Harmonizing EQ and IQ in the Boardroom — In conversation with Liz Lempres
The interplay of IQ and EQ within the boardroom is a subject of profound significance, where their convergence shapes the board’s ability to navigate challenges, foster harmonious dynamics, and propel businesses toward enduring success.
In this insightful interview, we delve into the pivotal role of IQ and EQ in board leadership, guided by Liz Lempres, an experienced Board Director with a wealth of experience spanning diverse industries and regions. Through her wisdom, we aim to unearth the strategies and insights that have crystallized the effectiveness of board leadership, and the profound impact of this dynamic interplay on corporate governance.
As a highly experienced board director with an extensive international background spanning various industries and regions, you’ve undoubtedly encountered a wide range of challenges and opportunities in the boardroom. Can you share your insights on the interplay between emotional intelligence (EQ) and intellectual intelligence (IQ) in your board leadership approach? How have you found both to be important in your decision-making and interpersonal dynamics within the boardroom, especially when navigating complex international business environments? Could you provide a specific example that illustrates how you’ve effectively employed both EQ and IQ to address a critical issue or lead a significant initiative within a board, and the impact it had on the outcome?
The success of a business leader is not solely contingent upon intellectual intelligence (IQ) but equally reliant on emotional intelligence (EQ). This holds for board directors, particularly in the nuanced dynamics of the boardroom. While IQ equips directors with analytical prowess, allowing them to discern critical issues and strategize effectively, EQ plays a key role in your ability to listen well, build trust with management and your fellow board members, and provide good judgment..
Board directors should be cognizant of the fundamental power of EQ in deciphering not only what is being said but also what remains unsaid, which helps you grasp the underlying concerns of your colleagues and management.
A strong EQ is also indispensable in fostering an environment where productive debates can thrive. While boards often function harmoniously and collegially, this very camaraderie can at times deter members from questioning their peers or challenging management’s views. A director with refined EQ can identify this potential impediment and employ techniques such as open-ended questions to pave the way for fellow board members to voice their reservations.
The combination of IQ and EQ assumes even greater significance when boards are tasked with making pivotal decisions during times of heightened stress or crisis. An example faced by almost every board is the onset of the COVID-19 pandemic. Numerous companies, particularly those in non-essential sectors, confronted a substantial downturn as consumer demand plummeted, and production came to a standstill to address health concerns.
During this period, I served on a board that confronted a significant decrease in volumes and an uncertain outlook for future demand, causing considerable distress within the management team. One issue that required immediate attention was the company’s bonus plan, which was based on targets set before the pandemic’s onset.
From an IQ standpoint, the logical course of action was to defer any decision until the end of the fiscal year. From an EQ perspective, though, it was clear that employees needed more certainty in how the company would handle bonuses. Employees were already under a lot of stress- worried about their own and their family’s health and safety, dealing with the drawbacks of their children learning by Zoom, and unsure what the outlook was for their company (and, therefore, their jobs). Uncertainty in how they would be paid was only adding one more distraction.
The board managed this issue by establishing an open dialog with management through a board committee- a smaller forum that enabled more detailed problem-solving and discussion. We also engaged external experts to understand what other companies were doing and how we might address employee needs while ensuring the interests of shareholders were also considered.
In the end, the board applied discretion in making annual bonus payments in recognition of the very unusual circumstances but made no change to longer-term bonus programs to ensure continued focus on long-term performance. It’s a good example of combining IQ and EQ to do what’s right for the company and all of its stakeholders. You need both to understand the issues and create effective solutions.
Thank you for sharing, Liz.
A seasoned professional with a multifaceted career, Liz Lempres is currently a dedicated Board Director, specializing in cultivating resilient consumer businesses at scale. Holding the prestigious title of Senior Partner Emeritus at McKinsey & Co., her expertise in strategy, organization, and board governance is widely acknowledged. With a global footprint spanning over 20 countries, her international exposure has enriched her perspective, enabling effective collaboration across diverse cultural and business landscapes. Renowned for assuming pivotal roles in audit, governance, compensation, and CEO succession, she brings a wealth of experience to every boardroom. Committed to driving sustainable practices, her active involvement in shaping and implementing ESG strategies underscores her belief in positive change for long-term success in today’s dynamic business environment.
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