How Emotional Intelligence Increases Boardroom Effectiveness

Know the four steps boards can take to enhance EQ among their directors.

Emotional intelligence (EQ) is a game-changer for directors and their effectiveness in the boardroom.

When those sitting around the table are adept at reading nonverbal cues, understanding emotional undercurrents and listening actively during discussions, their high EQ enhances strategic planning, decision-making and conflict resolution. Companies that prioritize strengthening director EQ — and recruiting new directors who possess it — build boards that are more cohesive and effective at driving better business outcomes.

Before examining how higher EQ improves boardroom effectiveness, it’s important to look at what emotional intelligence is.

Understanding Emotional Intelligence

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Emotional intelligence (EQ) is the ability to recognize, understand and manage one’s own emotions and those of others. EQ helps people navigate interpersonal dynamics, build strong relationships and make better decisions.

The four key components of EQ are:

  • Self-awareness. Understanding internal emotions and how they influence thoughts, actions and impact on others.
  • Self-regulation. Managing emotions to interact appropriately and constructively with others.
  • Social awareness. Recognizing and understanding the emotions and needs of others.
  • Relationship management. Building and maintaining healthy relationships.

Benefits of Emotional Intelligence in the Boardroom

Boards and companies benefit in several ways when their directors have higher EQ. Here are five notable benefits and examples.

Improved decision-making. With high EQ, directors are better equipped to manage stress and remain composed under pressure. This enables them to make more balanced, rational and effective decisions, even in crises and other high-stress situations.

When a company CFO failed to report weak cash reserves, two directors with strong EQ helped the board focus on long-term strategies instead of panicking. By remaining calm and guiding others to do the same, these directors helped facilitate a rational and effective response. Subsequent decisions reflected a clear vision for the company’s future, not an impulsive reaction to immediate financial pressures.

Better communication. Effective communication among directors is critical both inside and outside the boardroom. Directors with strong EQ communicate with clarity and empathy. They don’t tune out or ignore what others say and just speak their minds. As active listeners, their thoughtful engagement fosters a culture of open dialogue and mutual respect. Collaborative decision-making is critical for every board. A group that voices their individual opinions without listening to each other will always struggle to achieve consensus.

During a recent board discussion about AI risks, two directors voiced opinions dismissively; they didn’t care about what others had to say. In contrast, two other directors used active listening skills and when it came time to share their perspectives, they addressed others’ points first and added in their thoughts. This approach conveyed that their goal was to find common ground and agreement on the best path forward for the company.

Conflict resolution. Conflicts are inevitable in any boardroom. However, directors with high EQ navigate and resolve them more effectively. Emotionally adept directors understand different perspectives, manage their emotional responses and facilitate constructive discussions. Not only does this maintain a positive boardroom environment, but it also fosters a more constructive space for future disagreements. Conflicts are bound to arise — and they should. Healthy dissent encourages creative thinking and reveals potential blind spots, compared to never having questions or doubts.

During a recent board meeting, when discussing the company’s priorities for their five-year strategic plan, two directors vehemently disagreed on priority number 2. The dispute could have turned ugly, but ended with consensus thanks to the intervention of a director who mediated the discussion, directing a balanced presentation of thoughts aligned with the board’s goals.

Stronger relationships. Good relationships among board directors improve board cohesion and culture. Directors with higher EQ are more capable of building rapport and establishing trust with others. This ability makes it easier to collaborate and function as a group. People are more willing to listen and work together to find a solution when they have stronger foundations for the relationships already.

Boards can leverage directors with high EQ by organizing annual team-building activities outside of the boardroom and board dinners. Personal interactions during golf outings or other fun activities surrounding the annual meeting strengthen camaraderie and relationships. This ultimately improves how the group functions and makes decisions when it’s time to get down to business.

Adaptability and resilience. With change being the norm in so many businesses today, boards must be able to navigate new challenges that come with new situations. Emotional intelligence boosts resiliency and openness to change. High-EQ directors can manage uncertainty with a positive attitude and inspire confidence in others, ensuring their board remains effective and forward-thinking.

A very salient example of this was how companies responded to crisis during the COVID-19 pandemic. Those with emotionally intelligent board directors were much better at pivoting strategies and maintaining morale. This enabled their businesses to survive (and even grow) and weather the storm more effectively.

Practical Steps to Increase Emotional Intelligence in the Boardroom

How can companies increase emotional intelligence in their boardroom?

Training and development. Implement a training program for board members to enhance EQ. Focus on one or more of the aforementioned key components of EQ.

Regular feedback. During annual board evaluations, encourage a section on peer feedback to help directors understand how their behavior impacts others and identify areas for improvement.

Check-ins. Facilitate check-ins that are off cycle from annual evaluations to help directors stay aware of their reactions and how their responses impact others. This is particularly important if the company is going through a major change that heavily involves the board (e.g., M&A or private equity investment).

Mentorship and coaching. Pair newer directors with mentors who exhibit high emotional intelligence to facilitate learning and development.

Emotional Intelligence for Long-Term Success

By fostering emotional intelligence in the boardroom, companies can enhance decision-making, improve communication, resolve conflicts, build stronger relationships and remain adaptable in the face of change. Ultimately, these benefits contribute to a more effective and resilient board, one that is capable of steering the company toward sustained success.

About the Author(s)

Alyssa Gelbard

Alyssa Gelbard is an advisory board member of Peterra Kitchen LLC and Endicott College, a board member of Financial Executives International and founder and CEO of Point Road Group.


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