THE CPA IN INDUSTRY

June 2000

EMOTIONAL INTELLIGENCE: SOME HAVE IT, OTHERS CAN LEARN

By ohn E. Smigla and Gail Pastoria

Why are some accounting professionals--with only average or inferior technical skills--more successful than others? How are some accountants able to advance quickly, motivate subordinates, or gain entrance to the boardroom with little effort? In recent years such ability has been labeled "emotional intelligence." Two books by Daniel Goleman, Emotional Intelligence and Working with Emotional Intelligence, apply psychology to business. Many of the concepts are not revolutionary; however, the codification of these psychological principles has useful implications for professional accountants.

Emotional intelligence, as defined in the second book, consists of five competencies: self-awareness, self-regulation, motivation, empathy, and social skills. The first three competencies determine how well we manage ourselves. Self-awareness means recognizing one's emotions, strengths and weaknesses, self-worth, and capabilities. Self-regulation deals with managing emotions and impulses, maintaining integrity, being flexible, and taking responsibility for one's performance. Motivation focuses on meeting organizational goals, taking the initiative, and maintaining excellence and optimism. The last two competencies determine how well we handle relationships. Empathy requires reading the feelings of others and includes developing others, leveraging diversity, and understanding the needs of others. Social skills deal with handling others' feelings artfully, thereby inducing desirable responses. This requires listening, conflict management, leadership, and collaboration. Teamwork, which has been identified as a necessary skill for organizational success, also falls in this area. Specific jobs require certain combinations of the competencies.

An Essential Skill

Emotional intelligence is essential to a productive workplace. It is not only being nice to others, but also confronting them in the most constructive way when a problem exists. It does not mean a free reign for feelings; instead, the idea is to be in control of one's emotions.

Success depends on more than just intellectual excellence or technological prowess. Emotional intelligence is crucial to excel at the job or assume a leadership role. Technical expertise is important for baseline competency--getting the job completed. Passing the CPA or any other professional exam might be considered a baseline competency. However, research has shown that expertise alone does not reveal a star performer. Rather, a high level of emotional intelligence leads to success. The more complex a job is, the more emotional intelligence matters. Emotional incompetence can prevent individuals from reaching their full potential, but the good news is that emotional intelligence can be learned and is not fixed genetically. Furthermore, emotional intelligence tends to increase with maturity.

Emotional intelligence is extremely important for professional accountants. Self-regulation can defuse a potential confrontation before it escalates. Confronting rage with rage is not a solution, nor is it professional behavior. Applying empathy during the performance review process can produce positive outcomes also. Assessing a subordinate's strengths and weaknesses and identifying ways to improve performance in a sensitive manner will build morale; focusing on the negative will create resentment. The most successful finance departments have the best collaborators.

Employee burnout in high-growth companies can be extremely expensive. As turnover escalates, departmental performance suffers, and interdepartmental relationships are damaged. The learning curve is a cost borne by everyone that comes into contact with a new hire. In addition, the professional lacking in emotional intelligence may alienate colleagues and perform poorly. Due to poor listening and assessment skills, an individual without emotional intelligence is not as likely to provide management with the information it needs for decision-making.

Recent studies indicate that although IQs are on the rise in young people, emotional intelligence is on the decline. Subjects were more lonely and depressed, angry and unruly, nervous and inclined to worry, and impulsive and aggressive. Greater levels of understanding of interpersonal and communication skills will be needed to manage the impending human resources problems.

Most accounting programs do not currently address the concept of emotional intelligence in their curricula. This trend is likely to change because emotional intelligence is receiving overwhelming attention at all levels. The Accounting Education Change Commission, Institute of Management Accountants corporate study, and CPA Vision Process all identify skills that are needed by accountants that correspond to the five competencies for emotional intelligence. Moreover, continuing education seminars are already focusing on emotional intelligence.

Emotional intelligence, along with good communication skills and technical competency, is necessary for success in the accounting profession. At a minimum, emotional intelligence can make the workplace more efficient and harmonious. *