Once considered a “soft skill,” emotional intelligence (EQ) is now a measurable driver of performance and engagement. Research increasingly confirms what forward-thinking leaders have observed: the ability to manage oneself and relate well to others is often more important than technical know-how alone.

Greater complexity from broader economic and geopolitical disruption, changing team dynamics in hybrid and remote models, and increased expectations around psychological safety, inclusion, and empathy all mean that leaders can no longer rely solely on positional authority, charisma, or IQ to succeed. They must also possess the emotional depth to connect meaningfully with others, navigate ambiguity, and support team wellbeing under pressure.

The Center for Creative Leadership’s 2024 findings underscore this point. Their data showed that when leaders learned to set and manage emotional boundaries, team engagement increased by up to 71%. This insight reflects a broader truth: emotionally intelligent leadership creates environments where people feel seen, respected, and empowered to do their best work. Without it, organisations may experience high turnover, low morale, and a lack of psychological safety.

The advantages of psychological capital

EQ is closely related to what psychologists refer to as “psychological capital,” or PsyCap. This concept combines self-efficacy, hope, optimism, and resilience, the personal resources that help individuals stay motivated and bounce back from setbacks. While PsyCap and EQ are distinct, they reinforce one another. A leader with a high level of EQ is better equipped to build their own psychological capital and foster it in others.

What’s especially compelling about EQ is how teachable and scalable it is. Despite myths that some people are just “naturally good with people,” emotional intelligence is a skillset that can be built through deliberate practice, feedback, and reflection. Programmes that develop self-awareness, social awareness, and relationship management show consistently high returns on investment. For example, in one healthcare organisation, a peer-led EQ ambassador network significantly improved communication, conflict resolution, and interdepartmental collaboration.

Training approaches vary but often include gamified simulations, role-playing, peer-to-peer coaching, and journaling exercises. One financial services firm saw noticeable improvement after introducing a peer recognition system that celebrated EQ behaviours—such as thoughtful listening or emotionally sensitive conflict resolution—during team meetings. Employees reported feeling more valued and motivated, while managers observed smoother team interactions and quicker recovery from stressful incidents.

Another organisation invested in real-time dashboards to track EQ indicators such as feedback frequency, engagement scores, and reported conflicts. These insights helped leadership target specific departments for coaching, turning EQ into an actionable part of performance management rather than an abstract ideal.

Emotional intelligence fosters talent and engagement

The strategic impact of emotional intelligence is substantial. According to the 2025 Global Culture Report by O.C. Tanner, companies with high EQ leaders are six times more likely to be rated as “Promoters” by employees, nine times more likely to foster a sense of shared purpose, thirteen times more likely to produce exceptional work, and a staggering eighteen times more likely to inspire employees to feel successful in their roles. These outcomes translate directly into talent retention, innovation, and customer satisfaction.

What are the core components of EQ? They include self-awareness (recognising your own emotional patterns), self-management (responding rather than reacting), social awareness (understanding others' emotional states), and relationship management (building trust, handling conflict constructively). Strong EQ also requires courage: the willingness to sit with discomfort, take accountability, and have difficult conversations with honesty and empathy.

Conversely, the absence of emotional intelligence is just as revealing. Leaders with low EQ often exhibit defensiveness, poor listening, emotional volatility, or a reluctance to receive feedback. These traits create environments of mistrust, inhibit collaboration, and make teams risk-averse. When employees feel unsafe or misunderstood, they disengage—and the business suffers.

Fortunately, EQ can be developed at every career stage. Leaders can start small with reflection tools like journaling and breathing practices. More advanced development might involve 360° feedback assessments, one-on-one coaching, or structured learning such as Harvard’s Leadership Principles course. What matters most is consistency: emotional intelligence is not a one-time workshop but a long-term commitment to learning, self-regulation, and empathetic connection.

The World Economic Forum ranks EQ-related skills like resilience, listening, and adaptability among the top workplace competencies of the future. Meanwhile, a 2025 forecast by DDI reports a sharp decline in trust in middle management—down from 46% in 2022 to just 29%. The need for emotionally intelligent leadership has never been more urgent.