The Business Case for Emotional Intelligence at Work

04 September, 2025

The business case for emotional intelligence at work

Emotional intelligence (EI) is the ability to recognise and manage emotions in oneself and others. It has emerged as a top predictor of workplace success. In fact, a survey by Harvard Business School found 71% of employers value EI more than technical skills when evaluating candidates. Simply put, IQ (i.e. cognitive intelligence) may get someone the job, but it’s EI helps them thrive in it. With the growth of hybrid and remote working in recent years, the concept of emotional intelligence takes on even greater significance. As Daniel Goleman famously noted, “The most effective leaders…all have a high degree of…emotional intelligence”.

The same survey found that high-EI leaders stay calm under pressure, build trust, and respond to colleagues with empathy. These are the qualities that senior managers, team leaders and HR professionals know are essential for sustained performance.

Recent research reinforces that emotionally intelligent leadership directly boosts business results. A 2023 literature review of over 100 studies concluded that “emotionally intelligent leaders improve both behaviours and business results and have an impact on work team performance”.

Similarly, corporate case studies show that when leaders have high EI, their teams are more engaged, productive, and innovative. For example, a Genos study of 100 IBM leaders and their 438 direct reports found that high-EI leaders had highly engaged teams, whereas lower-EI leaders tended to have disengaged or actively disengaged staff. In practice, this means better collaboration, faster project delivery, and stronger customer relationships.

For example, one manufacturer (Amadori, supplier to McDonald’s) saw managers’ performance scores rise dramatically with higher EQ: EI predicted 47% of the variation in managers’ performance and 76% of the variation in employee engagement. In that case, improving managers’ EI also led to a 63% drop in turnover, underscoring how EI-driven leadership creates loyalty and continuity.

EI in leadership builds empathy, trust and performance

For senior leaders and team leaders, EI is not optional. EI is a foundation of effective management. Leaders with high EI excel at empathy, communication and relationship-building, which are proven to translate into better team performance. Research by TalentSmart (reported via the World Economic Forum) shows 90% of top performers have high emotional intelligence. The same research states that EI is “the strongest predictor of performance” overall. In practice, leaders who listen actively and understand their employees’ feelings can motivate teams even under stress. Emotionally intelligent managers know when “it’s an appropriate time to say something and when it’s not,” helping them respond thoughtfully rather than reacting in anger.

Empathy, in particular, pays dividends. A 2023 survey by EY Consulting found 87% of respondents said empathetic leadership leads to positive change and 85% said empathy increases productivity. In other words, when leaders “walk in their team members’ shoes,” they unlock energy and creativity.

In another study, the Center for Creative Leadership similarly found that managers who show more empathy are rated as better performers by their own bosses. This happens because empathetic leaders build trust: they make employees feel seen and heard. For example, Google’s management research emphasises that employees value how their managers show care and support. At Google they teach their managers to practice empathy and compassion which led to higher team satisfaction. In short, EI enables leaders to inspire rather than dictate, which boosts morale and loyalty.

The consequences of low on EI managers

Conversely, leaders low on EI can seriously hamper productivity. The Harvard Business School research mentioned above notes that 95% of people think they’re self-aware but only 10–15% actually are, and working with unaware colleagues can cut a team’s success in half. Such leaders tend to react impulsively, spark conflict, or overlook team dynamics.

In the same study, one survey found that 72% of employees ranked “respectful treatment of all employees” as the top factor in job satisfaction. When managers lack EI, they often forget this, leading to stress, gossip, and wasted effort. The Society for Human Resource Management reports that each unresolved conflict can waste about 8 hours of company time on unproductive activities. It’s no wonder disengagement skyrockets under high-pressure, low-empathy leadership.

High performing teams and collaboration

Emotional intelligence also unlocks better teamwork. Teams led by high-EI leaders are more cohesive, adaptable, and high-performing. In one study, organizations with emotionally intelligent leadership saw a 32% increase in team engagement and a 37% jump in productivity.

These gains stem from improved communication and trust. When team members feel understood, they share ideas more freely and help each other rather than compete. The ability to “read the room” through social awareness prevents misunderstandings and aligns people on common goals.

The core advantages of EI-driven teams help:

Better communication: High-EI teams listen actively and give constructive feedback. Confusion and errors drop when people check in on each other’s perspectives.
Increased innovation: Psychological safety – knowing that teammates empathise and won’t shame mistakes – encourages risk-taking and creative problem-solving.
Faster decision-making: Teams attuned to emotions can cut through friction. A study by Genos International indicates that teams with EI resolve conflicts 50% faster than others, meaning projects are less likely to stall over disagreements.
Resilience and adaptability: Empathetic leaders keep teams calm during change. Employees who feel supported report 20–25% higher job satisfaction and drive better results.

One powerful example comes from L’Oréal’s sales organisation. There, staff selected and trained for high EI outsold their peers by an average of $91,370 per person each year, driving $2.56 million more revenue overall. Turnover among these emotionally competent hires was 63% lower than average. These figures demonstrate how an emotionally intelligent workforce is not just happier, but measurably more effective.

Conflict resolution and workplace climate

No workplace is conflict-free, but EI equips leaders and teams to handle disputes constructively. Leaders who understand emotions can defuse tensions early by acknowledging feelings and finding common ground. For instance, in a high-stakes supplier negotiation, Siemens credited EI for turning an impasse into a collaborative, long-term partnership (resulting in a 15% revenue boost). In routine contexts, this translates to fewer HR interventions: teams trained in emotional awareness mediate peer disagreements themselves.

By contrast, lack of emotional insight makes conflicts explode. When Boeing’s leadership failed to address engineers’ concerns empathetically during crisis communications, trust plummeted and the company lost over $18 billion in market value. While that is a cautionary tale from aerospace, the lesson applies to any organisation: ignoring emotions can become expensive. Leaders should instead foster a culture of open dialogue.

Regular check-ins, active listening sessions, and training in empathy/communication are practical steps. The Cleveland Clinic’s REDE training is a notable healthcare example: one session on “relationship-centred communication” significantly boosted physician empathy and patient satisfaction while reducing burnout. Similarly, nonprofit Oxfam introduced structured EI-based conflict workshops, which led to a 30% increase in project completion the following year. These case studies underline that emotionally intelligent conflict resolution pays off in productivity and morale.

Driving engagement and retention

Employee engagement, i.e. the emotional commitment to an organisation, is directly linked to EI. Engaged employees are 17% more productive and absent 37% less often (Gallup). More broadly, one meta-analysis found high-engagement companies had 19% higher operating income and 28% higher earnings growth, whereas low-engagement firms saw 32% income declines. Since EI-rich environments foster engagement, leaders should view EI development as an investment in the bottom line.

Real-world examples reinforce this link. In a study a mid-sized tech firm invested in mental health and flexible work based on EI principles and this lifted employee engagement from 62% to 82% within a year. This reduced turnover dramatically. Likewise, Amadori saw organisational engagement scores soar when its managers improved their EI. Turnover fell sharply as a result. These stories show how treating employees as humans with emotions – by offering support, work-life balance, and participative management – keeps people motivated and loyal.

By contrast, poor emotional management by leadership drives talent away. A manager who constantly overlooks accomplishments or disparages team members will see morale sink. In such cases, even top performers disengage. As one HR expert puts it, “disengaged employees become a liability”. Leaders with high EI, however, “bring out the best” in their people. They communicate appreciation, handle setbacks constructively, and create a climate where employees feel safe to speak up. In the long run, this translates to lower recruitment costs and a stronger bench of internal talent.

Our tips for leaders and HR teams

The good news is emotional intelligence can be developed and embedded in workplace culture. Here are some key actions senior managers, team leaders, and HR can take:

Lead by example: Managers should practice self-awareness and regulation. Admit mistakes, show vulnerability appropriately, and handle stress visibly but calmly. This sets the tone that emotions are part of work life, not taboo.
Invest in training: Provide EI workshops and coaching for leaders. Teaching skills like active listening, perspective-taking, and giving constructive feedback equips managers to handle real situations. Even short courses have proven impact.
Incorporate EI into recruitment and performance reviews: Use behavioural interview questions to assess candidates’ empathy and interpersonal skills, not just technical acumen. In performance reviews and 1:1 meetings, include feedback on emotional competencies (e.g. collaboration, leadership behaviours etc.).
Encourage open communication: Establish regular 1:1s and check-ins or 360° feedback exercises. Encourage employees to share concerns before they escalate. Create safe forums (anonymous employee surveys or suggestion boxes) where staff can voice issues without fear.
Reward empathy and collaboration: Recognise and reward behaviours that reflect EI e.g. teamwork, mentoring peers, conflict resolution, community-building. Public praise of emotional leadership signals its value.
Support wellbeing: Policies that respect work-life balance (flexible schedules, mental health initiatives) demonstrate organizational empathy. According to Gallup, teams with flexible work saw up to 20% higher performance and 60% better satisfaction. These policies build loyalty by showing management cares about employees’ whole lives.
Monitor, measure and refine: Use engagement surveys and stay interviews to track whether the workplace climate is improving. Look for positive trends in survey comments about leadership and teamwork. If metrics stall, dig into whether emotional factors might be the issue.

Summary

In today’s fast-paced and complex work environments, emotional intelligence is not a “nice to have”. Instead, EI is a business imperative. Leaders who cultivate EI create teams that communicate better, innovate faster, and deal with conflicts more gracefully. At work, emotional intelligence is a game-changer.

Companies that invest in emotional skills see tangible returns: higher productivity, stronger engagement, and lower turnover. Conversely, neglecting EI leads to misunderstandings, burnout, and expensive talent loss.

As senior managers and HR professionals, the onus is on us to prioritise emotional intelligence alongside strategy and metrics. By weaving EI into leadership development and company culture, we build resilient organisations where people thrive and performance improves. Look after your people and they will take acre of your business.

Paul Beesley

Director and Senior Consultant, Beyond Theory