Many CFOs have built their careers on technical skills and financial smarts, but performance today is no longer solely measured on those abilities. For the modern CFO, a new set of soft skills built around emotional intelligence have become increasingly important in recent years for their ability to help business leaders build relationships, resolve conflicts, and motivate high-performing teams.
From understanding and managing emotions to aligning talent with business needs, the CFO as coach, collaborator and motivator is a growing trend. In this post, we’ll look at how emotional intelligence has become a critical skill set for today’s CFO and examine the five core components of emotional intelligence and the role they play in helping to bolster leadership performance. These key components include:
- Internal motivation
- Social skills
Changing the CFO skill set equation
The skill of emotional intelligence refers to the ability to identify, use, understand and manage the emotions of themselves and others in a positive way. For some individuals, the ability to understand and assess emotions may come effortlessly, but for others, not so much.
Since CFOs need to be able to induce change through others, this ability to inspire and influence has become a valuable skill in today’s collaboration-centered workplace. CFOs need to be able to respond to divergent points of view and differences in the way people think. By extension, they need to harness their emotional intelligence to get through difficult situations.
With fewer layers of management in today’s organizations, leadership styles lean toward less authoritative. Moreover, the shift towards more knowledge-focused, team-based roles means that workers tend to have more independence and self-governance, even with lower levels of an organization. As a result, CFOs are finding themselves connecting and collaborating with people they would not likely have interacted with in the past.
Previously, the finance function required a number of core skills, including technical expertise, analytical thinking, comprehension, and assertiveness. While these attributes may not have changed, today’s CFO also needs to exhibit a wide range of soft skills, including an ability to collaborate effectively, build relationships and perceive, evaluate and manage emotions.
Clearly emotional intelligence is important to everyday social interactions, but how does it relate to CFO performance? When you make tough decisions based on hard data that can have an impact on non-finance departments, you could come across as tough or inflexible. Not a good reputation for a leader. That’s where emotional intelligence comes into play.
Growing need drives resurgence
Emotional intelligence first gained widespread attention back in mid 90s with the release of a book by Daniel Goleman simply titled, “Emotional Intelligence”. The subject has since been the focus of numerous studies, many of which point to it being a better predictor of leadership success than a person’s general cognitive ability. The reasoning? An executive skilled at understanding what makes people tick can better motivate teams and drive more effective interactions.
Several factors are contributing to a renewed interest and growing need for leaders with strong emotional intelligence skills:
- Market disruption. New and emerging technologies are creating substantial market disruption and business transformation across industry sectors, resulting in corporate restructuring, flatter hierarchies and greater cultural diversity.
- New workplace demands. The digital age and broader enterprise connectivity is intensifying workplace pressures, creating the need for leaders with greater self-awareness, better emotional understanding and superb social skills.
- The need to innovate. Rapid technology acceleration and the speed of new service deployments requires better collaboration, agile teams and a culture that allows for continuous feedback, honest communication and individual empowerment, which are core emotional intelligence-based attributes.
- Service-oriented economy. As we move to a more service-based economy and a more customer-centric focus, relationship building, superior communication skills and better self-management abilities become more important than ever.
- Globalization. The ability to empathize and relate to different attitudes, perspectives and cultures is essential in today’s global environment. When managed properly, this diversity can lead to higher performance and better outcomes.
A recent report from World Economic Forum ranked emotional intelligence as the sixth most important skill needed in 2020 in order to manage the coming fourth industrial revolution. Emotional Intelligence wasn’t even on the list for 2015. This may explain why many organizations have begun offering employees more opportunities to improve their emotional intelligence.
Gaining a performance advantage
According to the model developed by Goleman, emotional intelligence consists of five core components.
- Self-awareness. Self-awareness is knowing your own feelings and understanding your strengths and weaknesses in relation to how they affect behavior. Leaders who are in tune with their own emotions are better able to control their own impulses and tend to enjoy better relationships. To improve self-awareness, take time to better know and evaluate yourself. Then understand how you relate to others.
- Self-regulation. CFOs need the emotional flexibility to collaborate effectively without letting egos interfere. Self-regulation is the ability to control outbursts, disruptive impulses, and moods. It also encourages a “think before acting” attitude. Instead of being held hostage by your emotions, learn to use them strategically as a performance improvement tool.
- Internal motivation. Internal motivation is the passion to work for internal reasons such as personal joy, curiosity or mental satisfaction. CFOs need to be continuously monitoring their performance, making sure they’re hitting their targets and dealing with issues when they arise. Internal motivation provides the clarity of focus and the drive needed to initiate change and take action while opening the door to positive feedback and learning.
- Empathy. Most of us are not taught how to deal with our emotions or the emotions of others. Empathy requires reading feelings and understanding the needs of others. Learning to control your own emotions will enable you to help others manage theirs. By becoming more aware and understanding how others feel in various situations, you’ll be better equipped to inspire, motivate, and connect with others across the organization.
- Social skills. Having good social skills and sound situational awareness can be a powerful tool for leading a team. While a clash of opinions is sometimes inevitable in a cross-functional team, the ability to negotiate the needs and viewpoints of others and find common ground is vital for a CFO. Creating the harmony and agreement needed to move initiatives forward hinges largely on the ability to managing relationships.
It turns out cognitive intelligence and technical skills are an incomplete predictor of performance. The ability to influence, collaborate, and communicate effectively across departments, cultures and generations is a key component of effective leadership.
The reality is there is a strong link between the emotional intelligence of its leaders and the financial performance of an organization. Today’s CFO needs to be both a strategic and tactical thinker. Not surprisingly, hiring managers are increasingly placing higher value on emotional intelligence and are incorporating these characteristics in their leadership search criteria.
While technical and financial expertise is important, CFOs can take their performance to the next level by combining financial know-how with emotional intelligence. Like any form of self-improvement, building and strengthening your emotional intelligence will stretch your comfort zone and challenge some long-held notions about effective leadership styles. The good news is the effort you make to improve your emotional intelligence will pay dividends far beyond the initial investment.