Business Group Blog

Managing Emotional Culture is Key to Organizational Performance

“In managing a company… with more than 150,000 employees and millions of customers…you of course need to be rational. But I’m gradually learning to be less rational and more emotional. Motivating people and generating a sense of spirit inside a company are essential…we need to appeal to our employees’ emotions to help create an environment where they can innovate.”
                                                                                          -Pablo Isla, CEO Inditex

Pablo Isla holds the #3 spot on “The Best-Performing CEOs in the World” in 2016 according to the Harvard Business Review. This list of 100 top performers is based on corporate financial performance (80%) and environmental, social and governance (20%) criteria. Inditex is the biggest fashion group globally, best known for its Zara brand; the company operates more than 7,000 stores in 91 markets worldwide.

What’s notable is that this veteran CEO calls out the importance of emotion in response to a question from HBR about how Isla’s leadership style has evolved  - and needs to evolve - to keep pace with constant change in his industry and his company over the past several  years.

It’s reminiscent of Olivia (Mandy) O’Neill’s keynote at the NBGH Fall Conference in Washington this past September, based on her own HBR article “Manage Your Emotional Culture” (Jan-Feb 2016). Her point is that when we talk about “corporate culture” we are almost always referring to the “shared intellectual values, norms, artifacts and assumptions” that tell employees how to think and behave at work. Cognitive culture is communicated in words – statements of mission and values, for example.

In addition, every organization also has an emotional culture that is most often transmitted through nonverbal cues such as body language and facial expression. As Dr. O’Neill and her co-author point out, emotional culture is rarely managed as deliberately as cognitive culture, if it is managed at all. This is a major missed opportunity:  cultures of anger, indifference or fear are associated with negative outcomes including poor performance and high turnover. On the other hand, positive emotions are associated with better performance, quality and customer service.

Dr. O’Neill asked the 500 attendees in the room to enter the word that most described their cognitive culture, and this was the result:

Cognitive Culture Wordcloud

When it came to emotional culture, here was the result:

Emotional Culture Wordcloud

As Pablo Isla clearly recognizes, CEOs and other leaders can drive performance by acknowledging and managing emotional as well as cognitive culture. Barsade and O’Neill put it this way: “By not only allowing emotions into the workplace but also understanding and consciously shaping them, leaders can better motivate their employees.”