The Relationship between Managers’ Emotional Competencies and Organizations’ Financial Performances

Abstract

The topic of emotional intelligence has attracted considerable in­terest from both academics and practitioners. Emotionally intelligent lead­ers have the ability to express, understand and regulate their own as well as others’ emotions. Previous evidence suggests that emotionally intelligent leaders play a crucial role in encouraging employees to perform at their best at work, which in turn can improve the financial performance of the organi­zation. Still, there is little empirical evidence to support these claims from de­veloping countries. Therefore, the research question of this paper is: Which of the leaders’ emotional competencies are required for outstanding financial performance of the organization? In this study, emotional competencies are analyzed through the self-awareness and self-management clusters. This study proposed and tested the relationship between managers’ emotional competencies and an organization’s financial performances, such as growth in profits, profitability, return on assets (ROA) and return on equity (ROE). Em­pirical data were obtained via a questionnaire survey involving 300 employ­ees from 80 organizations in the Republic of Serbia. The methodology used in the study is a well-known ESCI questionnaire. The findings revealed a weak positive correlation among emotional self-awareness, aspiration for success and adaptability as emotional intelligence competencies and financial per­formances, whereas emotional self-control and optimism did not have any statistically significant relationship with financial performances. The results provide implications regarding the development of emotionally intelligent leaders, supporting emotional competence at the organizations.