Education

Sunday August 6, 2006

EQ vs IQ

BY LEANNE GOH

LEADERS may be very bright but if they lack “people skills” they would not be able to motivate, inspire, communicate and empathise.

“Studies have shown that ‘soft skills’ or Emotional Intelligence (EQ) is a better indicator of success in leadership than rational intelligence (IQ),” shares Bob Steiner in his session on “Effective Leadership Skills”.

For example, it has been found that 74% of successful managers on three continents had EQ as the most important characteristic in their reason for success, versus 24% of the failures.

In a PepsiCo study, divisions headed by managers with high EQ outperformed revenue targets by 15-20%; those with low EQs under performed by the same amount.

Seeing creativity at work and an environment that promotes innovation at Google was the highlight for the young entrepreneurs.
He adds that 90% of the difference between outstanding managers and average ones is the higher EQ.

“Even among the PhD holders in the University of California Berkeley (UCB), the EQ was four times more powerful than IQ in assessing success in their fields, including hard scientists,” says Steiner who has an MBA in international management and is a part-time instructor with the UCB. He was in the corporate management at AT&T but now runs his own consultancy.

Throughout his session, he links leadership skills and traits with the experiences of the gold winners of the HSBC Young Entrepreneur Awards 2005-6 during a team-building session conducted by another instructor Jeff Richardson three days earlier.

Leaders and managers

HIRD: As long as both parties are still negotiating, they still want something from the other.
Steiner shares that there are universal desired leadership qualities and cites from Kouzes and Pozner’s The Leadership Challenge. Among the top five, he says, leaders should be: honest (88%), forward looking (71%), competent (66%), inspiring (65%) and intelligent (47%).

“The more you develop these and other leadership characteristics, the less pressure you feel.”

In the same study, it is interesting to note that countries like Japan and Singapore, which perceive their leaders to be generally honest, did not place the characteristic high on the list of leadership preferences, only 67% and 65% respectively.

He says power is perceived as dominating but it can be inspiring and motivating. “People gravitate towards those with the best ideas and are forward looking”

On leadership versus management, Steiner says that leadership was about “doing the right things” and providing the overall direction, vision and strategies while the latter was about “doing things right” in handling planning, budgets, conflicts, resource allocation, staffing, problem solving and ensuring plans are met.

“Both have critical functions. Leaders need to be good managers and managers need to be good leaders.”

Highlighting various corporate management style, he says there is no right or wrong styles as management is a not a science but an art.

“Look at the results. If one style doesn’t work, change it to get better results.”

He cites the example of General Motors’ tie up with Toyota which resulted in a turnaround with changes in leadership and management.

With the application of Japanese principles, absenteeism dropped from 20% to 2%; grievances were down from 5,000 to two; staff strength was reduced by 50% but production increased by 20%.

Before GM’s joint agreement with Toyota to reopen its plant that was slated for closure, the cost of its vehicles was 30% higher than its Asian equivalent. With the turnaround, it became cost competitive and its quality and productivity was at its highest.

Negotiating skills

In his eye-opening session on “Mediation and Negotiation Skills”, Terrence Hird put the class through an activity that required two opposing groups to negotiate with each other to have a viable and profitable business.

STEINER: There is no right or wrong styles as management is a not a science but an arts.
The goal was to maximise profits within restrictions imposed by the government.

If they failed to work around a government stipulation by co-operating, they stood to lose huge sums of money. At the same time, they had the option of burning down their competitor’s business. Hird, who has an MBA from Pepperdine University, was able to predict the teams’ strategy by observing their respective negotiators’ body language and when the teams changed negotiators.

Half an hour into the activity, both teams had accrued serious losses and despite a verbal agreement between the two negotiators, neither team kept their word and both resorted to torching the other’s store.

The moral of the story? Sometimes the players lose sight of the bigger picture and focus only on themselves, resulting in a lose-lose situation and loss of business reputation.

“The opponent in this case was the government. If both the groups had worked within the constraints and gone for a win-win situation, they would have made $260,000 instead of losing everything,” says Hird, who develops and teaches advanced courses for UC Berkeley Extension in negotiation, international business strategy and operations, and marketing.

He has more than 35 years of international business experience and has been a principal and consultant in numerous business joint ventures.

With San Francisco’s close proximity to the Silicon Valley, he has been helping students develop business plans and turning their ideas into businesses.

Need to build trust

In the business world, what is trust? What happens when negotiators renege on their word?

“When you do business, other people are watching you and observing your moves. The problem with young people is that they don’t know this and they think they can keep what they do a secret. We must look for a win-win situation that benefits both sides, and not necessarily evenly.

“Statistics in US show that you have to make 50 to 60 cold calls before you get one solid lead. So then are you going to cheat that person or company?

On who make better negotiators, men or women, Hird says that Harvard University conducted an academically controlled study which showed their different strengths.

“Men were better negotiators when they were negotiating for their own gain and got better outcomes than women, especially in areas of their salary.

“But women were better negotiators as negotiators for their teams. They were more committed to the big picture.”

Hird says that a good negotiator must find his way around an obstacle, the way the river would flow around a huge boulder in its path.

The reason for negotiation is because one party needs the other or there is a mutual need. As long as both parties are still negotiating, they still want something from the other, so go for a trade off, he adds.

“When you disagree, listen to the other party instead of preparing your opposing reply. Keep your mind open and go around the boulder, not through it.”

He shares numerous negotiation strategies, body language skills, and negotiation axioms.

Despite having to condense a 90-hour course into two-and-a-half hours, Hird gave the young entrepreneurs more than enough to chew on, especially the guys who had called for the torching of their competitor’s store!

Promoting good ideas

Jim Prost, in his session on “Creativity and Innovation: Secrets to Business Growth”, discussed why innovation is important, the myths versus the reality about innovation and providing a context for creativity.

He shares that in creating innovative companies, the corporate environment must value better performance above all else.

“We need to structure the organisation to permit innovative ideas to rise above the demands of running the business. We have to know where to look for good ideas and how to leverage them once they are found,” says Prost who teaches strategic marketing management in the MBA programme at the Haas School of Business at the UCB and is an adjunct faculty member of the McLaren School of Business at the University of San Francisco.

In 1990, he founded Prost Associates, a full-service marketing company, and works with clients in designing and developing their marketing, sales and strategic plans.

Speaking on the wide range of experiences in the corporate sector, he says that the most successful innovations require four key inputs. There has to be a “champion” who believes in and pushes the ideas ahead and the “sponsor” who must be high up enough to marshal the company’s resources.

“You need a mix of bright, creative minds to get the ideas and experienced operators to keep things practical.

“You also need a process that moves ideas through the system quickly so that they get top-level assessment, endorsement and resources early on.”

Identifying innovative leaders, Prost says they think, are visionary, listen to customers, understand how to manage ideas and are people-oriented.

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