The
Emotional Side of Intellectual Capital
By David Lee
Originally published in
Training Scene
It's hard to pick
up a training, HR, or management journal without seeing an article about
Intellectual Capital and what a critical source of competitive advantage it is,
or can be. The field of Knowledge Management - technology to harvest and
leverage this vital asset, is growing by leaps and bounds. Yet, we see very
little written about a core component of Intellectual Capital - human emotions.
Contrary to the popular view that emotions
are the "opposite" of intellect, a wealth of research shows they are
an integral part of intellect. In fact, neurobiologists state that a central
purpose of emotions is to influence attention, perception, and cognition. We
know intuitively that emotions influence the quality, focus, and style of our
thought process. If we feel anxious, angry, or hopeless; we think far
differently than when we feel confident, benevolent, and hopeful.
What does this mean to the organization
hoping to compete based on its Intellectual Capital? It means management cannot
afford to ignore how their workforce's emotional state affects this critical
asset.
Research shows that emotional distress
seriously compromises intellectual functioning in a variety of ways. As people
become more stressed; their thinking becomes increasingly more simplistic,
unimaginative, rigid, and even primitive. They literally become "dumbed down." Research from the psychobiology and
trauma fields also indicates that both traumatic and chronic stress can cause
biochemical, psychological, and neurological changes which hinder a person's
ability to notice and understand other's feelings, intentions, and nonverbal
communication. This "numbed out" state results in social obtuseness,
a lack of empathy, and interpersonal insensitivity; or in the popular
terminology of today - low Emotional Intelligence.
In short, the natural psychological,
neurological, and physiological responses which protect us from emotional pain
also make us less intelligent - both cognitively and emotionally. Thus, in an
emotionally painful workplace climate, an organization's valuable Intellectual
Assets literally depreciate. Such an environment also causes the depreciation
of Customer Capital - the strong, loyal relationships created by consistent,
positive interactions with the organization (i.e. its people). Customer Capital
depends upon the interpersonal component of Intellectual Capital - the
knowledge and know how required to create a positively memorable, totally
satisfying, customer service experience.
With studies showing that 68% of customer
defections are caused by front line employee's "attitude of
indifference," the Employee Emotion/Customer Capital connection is
obvious. Landmark research published in the Harvard Business Review by Richard Reichheld and Earl Sasser also
shows the huge economic consequences of creating a totally satisfying customer
service experience. 15% to 40% of a company's customers
who are "only" satisfied - not totally satisfied, defect to a
competitor each year. Totally satisfied customers are 6 times more likely to repurchase
than satisfied customers. Their research also revealed that reducing customer
defections by 5% can translate into a 30% to 85% increase in profits.
Thus, "delighting the customer"
has major financial implications. Creating such an experience requires
addressing the emotional state of the front line workers and those internal
departments who serve them. Creating such an experience requires inspired,
proud, upbeat employees. If employees are emotionally depleted, depressed, or
resentful; service will obviously be anything but delightful.
The bottom line is clear: If we want to
compete in the 21st Century marketplace, we can't do it with "dumbed down" and "numbed out" employees.
Creating a workforce that is "fast, flexible, focused, and friendly"
(to use Rosabeth Moss Kantor's
term) - and smart; requires a workplace which elicits and sustains positive
emotional states. Those organizations which know how to do this will flourish
in this new, more demanding marketplace.
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About the Author: David Lee is a
consultant, speaker, and executive coach. The founder of HumanNature@Work, he has worked with organizations and
presented at conferences throughout
For More Information:
David Lee, President
HumanNature@Work
P.O. Box 430
Bar Mills, Maine 04004
Tel: 207-929-3344
E-mail: info@HumanNatureAtWork.com