Viewpoint January 16, 2009, 2:07PM EST

The Emotional Ignorance Trap

A manager lacking emotional intelligence is sure to make bad decisions. Here's how to regulate your feelings, no costly psychotherapy required

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From Detroit to Wall Street to Silicon Valley, it seems that bad executive decisions have become the rule instead of the exception in today's corner offices. Shareholders, employees, politicians, and even managers themselves are asking why. What is the cause of all these bad decisions, and how can we start making good decisions again?

Bad managerial decisions do not stem from low intelligence. Bad decisions are not rooted in flawed logic, deficient math skills, a poor understanding of business trends, or any of the other usual suspects. Bad decisions result from emotional ignorance.

Over the last decade, TalentSmart industrial psychologists surveyed 6,000 board members, colleagues, and employees from a cross section of industries that included hospitals, tobacco companies, churches, and casinos. The key stakeholders of these organizations rated managers on 22 separate leadership skills, including such stalwarts as strategic thinking, focus on results, character, and the ability to communicate and articulate vision. Those managers considered good decision makers consistently score high on one skill in particular: emotional intelligence.

Emotional intelligence ratings tell us how well managers understand and regulate their own feelings as well as how skilled they are at reading and responding to the emotions of others. As it turns out, the nearly 70% of the leaders who were ranked highly in emotional intelligence were also among the most highly skilled decision makers. Overwhelmingly, it's the managers most adept at understanding how others influence their own emotional state—and who can take responsibility for their part in difficult situations and make the most of bad situations—who are capable of making sound decisions in a timely manner.

In contrast, can you guess how many of those with a poor grasp of their own emotions ranked among the most skilled decision makers? Zero. In fact, 69% of emotionally ignorant leaders ranked among the bottom 15% in decision-making skill. Those who fail to handle conflict effectively, refuse to shoulder responsibility for their actions, and remain unaware of their own fear, anger, or excitement are dreadfully inept at making decisions.

If emotional intelligence is so critical to a manager's ability to make good decisions, the next logical question is, how emotionally intelligent are most managers?

This is where the story takes a strange turn. In another study a few years ago, we measured the emotional intelligence of hundreds of thousands of workers from janitors to CEOs. We found that emotional intelligence rises steadily as people get promoted up the ranks into middle management. From there, however, emotional intelligence declines precipitously with every rung up the corporate ladder, finally bottoming out with CEOs.

So it seems the people least equipped to make good decisions are those we trust to make the most profound decisions. Perhaps this sheds some light on how so many of our businesses have ended up where they are today.

Fixing the problem requires that we first understand it. For so long, we have been taught to believe that decisions should be coldly logical. So we assume that emotions have no place in the decision-making process. We find evidence of this widespread, albeit erroneous, belief in the recent outpouring and popular acceptance of books and research detailing the many ways in which people make irrational decisions. The assumption is that if bad decisions result from illogical biases, then correcting those decisions is simply a matter of infusing more logic into the process.