Today, the customers and stakeholders of every business – from law firms to the blue chips to management consultancies – are more knowledgeable, more demanding and more likely to desert companies and turn to their competitors than ever before. The accountancy profession is no different. The vast majority of firms recognise the management of clients is critical. However, few have yet to realise that the critical success factor of the implementation of these strategies will be the emotional intelligence (EI) of their staff. What is EI? EI is defined by Dr Daniel Goleman, well-known author of the best-seller Working with Emotional Intelligence, as our capacity for recognising our own and others’ feelings, for motivating ourselves and for managing emotions well within ourselves and in our relationships. Better client management can only come about as the result of more emotionally intelligent people. But emotional intelligence does not just happen. It is necessary for accountancy firms to ensure their staff are developed to become more emotionally intelligent – strong in the so-called ‘softer skills’ (such as communication and managing and building relationships). This, in turn, can create a better working environment, equipped with better managers and a better retention rate – where employees feel valued, motivated and fulfilled. Because successful, talented people want to work for such organisations, this in turn, will attract the best people to that company. It is a common misconception in a cognitively demanding field, such as accountancy, that it is enough to have employees with high IQs and great technical skills, and that people with high IQs will automatically be able to manage clients well. This is not the case. Having smart people only gets you into the game – emotionally intelligent people are the key to sustainable success. Hay McBer research indicates that IQ predicts just 4-10% of career success; it mostly determines what field a person qualifies in and what kind of job he or she can secure. Paradoxically, IQ becomes a poorer predictor of career success in fields where intellectual capabilities are a pre-requisite. In fields such as law, IT and accountancy, there is very little variation in intellectual capability between candidates. Commensurately, a high IQ does not always offer enough of an advantage. It has been statistically proven by Hay McBer that EI is twice as important as IQ for determining business success and business leaders, EI competencies count for 85% of what sets star performers apart from the average – one very strong reason for a company to develop a better work climate to attract these people in the first place. What is EI about? EI consists of four fundamental capabilities: self-awareness, self-management, social awareness, and social skill. Each capability, in turn, is composed of specific sets of competencies. These include the ability to read and understand your emotions, and understand their impact on others, understanding your strengths and weaknesses, and having a strong and positive sense of self-worth. All of these factors enable stronger relations with clients, stakeholders and colleagues. Competencies such as empathy and teamwork also enable genuine dialogue and fresh thinking, which leads to innovative approaches and solutions for the organisation – something that enables employees to do more than just ‘get on’ with the client, but also helps drive an organisation forward. More emotionally intelligent employees also have a profound effect on the bottom line. Hay McBer research has shown that managers who are emotionally intelligent and create a positive work climate generate up to a 30% improvement in business results. The logic behind this is that 70% of a company’s culture or organisational climate is determined by its leadership and, in turn, 30% of difference between average and superior performance is due to organisational climate. A firm which attracts emotionally intelligent people will reap the business benefits resulting from employees capable of inspiring and motivating others (team members, clients and stakeholders). All well and good. But not all people are born emotionally intelligent. And too often, people in business (high-up the management chain, often responsible for large numbers of people) are labelled as ‘poor with people’. Being ‘good with people’ – a consequence of EI – is vital for the accountancy profession to manage their clients better. For clients to stay loyal, rather than merely satisfied, they want to deal with people whom they can communicate with, whom they feel will listen to them, as well as understand their business. Luckily, being ‘poor with people’ is unnecessary. EI is a learned capability; people can be coached to develop their emotional intelligence. But although EI can be learned at any age, it is not always easy. Growing your emotional intelligence takes practice and commitment. Developing EI requires a very different model of learning to traditional business training. The classroom model, going to a lecture, going to one-day seminars, hearing about it, is simply not enough. The emotional brain learns very differently from the thinking brain. The emotional brain learns through practice, shaping itself through repeated experience. If you consciously repeat a response to a particular stimulus, then that response will eventually become automatic. An example of EI in work Jack’s case (see box above) is just a small example of how EI skills can help accountants and their firms to survive in the relationship era, when success in business focuses on the strength of our relationships with clients, suppliers, partners and employees. Coaching Jack to develop his emotional intelligence had a positive effect on the company environment, making it a much more attractive place to work for those around him. This is because the best organisations have cultures that make them great, and that makes the best people want to work for them. They value teamwork, customer focus, initiative and innovation, and, crucially, they foster talent. Such organisations will attract the best people, and contain high performing teams who, in turn, will have a positive effect on client management. One accountancy firm ran a mentoring programme, whereby newly-qualified accountants were given older more experienced accountants (or partners) to help develop and hone their skills. As this particular firm had a high staff turnover, one of the aims of the mentoring programme was to improve relations between staff members, thereby creating an environment in which people enjoyed working and wished to stay. However, when mentoring partnerships broke down, the firm undertook a decision to assess and develop the mentors’ skills, such as empathy, communication, building bonds, teamwork and collaboration – all attributes of EI. This programme actually increased the awareness, and practice of, EI among top level staff, who, in turn, learned to communicate more effectively, and in less of an authoritative and demanding way, with the younger accountants. This not only improved morale, but also decreased staff turnover, which, in turn, reduced recruitment costs and therefore reduced key business costs for Jack’s firm. What it can do for you Emotional intelligence can transform a company from middle of the road, to top-of-the league. By creating a more emotionally intelligent environment, the firm will be able to attract a better class of accountant. These accountants, with highly-developed EI skills, will be able to meet the demands of existing clients and secure new ones. The firm will then be better placed to develop the business and steal a march on its competitors. With client relations benefiting from both the improved environment of the firm, and the highly skilled, emotionally intelligent people who work there, the company can enjoy the sustainable financial success that comes from a happy, expanding client base. So, there are reasons for honing those so-called ‘soft skills’ – before your competitors do. – Barbara Darling is a consultant with Hay McBer CASE STUDY – EVALUATING A MANAGER’S EMOTIONAL INTELLIGENCE To cite an example, Jack X has a highly authoritative and pace-setting working style. He works long and hard to get a job done. He takes a project over from one of his team if he is the slightest bit worried about a deadline. If anyone doesn’t meet his (very high) standards, he gets exasperated and often reprimands them. When stressed, he flies off the handle. Jack is highly motivated and highly skilled, but his attitude affects his team badly. Three out of the four have left, citing his unpredictability as a contributory factor. Although Jack is less temperamental with his clients, one has complained that Jack ‘simply doesn’t listen’. The senior partner recognises Jack’s skills, knows there is no-one like him in terms of sector knowledge and understanding his clients’ businesses, but also recognises the need to develop better communication skills to stop him losing team members and clients. An EI coach, an expert in teaching people how to increase their emotional intelligence, performed a 360 degree evaluation of Jack (a diagnosis of Jack obtained from the multiple viewpoints of himself, from his manager, and his team). This identified his blind spots, and highlighted a discrepancy between Jack’s view of himself, and his team’s view of him. Although initially, Jack resented the feedback, he understood he had to improve if he wanted to stay within the company. Once the areas he needed to improve on were established, such as his ability to build bonds and collaborate with his team (social skill) and empathise with other people’s emotions and perspectives (social awareness), Jack learned how to defuse his flare-ups by talking and listening to his team members, rather than getting hostile. Six months later, the climate has improved sharply, and his team’s results are creeping upward. Jack’s client management skills also improved; he can now cope with the client management imperative of really listening to his client’s needs.
A new head of solutions, Aidan Brennan, has been appointed at KPMG UK
The second largest improvement in ‘significant’ levels of financial distress since the EU Referendum was in professional services, found research from Begbies Traynor
Just one half of UK practices have implemented a pricing structure around auto enrolment implementation and advice - with many suffering increased costs
Deloitte's north-west Europe foray; BDO, Smith & Williamson investment paths; Shelley Stock Hutter; and Wilkins Kennedy discussed by editor Kevin Reed on our Friday Afternoon Live broadcast