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Employee Emotions Affect Your Organization’s
Ability to Compete
from HR Today
|Until recently, emotions were
considered a forbidden topic in the workplace.
They were nobody’s business, and they
had no place in business. They were not to
be discussed; they were to be left at home.
Today, research on how emotions affect creativity,
productivity, and career success has put a
new spin on the subject. Books such as Emotional
Intelligence and Executive EQ are heightening
Corporate America’s awareness that employee
emotions aren’t something that can be
- or should be - left at home.
Instead, management is waking up to the fact
that their success is directly related to their
ability to work productively with employee
emotions. They are realizing that how well
they elicit and sustain positive emotional
states in their employees plays a major role
in their organization’s success or failure.
This is because emotions directly influence
the five major sources of competitive advantage
in today’s marketplace:
Intellectual Capital - In today’s knowledge-based
economy, an organization’s success is
profoundly influenced by the knowledge, expertise,
and innovative capacity of its workforce.
Customer Service - With 70% of the economy
being service-related, providing excellent
service is central to most businesses’ success.
Furthermore, emerging research on customer
loyalty shows that an organization’s
success is closely linked to its ability to
create the kind of exceptional customer service
experience that leads to repeat business.
Organizational Responsiveness - In today’s
ever-changing marketplace, organizations must
respond rapidly, nimbly, and flexibly to changing
market conditions, business models, technologies,
and customer demands.
Productivity - Although productivity has always
been an issue, in today’s "do more
with less" workplace, it is more important
and Retention - In today’s
tight labor market and ultra-competitive marketplace,
an organization’s success depends more
so than ever on its ability to attract and
retain high quality employees.
By becoming more knowledgeable about how emotions
affect the primary sources of competitive advantage,
HR managers can help their management team
recognize the critical connection between employee
emotions and the bottom line. By doing this,
they can help their management team recognize
that addressing employee emotions is not a "warm,
fuzzy" thing to do, but a smart business
strategy that directly affects the bottom line.
The information in this article on how emotions
affect the primary sources of competitive advantage
can be used by HR Managers to begin this conversation.
In today’s knowledge-based, innovation
driven economy, the smart will survive. Thus,
one of management’s most important tasks
is to cultivate and engage the intellectual
capital of its workforce. The general emotional
state of a workforce plays a major role in
both the "amount" and "liquidity" of
an organization’s intellectual capital.
Emotions directly affect the "amount" of
intellectual capital - how smart and innovative
the workforce is - because emotions directly
affect intellectual functioning.
Research shows that when people are in a negative
emotional state, their thinking becomes less
flexible, original, and discerning. To put
it bluntly, we are "dumbed down" by
negative emotions. Also, at the simplest level,
when a workforce is dispirited, they don’t
have the interest or the energy to create,
to innovate, or to recognize new opportunities.
Conversely, when people are feeling confident,
secure, and passionate about their work, they
are more likely to envision new possibilities,
generate creative solutions, and make wise
Competing in a knowledge-based and innovation-driven
economy requires the sharing of information,
knowledge, and expertise throughout the entire
organization. The greater the "liquidity" of
Intellectual Capital - the more freely it is
disseminated and used - the more successful
Emotions affect this liquidity. Whether or
not an individual’s Intellectual Capital
is liquid - i.e. available for use by others
- depends upon how safe, valued, and committed
they feel. If people feel insecure, they are
unlikely to share their knowledge and expertise,
for fear of losing their power base.
If they don’t feel valued or committed,
they will withhold their knowledge and insights
as a form of "payback." Either way,
the organization loses out when intellectual
capital is kept out of circulation.
Thus, emotions affect people’s intellectual
functioning and their willingness to share
their knowledge and expertise with others -
two essential components of maximizing Intellectual
The connection between emotional state and
customer service is obvious. If service workers
are angry, demoralized, or just plain disinterested,
no amount of training will offset the service
climate their emotional state creates. The
economic consequence of not addressing front
line employee emotions is disastrous. Customer
service research shows that 68% of customers
defect from a company because they were treated
with an attitude of indifference. Thus, 68%
of what leads to customer defection is related
to emotion - or in this case, the lack of emotion.
Research by Bain and Company, a Boston based
consulting firm, has shown that if a company
reduces its defection rate by only 5%, it can
improve its bottom line by 30% to 85%. Thus,
when a company doesn’t address what is
creating a disinterested, dispirited workforce,
they are in essence saying "We’re
not interested in that extra 30% to 85% profit."
In today’s high velocity, constantly
changing marketplace, organizations need to
be extremely responsive. Being responsive means
being both fast and flexible. Emotions affect
how fast and flexible people are in their responses,
and therefore how fast and flexible organizations
are in their’s. If people are feeling
threatened, stressed out, or just plain dispirited,
they will resist change. They will cling to
outdated behaviors and methods, even when such
behaviors and methods are clearly not working.
Employees who feel secure, committed, and passionate,
find organizational and marketplace changes
energizing. They see these changes as something
that adds "spice to life," not something
to be feared and resisted. Thus, an organization’s
ability to respond nimbly in the marketplace
is directly related to employee emotions.
Emotion is sometimes defined as "energy
in motion." When people feel happy and
excited, they have far more energy at their
disposal than people who are depressed or disinterested.
Thus, a spirited workforce has more "fuel" to
power their production. On a practical level,
the happier an employee is with their work
and their company, the more likely they will
Employee Attraction and Retention
Employee emotions clearly influence an organization’s
ability to attract and retain employees. The
happier employees are, the more likely they
will want to stay. If an organization has a
reputation for being a fun place to work, a
place where employees are treated well, and
an organization that inspires pride and passion;
people will want to work there. Thus, such
organizations not only reduce costly turnover,
they also benefit from their ability to attract
the "best of the best."
By helping management create an environment
that elicits and sustains positive emotional
states in employees, HR Managers can directly
contribute to their organization’s bottom
line. The first step in this process is to
help managers see how employee emotions directly
affect the primary sources of competitive advantage.
Only after this connection is made, will management
be willing to do the work necessary to create
an organizational environment that elicits
and sustains positive emotional states in its
About the Author: David Lee is an internationally recognized authority on organizational and managerial practices that optimize employee performance. He is the author of Managing Employee Stress and Safety, as well as dozens of articles on employee and organizational performance that have been published in trade journals and books in North America, Asia, Europe, and Australia. For information on his programs and service, click here.
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