The Family-Owned Business Institute E-Newlsetter Spring 2004

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IQ is Necessary but Not Sufficient
Employees Qualities Referred to as EQ

It was a six-figure mistake! Despite expressed concerns, Devin Kingmen was promoted to President.

Ten years earlier, Devin graduated college at the top of his class. He was hired to support accounting and handle purchasing. Over the years, he endeared the company owner, Gary Jackson, for his loyalty and unyielding support.

In recent years, Mr. Jackson has wanted to find more balance in his life. To achieve this, he needed to delegate the day-to-day management to another. Devin was the owner's first choice. But at the urging of Mr. Jackson's banker, a specialist was hired to assess Devin's suitability for management. The results certainly supported what was already apparent. Devin was loyal and intelligent. But weak communication and interpersonal skills -- aloofness, fear of conflict, and an abrupt style - were also revealed. It was also found that Devin was perceived poorly by his peers. A common theme was that they saw him as a "yes man" to the owner.

Despite the warnings, Mr. Jacobs "went with his gut", as he usually did. His friendship with Devin, in part developed by weekend fishing and hunting trips, won the day. But chaos and infighting ensued almost immediately. Productivity fell sharply. Nine months later, the top two salesmen resigned. Then, the finance manager quit and a longtime customer defected to a competitor.

The bottom line? The company swung from profit to loss and the future was suddenly uncertain. Despite his best intentions, Mr. Jackson had more work on his hands than ever.

How could this happen by promoting a longtime, loyal and intelligent employee. The answer is that while Devin clearly had sufficient IQ. and a knack for knowing 'where his bread is buttered', he was woefully inadequate in what some are referring to as EQ.

IQ, or Intelligence Quotient, is that constellation of logic, reason and analytics skills to which we often refer. IQ has Einstein as its poster boy. But recent research shows that IQ is not a good indicator of ability to effectively lead people, execute a results-driven business plan, and achieve goals through working with others. The bottom line is that IQ is now, more and more, being relegated to what is referred to as a "threshold" ability - meaning that it is necessary, but not sufficient.

IQ is not enough to enable strong managerial performance. A set of skills referred to as EQ, or Emotional IQ, is necessary as well. We somehow knew this intuitively, as business owners, but research is now proving this out. Research is also giving us tools that we can use and apply to ourselves and our businesses to achieve better performance.

More than simply theory a theory of human performance, it has very practical implications for us as business owners. EQ refers to a person's ability to recognize and regulate their own emotions and those of others around them. The idea is that the most effective leaders in your company will have two sets of "competencies" - personal and social. Personal Competencies include self-awareness, self-regulation, self-management, and self-motivation. Social Competencies include social skills, empathy and interpersonal awareness. Together, these abilities will often make the difference between a top performer and one that is mediocre, or even a liability to your company.

Research in the area of Emotional Intelligence, referred to as either EQ or EI, was pioneered in the early 1990 by two American University professors, John Mayer and Peter Salovey. A Daniel Goleman has advanced the research greatly in its application to companies, employees and management performance. Mr. Goleman's website is Another useful website is

Reprinted with permission from Vercor/The Business Owner, LLC.  This article originally appeared in the Nov-Dec '03 issue of The Business Owner (, a Tulsa-based newsletter for owners of small and mid-size private businesses. Jay Kent-Ferarro, Ph.D. contributed materially to this article. Dr. Kent-Ferraro, through his consulting firm Empowerment Technologies, provides executive coaching, training and human performance consultation.

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