance. Madoff began to study law at Brooklyn College but later quit to start his own investment firm.

Using the $5,000 he earned from his summer lifeguarding job and a side gig installing sprinkler systems, Madoff and his wife founded Bernard L. Madoff Investment Securities, LLC. With the help of his father-in-law, a retired CPA, Madoff attracted investors through word of mouth and amassed an impressive client list including stars such as Steven Spielberg, Kevin Bacon and Kyra Sedgwick. Madoff Investment Securities became famous for its reliable annual returns of 10% or more. By the 1980s the firm was handling up to 5% of the trading on the New York Stock Exchange.

As the business expanded, Madoff began to employ more and more of his family members. His brother, Peter, joined the business in 1970 as the firm's chief compliance officer. Later Madoff's sons, Andrew and Mark, also worked for the company as traders. Peter's daughter, Shana, became a rules-compliance lawyer for the trading division of her uncle's firm, and his son, Roger, joined the firm before his death in 2006.

On December 10, 2008, Madoff's life began to unravel. After an investor informed his sons that Madoff planned to give out several millions of dollars in bonuses two months earlier than scheduled, they demanded to know where the money was coming from. Madoff then admitted that a branch of his firm was actually an elaborate Ponzi scheme. Madoff's sons reported their father to federal authorities, and the next day Madoff was arrested and charged with securities fraud.

Madoff admitted to investigators that he had lost $50 billion of his investors' money and pled guilty to 11 felony counts, including securities fraud, investment advisor fraud, mail fraud, wire fraud, money laundering, false statements, perjury, false filings with the Securities and Exchange Commission (SEC) and theft from an employee benefit plan. On June 9, 2009, Bernie Madoff was sentenced to 150 years in prison—the maximum possible sentence for the 71-year-old defendant.

As an armchair psychologist, I would not be surprised if the money struggles Madoff grew up with pushed him toward using get-rich-quick tactics. A more emotionally intelligent person would have absorbed the work ethic and morals of his parents in shaping the business he created. The same goes for his lack of understanding of how his sons and clients would react to his illegal activities. Bernie Madoff: High IQ. Low EI!

Emotional intelligence can be improved

Cognitive capacities, as measured by IQ, are largely fixed. We are who we are. But the good news is that life offers us repeated opportunities to sharpen our EI as we learn to be more aware of our moods, master our emotions, and develop better relationships with others. Our sensitivity to EI may even intensify as we age.

In addition to on-the-job success, using your EI strengthens personal relationships. By recognizing your emotions and handling them more effectively, you can improve your relationships with family and friends, immeasurably enhancing your quality of life and reducing stress.

Understanding and applying your emotional intelligence will give you much-needed wisdom in your quest for success.

The author

Scott Addis is president and CEO of The Addis Group and Addis Intellectual Capital, LLC (AIC). AIC is a coaching and consulting company whose purpose is to transform the process that insurance agents, brokers, and carriers use when working with their clients. Scott is recognized as an industry leader, having been named Inc Magazine's "Entrepreneur of the Year" as well as one of the "25 Most Innovative Agents in America" by The National Alliance. To learn more about Emotional Intelligence, go to www.beyondinsurance.com or contact Ashley Correll (Director of Beyond Insurance® Programs) at acorrell@beyondinsurance.com or (610) 945-1021.