Why Emotional Intelligence Is Crucial for Today’s CFOs

In this article we discuss:

• What Exactly Is Emotional Intelligence?
• Importance of Soft Skills for CFOs
• Developing Emotional Intelligence
• Emotional Intelligence as a Journey

In today’s complex and ever-evolving business landscape, CFOs face unprecedented challenges. While technical expertise, data leadership, and financial acumen remain foundational for the finance leader role, one trait is emerging as crucial for success—emotional intelligence (EI).

Often relegated to the realm of “soft skills,” EI—sometimes also referred to as emotional quotient, or EQ—is no longer a mere advantage. Increasingly, it’s a critical competency that enables CFOs to lead teams effectively, navigate finance transformation, and drive organizational success.

Harvard Business School professor Linda Hill, one of the world’s top experts on leadership, identified empathy as one of the eight qualities of successful leaders. “You need to be able to step into the shoes of your team members, understand what matters to them, what their priorities are, and identify common ground,” Hill writes.

Make no mistake: Emotional intelligence is the overlooked skill every CFO needs to thrive.

What Exactly Is Emotional Intelligence?

EI is the ability to understand and manage your own emotions, as well as recognize and influence the emotions of others. It’s a critical set of skills that enables individuals to navigate interpersonal relationships effectively, make sound decisions, and achieve their goals. Unlike purely cognitive abilities, EI focuses on the emotional and social aspects of human interaction, recognizing that emotions play a powerful role in our thoughts and behaviors. Developing EI is a lifelong journey that involves self-reflection, practice, and a genuine desire to connect with others on a deeper level.

EI comprises four core components: self-awareness, self-regulation, empathy, and social skills.

• Self-awareness involves understanding your own emotions, strengths, and weaknesses, and how they impact your interactions with others. Business leaders with a high degree of self-awareness were 10% more effective, Forbes writes, citing research by the Corporate Executive Board (CEB).
• Self-regulation is the ability to control or redirect disruptive impulses and moods, thinking before acting and managing your emotional responses. “Leaders who lack self-management tend to react and have a harder time keeping their impulses in check,” writes Shannon O’Connor Bock, president at A.J. O’Connor Associates. “This can lead to tension in the workplace and a breakdown in trust and collaboration.”
• Empathy and social awareness describes the ability to understand the emotions of others and social dynamics at play. Harvard Business Review explains, “Global leadership development firm DDI ranks empathy as the number one leadership skill, reporting that leaders who master empathy perform more than 40 percent higher in coaching, engaging others, and decision-making.”
• Social skills and relationship management encompasses the ability to build and maintain good relationships, communicate effectively, manage conflict, and work collaboratively with others.

These four components work together to create a foundation for strong interpersonal relationships and effective leadership.

Importance of Soft Skills for CFOs

Traditionally, the CFO role has been heavily weighted toward technical proficiency—a deep understanding of financial statements, accounting principles, and regulatory compliance. However, the role of the finance leader has evolved significantly, demanding much more than just number-crunching.

The modern CFO is no longer simply a financial gatekeeper. More often, they’re also strategic business partners, deeply involved in shaping organizational direction and driving value creation. This expanded role requires CFOs to collaborate cross-functionally, influence decision-making at all levels, and communicate effectively with a diverse range of stakeholders, from board members and investors to employees and customers. This shift necessitates a strong understanding of human dynamics, and the ability to build trust, foster collaboration, and navigate complex interpersonal situations—all hallmarks of emotional intelligence.  

“Emotional intelligence equips CFOs with the ability to navigate the intricacies of human dynamics. Interacting with the board of directors, investors, analysts, and cross-functional teams requires more than just technical expertise; it demands a nuanced understanding of emotions and effective communication,” CFO Robert Heese writes. “Emotional intelligence enables CFOs to manage their own emotions in the face of pressure and make sound decisions. It also helps in understanding the emotional landscape of others involved in the decision-making process, facilitating consensus-building, and minimizing resistance.”

The impact of EI on CFO performance can be profound, touching upon every facet of their leadership.

• EI enhances leadership effectiveness: A CFO with high EI can build strong, trusting relationships with their team members. They understand what motivates individuals, provide constructive feedback and coaching, and foster a sense of loyalty and shared purpose. Moreover, they are adept at managing conflict and resolving disagreements in a way that maintains a positive and productive work environment. This ability to connect with and inspire their teams is essential for driving performance and achieving organizational goals.
• EI significantly improves strategic decision-making: While financial data provides a crucial foundation, EI allows CFOs to consider the broader context of their decisions, including the emotional and human impact on employees, customers, and other stakeholders. They can anticipate and mitigate potential risks associated with change initiatives, understanding how people might react to new policies or strategies. A CFO with high EI understands that decisions aren’t made in a vacuum, and the human element is crucial to successful execution.
• EI is crucial for effective communication and influence: CFOs are constantly interacting with different audiences, each with their own perspectives and communication styles. A high-EI finance leader can tailor their communication to resonate with each group, ensuring clarity, understanding, and buy-in. They can build rapport and trust with stakeholders, fostering open and honest dialogue. Whether negotiating a deal, presenting to the board, or explaining financial results to employees, EI enables CFOs to communicate persuasively and achieve their desired outcomes. They understand that beyond just conveying information, communication is also about building connections and influencing behavior.

Developing Emotional Intelligence

So, how can CFOs develop their emotional intelligence? The journey begins with self-assessment. CFOs should take time to reflect on their own strengths and weaknesses in the core areas of EI. Seeking feedback from colleagues, superiors, and subordinates can provide valuable insights. Formal EI assessments can also offer a structured approach to identifying areas for improvement.

Once a CFO has a clear understanding of their EI profile, they can pursue targeted training and development. Numerous programs, workshops, and coaching services are available to enhance specific EI competencies. These programs often involve interactive exercises, case studies, and personalized feedback to help individuals develop their skills.  

Mentorship and learning from role models are also invaluable. Observing and interacting with leaders who demonstrate strong EI skills can provide practical examples and guidance. Mentors can offer personalized advice and support, helping CFOs navigate challenging situations and develop their own EI capabilities.

Emotional Intelligence as a Journey

Developing EI is an ongoing process that requires continuous practice, and CFOs can actively apply EI skills in their daily interactions and decision-making. Whether it involves paying closer attention to their own emotions and reactions, practicing empathy in conversations with colleagues, or consciously adapting their communication style to different audiences, EI requires consistent effort and dedication to cultivate.  

Prioritizing emotional intelligence as a core leadership skill can enhance a CFO’s effectiveness as a leader, improve their strategic decision-making, and help build stronger relationships with stakeholders. And it can help navigate the increasing complexity of the changing, modern business landscape.