Do You Have Emotional Intelligence?By
Management accountants are among the legions of financial professionals operating in an era of rapid and ever-evolving technological advances, particularly in the areas of data analytics, robotic process automation (RPA), blockchain, and AI. Given the pace of these advances and the critical need for folks like you to stay technologically current and relevant, the development of other skills of equal importance, such as interpersonal skills, may get short shrift. Without these “soft skills,” however, it’s unlikely that you’ll be able to grow professionally and take your career to the next level.
“Soft skills are especially relevant as you grow into management roles and lead others in the day-to-day operations and decisions of your company,” wrote Marcine Johnson, a former dean of the IMA Leadership Academy. (See “Sharpening Your Soft Skills,” Strategic Finance, January 2015.) More recently, a study published in Management Accounting Quarterly concluded that interpersonal skills—including demonstrating respect; active listening; building trust, relationships, and rapport; demonstrating emotional self-control; and relating to people of diverse backgrounds—were the most important soft skills for career success at all levels. (For more on this topic, see Douglas M. Boyle, Brian W. Carpenter, and Daniel P. Mahoney, “Developing the Communication Skills Required for Sustainable Career Success,” Management Accounting Quarterly, Fall 2017.)
Given how important interpersonal skills are to career advancement and success, you should consider two key questions:
1. What framework can be used to identify, assess, and develop expert-level interpersonal skills?
2. What specific interpersonal skills are most important for financial professionals to focus on for career success?
The answers to both of those questions center on the concept of emotional intelligence (EI), which is often identified as the most effective way to understand and develop strong interpersonal skills. Let’s take a look at the elements of the EI model and see which ones financial professionals have identified as most important for career development and planning.
THE EI MODEL
EI has been described as a multifaceted concept that breaks down how someone recognizes or perceives emotions, manages them, and uses them to create knowledge or reach goals. Figure 1 represents one of the most current iterations of the EI model, which focuses on how self-awareness, self-management, social awareness, and relationship management can be developed to allow for advantageous goal setting, decision making, and work performance. Although some people are born with higher EI levels than others, those at the lower end of the spectrum can still acquire, and even master, these skills.
Let’s look at the four components of EI in more detail, beginning with self-awareness, which has been described as “the ability to recognize an emotion as it happens.” This tenet is a key trait for financial professionals to possess. Self-confidence, which is an element of self-awareness, is especially important for management accountants and other financial professionals. As you approach various individuals—including external or internal auditors, analysts, controllers, managers, board members, or even CFOs—regarding a request or an issue, your confidence in that approach should positively dictate the tone of the conversation. Also, your ability to recognize varying emotions (your emotional awareness) and social cues during a meeting or conversation will benefit you immensely and will likely decrease the number of negative interpersonal exchanges.
The second component of the EI model, self-management, consists of several skills and characteristics that can be learned. The first, self-control, is defined as being able to manage one’s impulses or emotions. In their Management Accounting Quarterly article, Boyle, Carpenter, and Mahoney found the ability to demonstrate self-control to be among some of the top soft skills that a financial professional should possess.
Think about how important it is, for example, to be able to control one’s emotions in the face of having to communicate difficult information to various stakeholders, such as missed sales targets or trouble with a key supplier. The same level of restraint often extends to sensitive and private information that shouldn’t be disclosed until a later date, if ever. Thus, trustworthiness and confidentiality are likely vital to your role within the organization, and your capability to build trust is one of the most important skills to hold.
Similarly, being conscientious of your own time and work, as well as that of management, will also be crucial, especially in meeting internal and external deadlines. Finally, adaptability and innovation should work in conjunction with one another. As an accounting and finance professional, you’re working in a field that’s changing at an extremely fast pace, with new innovations and technologies being brought to the forefront. Maintaining a positive attitude toward these changes, possessing a willingness to learn how to use these tools properly, and being adaptable will be critical to your success within any organization.
A critical characteristic of social awareness is empathy. In his Forbes article, “9 Things Emotionally Intelligent People Do Differently,” Nick Hobson defined empathy as “a suite of mental processes that allows a person to recognize emotional states in others, to experience an exact match of the precise emotions and sensations felt by them”. He goes on to discuss two types of empathy: emotional empathy, which occurs “outside conscious awareness,” and cognitive empathy, which is seen as a “conscious deliberate choice.”
While it may not always be easy, striking the right balance between these two types of empathy should allow you to recognize what the appropriate response should be to the varying emotional reactions of particular stakeholders. For example, in a scenario involving the management letter comment negotiation process between the external auditors and the CFO, the “appropriate response” to a CFO’s concerns likely wouldn’t be the same for an external auditor compared to someone else within the organization. You must be empathetic to properly manage both stakeholders in this situation.
The second aspect of social awareness is organizational awareness. For a financial professional, understanding, adapting to, and navigating the politics, hierarchies, and individuals of an organization or team may be just as important as a thorough understanding of accounting standards or the rules governing your job. In short, recognizing the various nuances within your organization—and knowing how to respond to them—could be critical to your success.
The final tenet of EI is relationship management, which deals primarily with conflict management, teamwork and collaboration, leadership, influence, and the all-important communication. These are all soft skills that the auditing and accounting industries have been calling for and counting on for years. In fact, a study published in 2011 in Issues in Accounting Education found that accounting students typically possess lower levels of EI than liberal arts majors. Thus, there’s a real need to educate young accountants on these skill sets as early as possible and on an ongoing basis. Regardless of where you are in your career, you’ll have to collaborate extensively with all sorts of people in various management groups, from the audit committee and board of directors to internal and external auditors to other company stakeholders.
Invariably, conflicts will arise—no organization on the planet is immune from them—between team members or other key players both inside and outside of the company. If these conflicts aren’t addressed and managed, these negative interpersonal exchanges can ultimately decrease productivity and quality.
For its part, IMA® (Institute of Management Accountants) has recommended that management accountants brush up on several EI components. IMA’s Management Accounting Competency Framework calls for finance and accounting professionals working inside organizations to “influence, motivate, and gain support of others in order to achieve organizational goals through the use of emotional intelligence, accountability, and setting the ‘tone at the top.’” Additionally, it breaks down what a financial professional should know or possess to become an expert in each area deemed critical to optimal leadership. Some of these include communication skills, teamwork, relationship management, change management, and conflict management.
EI SKILLS FOR FINANCIAL PROFESSIONALS
While you’ll want to become proficient in all components of EI, it’s best to first focus on those skills that will help you further your career. To gain insight into the importance of each skill, we surveyed a representative cross-section of financial professionals, from those in public accounting firms (38.2% of 139 respondents) to nonprofit/governmental agencies (19.9%), and from those who work for companies with less than $10 million in assets (14.3% of respondents) to those with more than $1 billion (46.6%). More than half (54%) of the financial professionals we surveyed reported having more than 10 years of experience.
We presented the participants with each component of EI and asked them to “Please indicate your perception of how important the various emotional intelligence characteristics are to the success of a supervisory staff, manager, and executive/partner level professional pursuing a career in accounting (1 represents not at all important and 7 represents critically important).” The results are presented in Table 1.
These results indicate that the broader EI constructs of self-management and relationship management are most important to financial professionals at all levels of their careers, from supervisory staff to manager to executive/partner. Moreover, respondents identified all EI skills as important to career success (all had means of greater than 5). This finding supports the contention cited in the literature that interpersonal skills are of high importance for financial managers to identify and develop.
The four specific skills cited as being most important across all career levels were self-control, trustworthiness, leadership, and communication. Most notably, respondents indicated that trustworthiness is the most important skill at the supervisory and executive levels and the second-most important skill at the managerial level. In addition to these skills, teamwork was identified as a top skill for supervisory staff, whereas managers said that conscientiousness was very important to them and executives/partners ranked organizational awareness highly. Our hope in conducting this study is that financial professionals will use these findings to prioritize, assess, and systematically plan their career development.
SEVEN EI RULES TO LIVE BY
Based on the findings of our study, as well as what we’ve experienced and learned from other EI experts over the years, we recommend that current and budding financial managers consider the following for career success:
1. Acknowledge the importance of EI. The importance of interpersonal skills increases as you advance in your career from one level to the next (staff, supervisor, manager, executive/partner). One of the best ways to understand and develop interpersonal skills is through the mastery of EI.
2. Understand that EI can be learned. We’ve heard some people say that EI and its components (empathy, for one) can’t be taught. This simply isn’t true. While some individuals have an innate ability to demonstrate high levels of EI, research indicates that EI can be learned. Most anyone can become proficient in EI through reflection, assessment, development, and experience. The key is to engage and practice.
3. Learn the components of the EI model. EI is a complex concept. Using an established model such as the one depicted in Figure 1 will provide a solid framework for assessment, development, and career planning. Additionally, understanding what specific skills are most important for financial professionals (as Table 1 makes clear) will provide further insight.
4. Critically assess your level of EI. The degree to which you improve upon your own EI depends, in part, on how honest you’re willing to be with yourself. This should include critically assessing your current state of EI, understanding the benefits of enhancing your EI (to earn raises, promotions, etc.), and then using a framework such as the EI model and other tools to strengthen your EI.
5. Prioritize where to start. It isn’t practical to work on all elements of EI simultaneously. Depending on the current stage of your career, you may want to use the findings in Table 1 to prioritize which skills are most important to focus on first. Trustworthiness, for instance, was identified to be of critical importance regardless of career stage. Thus, this would be a great skill to focus on immediately to let people know you’re someone who can be relied upon to be honest and dependable. In addition, as specific skills are mastered, the rankings in Table 1 may be used to develop a career advancement and development plan.
6. Seek out trusted mentors. A mentor—someone you trust and who has already mastered most or all elements of EI—can be of great benefit in helping you develop your own EI skill set. A mentor could be someone you work with but doesn’t have to be. This person can also be someone who is simply willing to provide honest and constructive feedback. A key to a successful, lasting mentoring relationship is to be respectful of the mentor’s time. So do your homework. Preparation and reflection will ensure that your discussions are meaningful.
7. Use appropriate resources. The Global Leadership Foundation offers a free emotional intelligence test (bit.ly/2H4aGJm). It includes 40 broad scenarios and asks the participant to choose which option best applies to him or her. Some of the statements include how trust is established, how obstacles are overcome, how one’s behavior changes under pressure, and how difficult people should be handled, as well as questions about teamwork and flexibility. Upon completion, participants receive individual scores in self-awareness, self-management, social awareness, and relationship management. These scores can be used to help identify your EI strengths as well as any areas that may need improvement. Knowing which skills you need to work on will help you identify the right training and development resources to use.
TAKE CHARGE OF YOUR FUTURE
The outlook for financial managers is extremely positive. The U.S. Department of Labor’s Bureau of Labor Statistics projects rapid growth among this group: an average of 19% between 2016 and 2026 vs. 7% for all other professions. By 2026, the ranks of financial managers are expected to swell by another 108,600 professionals. Those who are proficient in risk management and cash management are expected to be in especially high demand.
But remember one thing as you reach for the higher rungs of the corporate ladder: Raw talent and a slew of credentials will only get you so far, even in the strongest of labor markets. You’ll still need emotional savvy, which includes a skill set that gives you the ability to read how a certain situation “feels” and how best to appeal to the key players involved in it. For example, how empathetic do you need to be? How adaptable will you be to the use of current and emerging technologies in the financial profession? What’s the right amount of leadership to display on a particular initiative, and how will you communicate your progress? Are you committed to being a team player and being flexible in dealing with different personalities?
Overall, however, the formula is more or less a simple one: By blending your talent with the full complement of EI skill sets, you’ll put yourself in the best position to stand out among your peers—and fulfill your dreams for future success.