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The Importance of Emotional Intelligence (EQ) in Running a Business

In This Article

Running a business is about a lot more than profit margins and market dominance. Client communication skills, social media savvy, and staying up to date with constantly changing technology developments are just a few of the elements business owners must handle to keep up with the competition. But one new concept has gained in popularity in recent years: emotional intelligence (EQ). 

It is a multifaceted idea that businesses are incorporating into their strategy in order to improve the customer and employee experience, and leaders are adopting it to develop their skills and acumen. This article will detail what emotional intelligence in business means, how you can incorporate it into the running of your company and the many ways in which it can contribute to your success.

What is emotional intelligence in business?

Emotional intelligence refers to those attributes that help you to recognise and regulate your own emotions, as well as to sensitively handle the feelings of others. These may be qualities that you think of as basic human skills, but not everyone possesses emotional intelligence to the same degree.

An emotionally intelligent person actively endeavors to have empathy for other people’s feelings, knows their own emotional responses better, manages those emotions more successfully, and is highly adept at dealing with others. Within a business environment, this concept goes beyond individual EQ – it can impact collective dynamics and the very culture that permeates an organization.

meeting of a group of people

Leaders who’ve cultivated their emotional intelligence hold the potential to create an environment that nurtures productivity, innovation, and sustainable growth by fostering emotional well-being within their teams. So whether your business sells electrical goods or provides marketing for law firms, EQ can shape how you connect with people, make decisions, and navigate business interactions. 

Let’s take a deeper look at the components of EQ in business.

Rationality and empathy

Emotional intelligence shouldn’t be separate from business strategies; it’s an intertwined thread that enriches decision-making. While data and analysis provide a rational foundation, emotional intelligence adds a layer of insight rooted in empathy. 

It’s the ability to recognize how decisions ripple through the lives of employees, stakeholders, and customers. EQ-aware leaders understand that beyond the spreadsheets and projections, there are real people with aspirations and concerns

Collective dynamics

When a focus on EQ is embodied by leaders and woven into the fabric of an organization’s ethos, its influence will be widely felt. Every interaction and relationship within a business, as well as external professional relationships, can be improved. 

An atmosphere of open communication that values a diversity of opinion can be established – one that encourages the tactful negotiation of conflict and allows employees to feel confident and secure. This is an ecosystem where ideas can be expressed freely and innovation can thrive.

presentation to a group of people

A nurturing environment

Employee happiness is often overlooked, despite its impact on things like turnover and engagement. Leaders with a developed EQ recognize that a culture of empathy and understanding boosts morale, reduces stress, and results in a higher level of job satisfaction. Creating spaces where employees feel valued, heard, and supported leads to greater loyalty and better performance. 

What happens in an absence of emotional intelligence?

The vacuum created by the absence of emotional intelligence spawns a range of challenges. Within this void, interpersonal conflicts are rife, communication disintegrates, and the unity that fuels effective teamwork dwindles. 

You can have the most efficient operations, the best CRM for freelancers and experienced management. But if your employees feel disconnected and unappreciated, their performance will naturally suffer. This drought of EQ can infect your customer interactions, tarnish your reputation and even endanger the longevity of your business.

A breeding ground for conflict

Without emotional intelligence, it is far easier for an environment to grow where conflicts take root and spin out of control. In this vacuum, misunderstandings are left to fester, as people struggle to handle their own feelings and are reactive to the emotional response of others. 

What could have been resolved through empathy and effective communication escalates into detrimental disputes, sowing discord among team members and thus hindering productivity.

open space office man demonstrating eq

Crumbling communication

Communication is an undisputed pillar of collaboration but it begins to crumble without the support of EQ. The nuances of nonverbal cues and unspoken sentiments can be lost in translation, leading to misinterpretations and missed opportunities. 

The void left by emotional intelligence inhibits the exchange of ideas and stifles creativity, leaving your team members struggling to achieve their full potential together. 

Team unity unravels

Effective teamwork is fueled by a shared sense of purpose, trust, and mutual respect – all elements nurtured by emotional intelligence. When this critical ingredient is lacking, unity begins to unravel. 

Employees who feel isolated and undervalued are likely to continue drifting away from the collective spirit that could invigorate them. The result is a disjointed team that struggles to pool its strengths and achieve collective goals.

Disengagement reigns

A scarcity of EQ can have a devastating impact on your employees’ engagement. A sense of disconnection from an organization takes hold and suffocates employees’ enthusiasm for their work. 

Feeling unheard and unappreciated, their motivation plummets and their commitment to high-quality performance fades. The cycle of disengagement curtails productivity and practically every important area of your business.

Customer interactions suffer

At its worst, an absence of EQ can reach beyond internal dynamics and cast a formidable shadow over customer interactions. When employees are disconnected or unhappy, those people most important to your business’s success will notice. 

Customer and client relationships that could be nurtured by genuine empathy and understanding become strained. This lack of emotional intelligence can undermine the trust that is vital for sustained success.

Developing Emotional Intelligence: The Four Components

Now we know the importance of EQ, how do we cultivate it? As with any skill, it is something that can be learnt, as long as you understand the key components. These four integral components are self-awareness, self-regulation, social awareness, and relationship management. 

woman communicating with team


Self-awareness is the foundation of strong EQ. It is the ability to clearly observe and be accountable for your own emotions, what triggers them, and how this affects your behavior. This intimate understanding of your complex internal world allows you to be less beholden to your emotions and is the first step in building better relationships with others.


Self-regulation is a highly useful skill that empowers you to deal with stressful situations with clarity and composure. Being able to self-regulate means that you are able to channel your emotions constructively and in doing so avoid succumbing to impulsive reactions. This leads to better communication and reduced conflict.

Social awareness

This is the ability to attune to the emotions of those around us, creating greater empathy that rises above mere observation. A socially aware person can quickly identify unspoken cues and subtle shifts in emotions, which helps them to build genuine connections and be able to make better decisions in the light of their understanding of their impact on the humans involved.

Relationship management

The final component of emotional intelligence is relationship management. This focuses on the connections between others, and builds upon the first three elements. If you’re good at relationship management then you’re a skilful communicator, great at solving problems when they come up, and capable of building strong connections with people. Essentially, relationship management is the art of effective communication and conflict resolution. 

How EQ can help you run your business

We’ve talked about the overall benefits, but let’s get into the practical examples of how emotional intelligence can aid you in running your business successfully. There are three key areas: customer service, employee management and self-improvement.

presentation to a group of people

Customer service

The first area in which EQ can bring great benefits is your customer service and client relationship operations.

Understand your customers

It doesn’t matter if a customer is buying a pair of shoes or shopping for Australian only domain names – they want to feel their needs are understood and that their experience matters. EQ can help you to think further than a sale and into what makes your customers happy or unhappy. 

Rather than relying solely on data, you can combine it with empathy. This connection to your customer’s experience can help you craft personalized experiences and preempt potential issues or pain points, leading to higher levels of customer satisfaction. 

Emotional intelligence can also play a role in choosing your business name. Understanding how different names might make people feel can guide you toward a name that aligns with your brand’s values and objectives.

Provide a better service

We all know what it feels like to receive bad customer service and be treated as just another transaction. It leaves a bad taste in the mouth and our image of that company can be irrevocably damaged. 

When businesses support and encourage their employees in developing their EQ, interactions with customers prosper. These conversations take on a genuine and empathetic touch which many customers will value highly. Their image of your brand will be enhanced and there’s a greater chance they’ll recommend you to others. 

Improve customer loyalty

It’s a well-known fact that a returning customer is more valuable to a company than a new one, so building customer loyalty is essential for any business. There are many ways to do this, such as sending follow-up emails after no response from a client or offering incentives for their return custom.  

But the connection forged by emotionally intelligent interactions is very powerful and it provides the bedrock for unwavering customer or client loyalty. For instance, let’s say you provide insurance. If you allow your employees the chance to show grace and empathy for difficult situations such as bereavements and illness, your customers are likely to stick with you as they know you can help their stress, rather than causing more of it. By forging these connections, you can create consistent, mutually beneficial relationships. 

two women communicating with one another

Handle difficult conversations more effectively

Complaints and problems can and will happen, but handling challenging customer or employee interactions becomes a whole new experience for those who possess emotional intelligence. Equipped with a refined set of skills, you can adeptly guide conversations from conflict to resolution, using adversity as an opportunity for empathetic problem-solving. 

High-EQ team members can use their empathic abilities to untangle complexities, addressing sources of discontent and frustration. Through active listening and genuine care, they master the art of understanding, revealing solutions that might not otherwise have been recognized. 

Employee management

Managing employees in a way that positions your business to succeed, and ensures their happiness, is a delicate balance. It can cover everything from major concerns like their pay, down to the smaller details like ensuring they have the Vonage VoIP phone information so they can perform their job role from anywhere. But EQ can make every aspect of employee management easier.

Lead employees more effectively

Making the effort to heighten emotional intelligence can have a transformative effect on a person in charge. High EQ leaders can, in a sense, lift employees – making them feel valued, rather than put upon. It becomes less about giving orders, and more about creating an environment where commitment is more than a task – it’s an investment in a collective goal. 

Improve employee performance

Embracing emotional intelligence gives a real boost to the workforce, creating an environment where people are more likely to feel appreciated and truly satisfied with their job. This dynamic not only helps everyone perform at their best, but also keeps everyone fully committed to your business goals, whether they are full-time employees or IT freelancers who contribute their expertise remotely. 

As employee morale gets a boost from emotional well-being, productivity naturally goes up too. Genuine care creates a strong connection between employees and the organization, turning the workplace into a nurturing haven where dedication thrives and everyone’s dreams line up, mapping the route to shared success.

two gentlemen talking with one another

Reduce Employee Turnover

When emotionally intelligent leadership takes the lead, something special happens in the workplace. There’s respect and a strong sense of camaraderie. Employees no longer feel like cogs in a machine; they’re taken care of, cheered on, and given the perfect space to grow and shine. 

And guess what? This needed change leads to far fewer employees leaving for other opportunities. Because in a warm and supportive environment, the itch to find something better elsewhere starts to fade away. Loyalty becomes the norm, and you no longer have to spend every waking hour worrying about recruiting for your many open vacancies. 

Self Improvement

There are many challenges and benefits of being an entrepreneur. There is a lot of pressure and stress, but incredible potential reward and the freedom to be your own boss. While so much focus can be on the business, it is also important to continually work on improving yourself. Improving your EQ is a masterful way to do this, as it will help your personal happiness as well as your business.

Consider enrolling in specialized EQ training programs or workshops to develop these vital skills further.

Greater empathy

Focusing on developing your own emotional intelligence will take you down a path that leads to some really amazing transformations. One of the greatest of which is greater empathy for everyone. Most people have empathy to one degree or another, but we all know there are limitations.

Though you’ll likely never be able to understand everyone (we are all human, after all), making the effort to try to see the world from others’ perspectives and their feelings about it can have a profound effect. There will be less friction, anger and impulsive responses. You’ll be happier and those who you interact with will benefit.

Better relationships with colleagues

Embracing the four components of emotional intelligence leads to a natural evolution within interpersonal dynamics. This change can imbue you with newfound abilities to communicate more effectively and navigate emotions smoothly.

These elements form the cornerstones of harmonious relationships, building an environment where collaboration thrives. This integration of emotional intelligence not only enhances personal interactions but also propels you and your colleagues towards your shared goals. 

woman talking to another woman

Higher self-awareness

We’d all like to be the most charismatic person in the office and master how to make 10k a month! But the most important goal we can have is real self-awareness. It is through self-examination that we can truly confront our weaknesses, limitations, and the untapped potential for personal growth. 

This introspection brings our emotional responses and their causes into the light and by understanding ourselves we can learn the impact our behavior has on both ourselves and other people. From there, growth can start.

Self-regulate in stressful situations

Work can often put us into high-pressure scenarios, but those able to emotionally self-regulate can handle them much better. In the face of adversity, you’ll have the tools to navigate your way through the difficulty with poise and resilience.

This remarkable skill won’t only elevate your own problem-handling. It will have a ripple effect, inspiring confidence and trust among peers and stakeholders alike.

So what’s next?

In essence, EQ is a crucial yet often overlooked aspect of a successful business. It encompasses understanding and regulating emotions, enhancing communication, and fostering a collaborative environment. 

It might seem like a challenge to foster, but you can take it in small steps. The next time you react emotionally to something, take the time to look inwards – it’s the ideal chance to build your self-awareness and work on emotional regulation. And the next time data tells you something about your customers, ask yourself ‘why’.

Once you’ve taken the steps yourself, it’s time to foster it throughout – model the communication style you want, and encourage mediation in conflict situations to help steer conversations in an emotionally-intelligent way. As we mentioned, EQ is something that can be nurtured, so start working on it today.


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Written by Jessica Perkins

Staff at

A growth hacker at heart, Jess helps SaaS companies rapidly scale their inbound leads through lean marketing strategies. She views content marketing and advertising as the perfect concoction of growth, and loves to write about her insights and experiences.

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Reviewed & edited by Alex Skinner, at Millo.

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