In our increasingly complex world, it takes a special kind of talent to be a successful C-suite executive. Everyone at that level, the CEO in particular, must effectively balance the ever-changing needs of employees alongside the ever-changing needs of the business. Functional expertise guides all CEOs in this endeavor, but emotional intelligence (EQ) is the real difference maker.
Executives that exhibit high EQ leadership read the informational clues about the people and situations around them to better relate and react to others, no matter how challenging the situation. This practice generates higher levels of engagement and trust with employees throughout the organization.
Solving for High C-Suite Turnover
According to a March 2023 CEO Turnover Report, the number of CEO changes (418) at U.S. companies in the first quarter of 2023 was 6% higher than the same quarter of 2022 and 57% higher than Q422. This number was also just shy of the record for CEO changes (441) set in the first quarter of 2020, when specific social movements and pandemic-related issues were still driving significant CEO turnover. Notably, hospitals and technology companies experienced the second and third most CEO changes in Q123.
An Altrata report that analyzed the entire C-suite at Fortune 1000 companies between 2018 and 2022 found the following annual turnover rates:
- CHRO: 9%
- CFO: 16%
Even though CEOs had the lowest overall change rates compared to their C-suite colleagues, the report indicates that they still had the highest year-over-year increase in turnover. Moreover, healthcare and technology companies experienced the most CEO turnover among industries. These same organizations also experienced the most CFO turnover.
Prioritizing EQ in Your Leadership
Boards that are trying to replace a CEO, CFO, or other C-suite executive amid these increased levels of turnover have a lot to consider. Specific industry or even sub-sector experience may be required. Private equity firms typically want portfolio company executives with experience in sponsored environments. And all companies typically seek C-suite talent with functional skills specific to the business’ infrastructure, size, market, and employee base.
This emphasis on industry experience and relevant functional skills does not guarantee success, even when the candidate’s resume is a perfect match. In my experience, the missing piece is usually EQ. Research from TalentSmart indicates that when compared to more than 30 other workplace skills, EQ was the “strongest predictor of performance, explaining a full 58% of success in all types of jobs.” Additionally, it found that 90% of top performers possessed high EQ.
C-suite traits associated with high EQ (self-awareness, self-regulation, motivation, empathy, and social skills) result in the greatest positive ripple effect throughout an organization. Therefore, it is imperative that, before an offer is made, each C-suite candidate’s EQ level be evaluated closely and in conjunction with other skills.
Evaluating Leadership EQ
Once your hiring committee agrees to prioritize EQ in its executive hiring, it is important to confirm that the selected executive search firm is committed to evaluating candidates for this all-important quality. Asking the following six questions will ensure EQ is given the proper weight and priority as candidates are being assessed:
- How does your search firm balance the need for both functional skills and EQ leadership when conducting executive search and other leadership searches?
- What do you look for on a candidate’s resume, LinkedIn profile, online bio, and social feeds that could indicate high (or low) EQ?
- Do you ask behavioral interview questions in which the candidate describes situations that require strong EQ? (For example, a time the candidate needed to resolve conflict on a team, the action they took, and the outcome they achieved?) What are those questions and what do they tell you about the candidate’s EQ?
- Do you ask a candidate’s references about their EQ and request examples of how they exhibited it in previous leadership roles?
- What are red flags that suggest a candidate doesn’t have the EQ needed for the role?
- How do the results of any formal EQ assessment inform your candidate recommendations?
The Difference Leadership EQ Can Make
Overall, there is a notable difference that EQ can make as you expand teams to grow your business. Leaders who illustrate high EQ are more likely to uncover and solve challenges, develop trust among employees, and create a safe space for feedback. Prioritizing EQ in hiring yields success by a variety of measurements and standards. Most notably, it is proven to foster a more positive workplace environment, and it streamlines future succession planning. EQ, while considered a ‘soft’ skill or trait, is paramount to business success today; when present in leadership up and down an organization, it creates a true competitive advantage.
By Teresa Hansen, Managing Director at Focus Search Partners