impact of emotional intelligence on … · iii certificate this is to certify that the thesis...

IMPACT OF EMOTIONAL INTELLIGENCE

ON ORGANIZATIONAL CLIMATE AND

ORGANIZATIONAL CITIZENSHIP BEHAVIOR

IN PRIVATE SECTOR BANKS.

Thesis Submitted to the

Padmashree Dr. D. Y. Patil University,

Department of Business Management

In partial fulfillment of the requirements

For the award of the Degree of

DOCTOR OF PHILOSOPHY

In

BUSINESS MANAGEMENT

Submitted by

DEEPA NAIR

(ENROLLMENT NO: DYP-Ph.D-09003)

Research Guide

Prof. Dr. R. GOPAL

DIRECTOR, DEAN& HEAD OF THE DEPARTMENT

PADMASHREE DR. D.Y. PATIL UNIVERSITY,

DEPARTMENT OF BUSINESS MANAGEMENT,

Sector 4, Plot No. 10,

CBD Belapur, Navi Mumbai 400 614

May 2012

I

IMPACT OF EMOTIONAL INTELLIGENCE

ON ORGANIZATIONAL CLIMATE AND

ORGANIZATIONAL CITIZENSHIP BEHAVIOR

IN PRIVATE SECTOR BANKS.

II

DECLARATION

I hereby declare that the thesis entitled Impact of Emotional Intelligence

on the Organizational Climate and Organizational Citizenship behavior

in Private sector Banks submitted for the Award of Doctor of

Philosophy in Business Management at the Padmashree Dr. D.Y. Patil

University Department of Business Management is my original work and

the thesis has not formed the basis for the award of any degree,

associateship, fellowship or any other similar titles.

Place: Navi Mumbai

Date:

Dr. R. Gopal Dr. R. Gopal Deepa Nair

(Head of the department) (Research Guide) (Research Scholar)

III

CERTIFICATE

This is to certify that the thesis entitled Impact of Emotional Intelligence

on the Organizational Climate and Organizational Citizenship Behavior

in Private Sector Banks and submitted by Ms. Deepa Nair is a bonafide

research work for the award of the Doctor of Philosophy in Business

Management at the Padmashree Dr. D. Y. Patil University Department of

Business Management in partial fulfillment of the requirements for the

award of the Degree of Doctor of Philosophy in Business Management

and that the thesis has not formed the basis for the award previously of

any degree, diploma, associateship, fellowship or any other similar title of

any University or Institution. Also certified that the thesis represents an

independent work on the part of the candidate.

Place: Navi Mumbai

Date:

Prof. Dr. R. Gopal Prof. Dr. R. Gopal

(Head of the department) (Research Guide)

IV

Acknowledgements

I am greatly indebted to the Padmashree Dr. D.Y. Patil University,

Department of Business Management which has accepted me for the

Doctoral Program and provided me with an excellent opportunity to

carry out the present research work.

I, with deep gratitude and respect, acknowledge the constant guidance

and support received from my research guide Prof Dr. R.Gopal. It was

possible for me to bring this research work to a fruitful conclusion

because of his positive demeanor and constant encouragement.

I would like to thank all the employees of the different banks who have

cooperated with me in the data collection. I also wish to extend my

heartfelt thanks to Mr. P. Ramkumar (Retd. From Catholic Syrian Bank)

and countless other well wishers, relatives, friends who have helped me in

my three year journey with their references and intellectual inputs. My

special thanks to all the Banks who are the clients of Ameya Infovision

Pvt. Ltd.

I am grateful to my parents who have always been encouraging me in all

my endeavors. I thank my husband Mr. K Devidas Nair for his unstinting

support at every stage especially during the data collection. My

appreciation for my son Shiva for his patience while I was busy

completing this research. Lastly I bow my head in reverence to all my

deities in whom I seek my strength and support.

Place:

Date: Signature of the student

V

Contents

Chapter

No.

Title Pg.

No.

List of Tables x

List of Exhibits xv

List of Abbreviations xvii

Executive Summary 1

1 Introduction 9

1.1 Origin of Banking 10

1.2. Banking in the Middle Ages 11

1.3. Banking in Ancient India 11

1.4. Establishment of Modern Banks 12

1.5. Private Banks in India 14

1.6. Emotions in the work place 16

1.7. Relation between individual and Organization 16

1.8. Changes in Financial Services Sector 19

1.9. Importance of Behavioral Dimensions in Banks 20

2 Literature Review 27

3 Problem Definition, Objectives of the Study and

Research Methodology

62

3.01 Introduction to the Problem 63

3.02 Research Problem 64

3.03 Objectives of the Study 65

3.04 Hypothesis 66

3.05 Research Design 69

3.06 Sampling Design 70

3.07 Data Acquisition 71

3.08 Pilot Study 71

3.09 Tools of Data Collection 72

3.09.a. Personal Interview Method 72

3.09.b. Questionnaire 73

VI

3.10 Data Analysis 73

3.11 Presentation of Findings Recommendations and

Conclusion

74

3.12 Limitations of the research 74

4 Demographic Variables and Emotional

Intelligence, Organizational Climate and

Organizational Citizenship Behavior.

76

4.01 Reliability Tests 77

4.02 Demographic variables and Emotional Intelligence 79

4.02.1 Age and Emotional Intelligence 79

4.02.2 Position and Emotional Intelligence 81

4.02.3 Educational Qualification and Emotional

Intelligence

84

4.02.4 Experience and Emotional Intelligence 86

4.02.5 Gender and Emotional Intelligence 88

4.02.6 Marital Status and Emotional Intelligence 90

4.02.7 Comparison of Emotional Intelligence between

States

93

4.03 Demographic variables and Organizational

Climate

94

4.03.1 Employee Age & Organizational Climate 94

4.03.2 Relation between gender and Organizational

Climate

96

4.03.3 Qualification and Organizational Climate 98

4.03.4 Experience and Organizational Climate 99

4.03.5 Relation between marital status and

Organizational Climate

101

4.03.6 Position and Organizational Climate 102

4.03.7 State wise difference in Organizational Climate 104

4.04 Organizational Citizenship Behavior and

Demographic variables

106

4.04.1 Age and Organizational Citizenship Behavior 106

4.04.2 Gender and Organizational Citizenship Behavior 108

VII

4.04.3 Qualification and Citizenship behavior 109

4.04.4 Experience and Organizational Citizenship

Behavior

111

4.04.5 Position and Organizational Citizenship Behavior 112

4.04.6 Marital Status and Organizational Citizenship

Behavior

114

4.05 Summary of findings of demographic variables in

relation to Emotional Intelligence

116

5 Emotional Intelligence and Organizational Climate 118

5.01 Introduction 119

5.02 Relation between Emotional Intelligence and


120

5.03 Emotional Intelligence and the sub variables of


121

5.03.1 Emotional Intelligence and Job Satisfaction 125

5.03.2 Emotional Intelligence & Customer Orientation 129

5.03.3 Emotional Intelligence and Involvement and

Empowerment

136

5.03.4 Emotional Intelligence & Teamwork Cooperation 138

5.03.5 Innovation 146

5.03.5.a Some Recent Innovations In Indian Banking 148

6 Emotional Intelligence and Organizational

Citizenship Behavior

152


6.02 Relationship between Emotional Intelligence and

Organizational Citizenship Behavior

154

6.03 Emotional Intelligence &Interpersonal Helping 161

6.04 Emotional Intelligence & Individual Initiative 165

6.05 Emotional Intelligence & Personal Industry 167

6.06 Emotional Intelligence & Loyal Boosterism 169

6.07 Organizational Citizenship Behavior as a

Customer Acquisition and Retention Strategy.

171

VIII

7 Organizational Climate and Organizational


174


7.02 Impact of Organizational Climate upon


176

7.03 Correlations & Multiple regression analysis 182

7.03.1 Job Satisfaction 182

7.03.2 Customer Orientation 185

7.03.3 Involvement & Empowerment 187

7.03.4 Teamwork and Cooperation 189

7.03.5 Correlation Analysis 192

7.03.6 Multiple regression analysis 193

7.04 Employee Training and Information and

Knowledge Sharing

195

7.04.1 Employee Training 196

7.04.2 Information and Knowledge sharing 199

7.04.3 Multiple Regression 202

8 Implications and relevance of the Study 205


8.02 Talent Management 207

8.03 Employee Retention 210

8.04 Human Resource Planning - Recruitment and

Selection

215

8.05 Training and Development 218

8.06 Team Work and Cooperation 224

8.07 Relevance of Organizational Citizenship

Behaviour

229

8.08 Customer and Client Management 230

9 An Overview 233

9.1 Model Developed in the Study 238

Annexure 240

Annexure I (Bibliography) 241

IX

Annexure II (Questionnaire) 256

Annexure III (Operational Definitions) 264

Annexure IV (List of Banks) 267

Annexure V(SPSS Tables & Exhibits) 268

X

List Of Tables

Table

No.

List of Tables Page

No.

3.1 Sampling 70

4.01.a Reliability for Emotional Intelligence 77

4.01.b Split half Reliability 78

4.02.a Reliability for climate 78

4.02.b Split half reliability for Organizational Climate 78

4.03.a Reliability for OCB 79

4.03.b. Split half reliability for OCB 79

4.04 Descriptive statistics of age and EI 80

4.05 ANOVA Relation between Age and EI 80

4.06 Position and EI (percentage analysis) 82

4.07 Chi-Square Tests- relation between position and

Emotional Intelligence

83

4.08 Symmetric Measures : Phi CramerV Tests 83

4.09 qualification level * EI Percentages 85

4.10 Chi-Square Tests Relation between Emotional

Intelligence and Qualification

86

4.11 Group Statistics Mean and Standard

Deviation(EI & Experience)

87

4.12 T Test- EI & experience 87

4.13 Group Statistics- Gender & EI 88

4.14 T Test for equality of means based on gender 89

4.15 Marital Status * Emotional Intelligence Level 91

4.16 Chi-Square Tests relation between Marital

Status and Emotional Intelligence

92

4.17 Symmetric Measures- Phi Cramer V Test 92

4.18 State wise Group Statistics 93

4.19 State wise Comparison with T Test 94

XI

4.20 Group Statistics- Age and Organizational

Climate

95

4.21 ANOVA for Age and Organizational Climate 96

4.22 male or female * OC % Analysis 97

4.23 Chi-Square Tests-relation between gender and

perception of Climate

97

4.24 ANOVA- Qualification OC 98

4.25 experience * OC Percentage Analysis 99

4.26 Chi-Square Test Experience and OC 100

4.27 Group Statistics Marital Status and OC 101

4.28 Marital Status and OCT Test 102

4.29 Position* OC percentage Analysis 103

4.30 Position and OC chi square test 103

4.31 Group Statistics for States 105

4.32 T- Test for State differences in OC 105

4.33 age * Organizational Citizenship Behavior 106

4.34 Chi-Square Tests Age and OCB 106

4.35 Symmetric Measures 107

4.36 Group Statistics for Gender & OCB 108

4.37 T Test to compare OCB between gender 109

4.38 Descriptives- qualifications & OCB 110

4.39 ANOVA between Qualifications for OCB 111

4.40 Group Statistics Experience and OCB 111

4.41 T Test for difference in OCB due to experience 112

4.42 Chi-Square Tests for position and OCB 113


4.44 Marital Status * OCB 114

4.45 Chi-Square Tests relation between marital

status and OCB

115


5.01 Correlations between EI & OC 120

XII

5.02 a. Regression: Model Summary 121

5.02 b. ANOVAb of Regression 121

5.02 c. Coefficients

Regression 121

5.02 d. Residuals Statisticsa 122

5.03 Correlation between EI and JS ,CO, IE and TC 125

5.04 a. Model Summary

of Regression (EI & JS) 126

5.04 b. ANOVAb

of Regression (EI & JS) 126

5.04 c. Coefficients of Regression (EI & JS) 126

5.04 d. Residuals Statisticsa (EI & JS) 128

5.05 Emotional intelligence * customer orientation 130

5.06 Chi-Square Tests- Relation between Emotional

Intelligence & Customer Orientation

131

5.07 a. Model Summary of Regression (EI & CO) 133

5.07 b. ANOVAb of Regression Analysis(EI & CO) 133

5.07 c. Coefficients of Regression Analysis(EI & CO) 133

5.08 a Model Summary of Regression (EI & IE) 136

5.08 b. ANOVAb of Regression Analysis (EI & IE) 137

5.08 c. Coefficients of Regression Analysis(EI & IE) 137

5.09 a. Model Summary (EI & TC) 139

5.09 b. ANOVAb of Regression Analysis(EI & TC) 140

5.09 c. Coefficients of Regression Analysis(EI & TC) 140

5.09 d. Residuals Statisticsa(EI & TC) 141

5.10 Chi-Square Tests(Emotional Intelligence &

Innovation)

146

5.11 Symmetric Measures(Cramer's V test) 147

6.01 OCB level of Employees 153

6.02 EI * OCB percentage analysis 155

6.03 Correlations between Emotional Intelligence

,OCB, IH, II, PI and LB

156

6.04 a. Model Summary of Regression(EI & OCB) 157

6.04 b. ANOVAb of Regression Analysis (EI & OCB) 157

XIII

6.04 c. Coefficients of Regression Analysis (EI &

OCB)

157

6.04 d. Residuals Statisticsa (EI & OCB) 158

6.05 a. Model Summary (Regression for EI and IH) 162

6.05 b. ANOVAb of Regression Analysis (EI and IH) 162

6.05 c. Coefficients of Regression Analysis (EI and IH) 163

6.05 d. Residuals Statisticsa (EI and IH) 163

6.06 a. Model Summaryb (Regression Analysis EI&II) 166

6.06 b. ANOVAb(Regression Analysis EI&II) 166

6.06 c. Coefficientsa of Regression Analysis(Regression

Analysis EI&II)

167

6.06 d. Residuals Statisticsa(Regression Analysis

EI&II)

168

6.07 a. Model Summaryb(Regression Analysis EI&PI) 168

6.07 b. ANOVAb(Regression Analysis EI&PI) 168

6.07 c. Coefficientsa (Regression Analysis EI&PI) 168

6.08 a. Model Summaryb (Regression Analysis

EI&LB)

170

6.08 b. ANOVAb(Regression Analysis EI&LB) 170

6.08 c. Coefficients(Regression Analysis EI&LB) 171

7.01 Organizational climate (OC)* organizational

citizenship behavior (OCB)

177

7.02 Chi-Square Tests (OC & OCB) 178


7.04 Correlations between OC & OCB 179

7.05 a. Model Summary (Regression OC & OCB) 179

7.05 b. ANOVAb(Regression OC & OCB) 180

7.05 c. Coefficientsa(Regression OC & OCB) 180

7.05 d. Residuals Statisticsa(Regression OC & OCB) 181

7.06 OCB* JS percentage analysis 184


7.08 OCB* customer orientation 186

XIV

7.09 OCB* Involvement /Empowerment 188

7.1 OCB* Teamwork/Cooperation % analysis 190


7.12 Correlation between OCB & JS, CO, IE, IK, ET

,TC

192

7.13 a. Model Summary (Multiple regression Analysis) 193

7.13 b. ANOVAb(Multiple regression Analysis) 193

7.13 c. Coefficientsa(Multiple regression Analysis) 194

7.14 OCB* ET percentage Analysis 198


7.16 OCB * IK 201

7.17 a. Model Summary(Multiple Regression ET, IK &

OCB)

202

7.17 b. ANOVAb(Multiple Regression ET, IK & OCB) 203

7.17 c. Coefficientsa(Multiple Regression ET, IK &

OCB)

203

8.1 % of Employees who desire to leave the Bank 214

XV

LIST OF EXHIBITS

Ex.No. LIST OF EXHIBITS Pg.No.

1.1 Percentage of respondents who expected

moment of truth during 24 hours (From -

The McKinsey Quarterly Chart Focus

Newsletter)

18

2.1 MSCEIT Total (Adapted from Mayer, &

Caruso, 2002)

33

4.01 Position and Level of EI 82

4.02 Level of EI and Qualification 86

4.03 Marital Status and Emotional Intelligence 90

4.04 male or female * OC- Percentage Analysis 98

4.05 Experience and Organizational Climate 100

4.06 Position & Organizational Climate 104

4.07 Age and OCB 107

5.01 a. Histogram of standardized Residual(EI and

OC)

122

5.01b Scatter Plot (EI and OC) 123

5.01c Unstandardized residual plot(EI & OC 123

5.01d Studentized Residual Plot(EI and OC) 124

5.02a Histogram of standardized Residual(EI & JS) 127

5.02b Residual Plot(EI &JS) 129

5.02c Residual Plot(EI &JS) 129

5.03a Level of CO with Emotional Intelligence 130

5.04 Histogram of standardized Residual(EI&CO) 134

5.05. a Scatter Plot (TC&EI) 141

5.05. b Studentized Residual Plot(TC&EI) 142

5.05. c Unstandardized Residual Plot (TC & EI) 142

XVI

6.01 Pie chart showing OCB level 154

6.02 a. Histogram of regression standardized

residual (EI &OCB)

159

6.02 b. Scatter Plot (EI &OCB) 159

6.02 c. Unstandardized residual Plot(EI&OCB) 160

6.02 d. Studentized residual Plot 160

6.03 .a. Residual Plot(EI &IH) 164

6.03 b. Studentized residual Plot 164

7.01 OCB Level 177

7.02 Scatter plot around the line of fit in the graph

of the linear equation

180

7.03 Histogram of Standardized residual 182

7.04 JS & OCB 185

7.05 OCB & CO 186

7.06 OCB & IE 188

7.07 OCB & TC 191

7.08 OCB & ET 198

7.09 Exhibit: OCB & IK 201

8.1 Talent Management Model 208

8.2 %of Employees who desire to leave the Bank 214

8.3 Stages of Team Formation 226

9.1 Model Developed in this Study 239

XVII

LIST OF ABBREVIATIONS

EI (ei) Emotional Intelligence

EE (ee) Expressing Emotions

UE (ue) Understanding Emotions

BE (be) Balancing Emotions

OC (oc) Organizational Climate

OCB

(ocb)


JS (js) Job Satisfaction

TC (tc) Teamwork/Cooperation

IK (ik) Information /Knowledge Sharing

CO (oc) Customer Orientation

IE (ie) Involvement/Empowerment

ET (et) Employee Training

IH (ih) Interpersonal Helping

PI (pi) Personal Industry

II (ii) Individual Initiative

LB (lb) Loyal Boosterism

HDFC Housing Development Finance Corporation

ICICI Industrial Credit Investment Corporation of India

MSCEIT Mayer-Salovey-Caruso Emotional Intelligence Test

IQ Intelligence Quotient

SIB South Indian Bank

ATM Automated Teller Machines

1

EXECUTIVE SUMMARY

Introduction

In a Business Environment that is extremely volatile, banks are always

searching for answers and means to create a workforce with competencies that

will make them globally competitive. In the Indian Banking scenario a huge

expansion is taking place particularly in the private sector banks. Expansion is

taking place in multiple moves; one is there is physical expansion;

distribution, increased number of branches, automated teller machine (ATM),

network. But importantly, there is another expansion which is taking place is

that the product in the service range of the private sector banks is becoming

bigger, more complex and more relevant to the dynamic economy in which we

are today. One of the major challenges which banks face is streamlining the

HR in the face of the rapid changes in the economy, and market conditions.

There is already a crisis of talent. This study mainly focuses on the behavioral

competencies of the employees and its contributions to the growth of the bank.

Emotional Intelligence

Emotional Intelligence is a persons ability to be self aware, detect emotions in

others, and manage emotional cues and informations. Different models have

been proposed for the definition of EI and disagreement exists as to how the

term should be used. The earliest roots of emotional intelligence can be traced

to Darwin's work on the importance of emotional expression for survival and

adaptation. In the 1900s, even though traditional definitions of intelligence

emphasized cognitive aspects such as memory and problem-solving, several

2

influential researchers in the intelligence field of study had begun to recognize

the importance of the non-cognitive aspects. For instance, as early as 1920,

E.L. Thorndike used the term social intelligence to describe the skill of

understanding and managing other people.

The first use of the term "emotional intelligence" is usually attributed to

Wayne Payne's doctoral thesis, A Study of Emotion: Developing Emotional

Intelligence from 1985. However, prior to this, the term "emotional

intelligence" had appeared in Leuner (1966). Greenspan (1989) also put

forward an EI model, followed by Salovey and Mayer (1990), and Goleman

(1995). The distinction between trait emotional intelligence and ability

emotional intelligence was introduced in 2000.


Climate can be defined as the incumbents perceptions of the events, practices

procedures and kinds of behavior that get rewarded supported and expected in

a setting (Schneider1990; pg.384). The climate of an organization refers to

those aspects of the environment that are consciously perceived by the

organizational members (Amstrong 2003). In short it refers to how members

of the organization perceive it as they go about their daily business. Reichers

and Schneider (1990.pg.22) defined organizational climate as shared

perceptions of the way things are around here.


Organizational citizenship behavior (OCB) has become a major construct in

the fields of the psychology and management and received a great deal of

3

attention in the literature (Bateman and Organ, 1983). Organizational

citizenship behavior represents individual behavior that is discretionary, not

directly or explicitly recognized by the formal reward system, and in the

aggregate promotes the efficient and effective functioning of the organization

(Organ, 1988, p. 4).

Most of the studies examining the structure of OCB have agreed that it is a

multidimensional concept (e.g. Graham, 1989; Moorman and Blakely, 1995;

Organ, 1988; Podsakoff et al., 1990). Graham (1989), for example, proposed a

four-dimension model of OCB consisting of: interpersonal helping, individual

initiative, personal industry, and loyal boosterism. 1995).

Research Gap

There is no study connecting the three organizational variables - Emotional

intelligence (EI), organizational Climate (OC) and Organizational citizenship

behavior (OCB) - together. There is a huge research gap in this area and

therefore this research attempts to cover that by understanding the relation

between employee Emotional Intelligence (EI) and Organizational Climate

(OC) and Organizational citizenship behavior (OCB).

The primary Objectives of the Study:

Though this study has Eleven Objectives the three primary Objectives of this

study are-

1. To explore the impact of Emotional Intelligence on Organizational

Climate.

4

2. To investigate the impact of Emotional Intelligence on Organizational


3. To scrutinize the relationship between Organizational Climate and


Employee Emotional Intelligence is the independent variable in this study and

its impact on Organizational Climate and Organizational Citizenship Behavior

is studied. Since this study is totally focused on Private Sector Banks in India,

Public Sector Banks were not considered. Sampling was done in two stages.

In order to get a representative sample, the stratified sampling technique was

first used and two strata developed based on size- one Large and the other

medium. The parameters for size were Market Capitalization of the bank and

employee strength. For the purpose of confidentiality the randomly selected

large banks were coded as L1, L2, L3 and the other strata of medium sized

banks were coded as M1, M2, M3, M4, M5. The suggested sample was 651

and the sample collected was 704.

Data Acquisition was through Primary and Secondary sources. The Primary

Sources of Data Collection are the Questionnaire and the In Depth Interviews.

The Secondary Sources of Information are from Annual Reports of Banks,

Company Manuals and brochures, Articles, Internet Sources, books,

periodicals, guides and directories, Journal and Newspaper.

Data Analysis

Data Analysis was done using the SPSS software. The chi square test, Anova

T test correlation, regression and multiple regression analysis was used to find

5

the relationship between the variables of Emotional Intelligence,

Organizational Climate and Organizational Citizenship behavior.

Findings

The correlation and regression analysis conducted revealed that there was a

high degree of positive correlation between the independent variable

Emotional Intelligence and the dependent variable Organizational Climate.

The computed value of the F statistic as well as the computedt values

showed a significant relation between the two variables. The Regression

model was developed to show the impact of Emotional Intelligence on

Organizational Climate .

To find the impact of Organizational Climate on Organizational Citizenship

Behavior, correlation and regression analysis was conducted. The Pearsons

Correlation showed a high degree of positive correlation between the

independent variable Organizational Climate and the dependent variable

Organizational Citizenship Behavior. Further the regression analysis shows

the computed value of the F statistic as well as the computed t values to be

significant. The Regression equation further proves the degree of relation

between the two variables of Organizational Climate and Organizational

Citizenship Behavior.

There is a high degree of positive correlation between Emotional Intelligence

and Organizational Citizenship Behavior. Further the regression analysis

shows the computed value of the F statistic as well as the computed t values to

be significant. The Regression equation further proves the degree of relation

6

between the two variables of Emotional Intelligence and Organizational


Model Developed in the study

The brief of the entire study can be understood on the basis of the model

developed in this study

TALENT

MANAGEMENT

EMPLOYEE

RETENTION

ABSENTIEEISM

(Curbing)

CUSTOMER &

CLIENT

MANAGEMENT

TRAINING &

DEVELOPMENT

RECRUITMENT

SELECTION

STRESS

MANAGEMENT

ORGANIZATIONAL

RELEVANCE

UNDERSTANDING

EMOTIONS

BALANCING

EMOTIONS

EXPRESSING

EMOTIONS

EMOTIONAL

INTELLIGENCE

CUSTOMER

ORIENTATION

INVOLVEMENT /

EMPOWRMENT

INFORMATION &

KNOWLEDGE

SHARING

TEAM WORK /

COOPERATION

OVERALL

SATISFACTION

EMPLOYEE

TRAINING

ORGANIZATIONAL

CLIMATE

INTERPERSONAL

HELPING

INDIVIDUAL

INITIATIVE

PERSONAL

INDUSTRY

LOYAL

BOOSTERISM

ORGANIZATIONAL

CITIZENSHIP

BEHAVIOR

OUTPUT

Organizational

System Level

HUMAN

OUTPUT

INDIVIDUAL

GROUP OR

TEAM LEVEL

INPUTS

MODAL DEVELOPED

Exhibit 9.1: Model Developed in the Study

Exhibit 9.1 which represents the model that has been developed in this study

sums up the entire study. Emotional Intelligence (with its three components

7

Expressing Emotions, Balancing Emotions and Understanding Emotions) is

the individual and group level inputs which affects Organizational Climate

(measured by its components Customer Orientation,

involvement/Empowerment, Information/Knowledge sharing, Employee

Training, Teamwork /Cooperation, and Job Satisfaction).The Organizational

Climate in turn affects Organizational Citizenship Behavior(with its

components being Interpersonal Helping, Personal Industry, Individual

Initiative and Loyal Boosterism). All these three variables have a positive

impact on each other as proved in the study. For the Banks an increase in the

Emotional Intelligence of the Employees results in better Organizational

Climate which in turn results in high Organizational Citizenship Behavior by

the employees. The positive outcome of the interaction between these variable

affects Talent Management, abets employee retention, curbs absenteeism,

improves customer and client Management and helps in stress management,

Recruitment and Selection and Employee Training.

Limitations of the research

Since the sample has been totally taken from the Private Indian banks cultural

variations could occur across different countries. Differences in values,

attitudes, motivations and perceptions could give different results. This study

is focused mainly on Private Banks and can be replicated across several

industries to get a more holistic picture of the influence of Emotional

Intelligence on the Organizational Climate and consequently its impact on

Organizational Citizenship Behavior. Public Sector Banks as well as Foreign

Banks too were not considered in this study.

8

Conclusion

Todays Banks operate in an increasingly uncertain and tumultuous global

market economy that requires employees to demonstrate complex and

multidimensional thinking, requiring traditional analytic or linear thinking

skills, as well as more nonlinear modes such as intuition, insight, emotional

assessments, creative thinking, and perceptual flexibility .This study looks into

one such nonlinear behavioral skill i.e. Emotional Intelligence, a recent

addition to Organizational Literature. An attempt has been made to understand

the impact of Emotional Intelligence on Organizational Climate and the

resulting impact it has on the final outcome Organizational Citizenship

Behavior and its relevance to Private Sector Banks.

9

Chapter 1

INTRODUCTION

Whether we like it or not, men and women are not the same in nature,

temperament, emotions and emotional responses. Doing Business is much

about using your Emotional Intelligence.

10

CHAPTER 1

INTRODUCTION

1.1. Origin of Banking

The word bank has its origin in the French word Banque or the Italian

word Banca, both of which mean an office for monetary transactions over

the counter, benches or desks. Thus, in olden times, bank means a bench or

desk on which transactions took place. In many parts of the world some sort of

monetary dealings were prevalent even when barter system was popular.

Excavations are said to reveal the existence of deposit banks in Babylonian

/Assyrian civilization. The code of Babylonian's, the code of Hammurabi, the

king of Babylon dealing with the morals, ethics of a good and honest banking

also existed. Copper, silver and other metals with specified weight were used

as a standard of valuation. The discovery of coin brought a revolution in the

history of money and banking. Coinage helped banks to perform more and

more functions which were not possible under practice of granting loan was

widely prevalent. The books of Manu, also speaks of credit system, credit

instruments, interest on loans and renewal of commercial papers. In Rome, in

the 4 th century BC, the modern banking functions such as money changing,

auctioning, discounting, advancing, and investment were undertaken, People

were using cheque or draft on bank. During the ancient period, the banking

business was mostly undertaken by private individuals.

11

1.2. Banking in the Middle Ages

The middle ages saw the rise and spread of professional moneylenders doing

business all over the world. But there were no general or uniform principles

governing banking, lending and rates of interest. No code of ethics existed.

The Jews exacted very high rate of interest and Henry III fixed 43% rate of

interest for the moneylenders. The goldsmiths established a corporation of

goldsmiths in England and were charged with the safe keeping of the royal

mint and the treasure. Due to ill treatment by the Government of Charles II,

the goldsmiths vanished and it became a turning point in the history of

banking in England. The Bank of Venice, established in 1157, is supposed to

be the most ancient bank. Another bank Monte was established in Florence

in 1336 in Italy. A public bank was established in Barcelona in 1401. It used

to exchange money, receive deposits and discount bills of exchange. The Bank

of Genoa and the Bank of Amsterdam were established in 1457 and 1609

respectively. The bank of Amsterdam accepted all kinds of specie on deposits.

Most of the European banks were formed on the model of this bank, i.e. Bank

of Amsterdam. The bank of England was established in 1694.

1.3. Banking in Ancient India

Banking in India is older than the rest of the world. Acceptance of deposits

and granting of loans were being performed by a section of community in

Vedic period. The banker performed most of the functions of the modern

banks during Smriti period. Vaishyas practiced banking during Buddhist

period and later on Brahmins and Kshatriyas also entered into the fray. In

Kautilyas Arthshastra, maximum rates of interest were fixed. People who did

12

this business were called as Sahukar of Mahajan or Sresthis.. During early

Muslim Rule in India, Indigenous banks performed banking functions. The

bills of exchange, known as Hundie, were most commonly used. The names of

Jagat Seth are very well known in India. According to U.P. Banking enquiry

Committee Jagat Seths of the 17th and 18th Centuries, having all the power

and influence as the other private banking house in any other country and

fulfilled many of the functions of central bank.

1.4. Establishment of Modern Banks

Due to the advent of the East India company, the indigenous banking declined

in the 18th century. The first joint stock bankthe Hindustan Bankwas

established in 1770 by the Alexander and company at Calcutta but it was

liquidated in 1832. The Bengal Bank was established in 1785 and the General

Bank of India in 1786. Both the banks, however, failed by 1791. The first

Presidency bank was established in Calcutta in 1806 in the name of Bank of

Calcutta and was renamed as the Bank of Bengal in 1809. The other two

Banksthe Bank of Bombay and the Bank of Madras were established in

1840 and 1843 respectively. Most of the government business was done by

these banks. In 1865, the Allahabad bank was established under European

Management. The Commercial Bank, established in 1881, was the first purely

Indian Bank. It was followed by the Punjab National Bank in 1894 and the

peoples Bank in 1901. In addition to this, a few banks like the Bank of India

(in 1906), the Indian Bank (in 1907), the Bank of Baroda (in 1908). The

Central Bank of India (in 1911),were also established by the Indians.

13

Calcutta was the most active trading port in India, mainly due to the trade of

the British Empire, and so became a banking center. By the 1960s, the Indian

banking industry had become an important tool to facilitate the development

of the Indian Economy. At the same time, it had emerged as a large employer,

and a debate had ensued about the possibility to nationalise the banking

industry. Indira Gandhi the-then Prime Minister expressed the intention of the

GOI in the annual conference of the All India Congress Meeting in a paper

entitled "Stray thoughts on Bank Nationalization." The paper was received

with positive enthusiasm. Thereafter, her move was swift and sudden, and the

GOI issued an ordinance and nationalize the 14 largest commercial banks with

effect from the midnight of July 19, 1969.Jayaprakash Narayan, a national

leader of India, described the step as a "masterstroke of political sagacity."

Within two weeks of the issue of the ordinance, the Parliament passed the

Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it

received the presidential approval on 9 August 1969.

In the early 1990s, the then Narsimha Rao government embarked on a policy

of liberalization licensing a small number of private banks. These came to be

known as New Generation tech-savvy banks, and included Global Trust Bank

(the first of such new generation banks to be set up), which later amalgamated

with Oriental Bank of Commerce, Axis Bank(earlier as UTI Bank), ICICI and

HDFC. This move, along with the rapid growth in the economy of India

revitalized the banking sector in India, which has seen rapid growth with

14

strong contribution from all the three sectors of banks, namely, government

banks, private banks and foreign banks.

The banking scenario in India has already gained all the momentum, with the

domestic and international banks gathering pace. Indian banks, the dominant

financial intermediaries in India, have made good Progress over the last five

years, as is evident from several parameters, including annual credit

growth, profitability, and trend in gross nonperforming assets (NPAs). While

the annual rate of credit growth clocked 23% during the last five years,

profitability (average Return on Net Worth) was maintained at around 15%

during the same period, and gross NPAs fell from 3.3% as on March 31,

2006 to 2.3% as on March 31, 2011.Good internal capital generation,

reasonably active capital markets, and governmental support ensured good

capitalization for most banks during the period under study, with overall

capital adequacy touching 14% as on March 31, 2011. At the same time, high

levels of public deposit ensured most banks had a comfortable liquidity

profile.

1.5. Private Banks in India

It is well documented in economic literature that financial development makes

fundamental contributions to economic growth. Private Banks are one of the

main participants of the financial system in India. Past experiences also

provide ample support to this fact. In theory it goes back to Schumpeter (1911)

who argued that well functioning banks are able to identify innovative

entrepreneurs that allow funds being channeled to the most promising

investment projects. Indian banking has worked up to the competitive

15

dynamics and is addressing the relevant issues to take the multifarious

challenges of globalization. These private banks are futuristic and proactive

players who are constantly reorienting their strategies to bring about total

systemic transformation. In this context of constant transformation and quest

for excellence these banks have to have a multipronged strategy to survive in

the market. One of the most interesting areas of development would naturally

be to start from within the Banks by improving the quality of workforce. This

study tries to probe a very important dynamic aspect of human nature i.e

emotions and its management in the workplace context.

The focus of all banks in India has shifted their approach to 'cost', determined

by revenue minus profit. This means that all the resources should be used

efficiently to better the productivity and ensure a win-win situation. To survive

in the long run, it is essential to focus on cost saving. Previously, banks

focused on the 'revenue' model which is equal to cost plus profit. Post the

banking reforms, banks shifted their approach to the 'profit' model, which

meant that banks aimed at higher profit maximization. The banking industry is

slated for growth in future with a more qualitative rather than quantitative

approach. For this growth to occur it is very important to understand the

human forces acting to bring about these changes. This study looks at the

private sector banks and its workforce in the context of the relationship

between the employee Emotional Intelligence and The resulting organizational

Climate and the resulting output of the two Organizational Citizenship

Behavior.

16

1.6. Emotions in the work place

Most social and behavioral scientists reason either implicitly or explicitly

,that observed behavior is a function of the salience or meaning of situations

for people (Schneider). Except for extreme behaviorists, behavior is

conceptualized as the outcome of a sense making process wherein stimuli are

processed by humans who then behave in , or construct (Weick, 1995), the

situations to which they respond. Response to stimuli is the result of the

emotions people experience. Given the obvious role that emotions play in

work and everyday lives, the field of Organizational Behavior has given no

importance to the topic till late. There could be two possible explanations for

this .The first is the myth of rationality. From the late nineteenth century and

the rise of Management until very recently was to keep emotions in the back

burner. The second reason was that strong emotions of any kind are disruptive

by nature. The need of the hour is to recognize emotions as an integral part of

any working climate and instead of relegating it what is important is how to

learn to manage it for increasing the productivity performance and efficiency

of the employees.

1.7. Relation between individual and Organization

Each individual working in a system (organization) should understand his

basic behavioral orientations if he has to perform effectively. The relationship

between the individual and the organization (system) is reciprocal. Any

organizations, whatever be its size, activity, its success depends upon the

employees decisions and behavior. All the other factors contributing to

17

organizational success like technology are subject to rapid change but one

factor contributing to organizational outcomes which has always held a

position of primacy is the human element or the human factors that contribute

to the triumph of organizations. Employee performance is the outcome of a

number of factors both intrinsic to the employee at the individual level and at

the same time a variety of extrinsic factors which are organizational.

Banks too understand that in order to stay in the competition they have to

increase their profitability and revenue which means they have to improve

their performance .Yet many banks find it increasingly difficult to achieve the

performance goals. .As banks try to manage risks, improve branch operations,

design and execute more effective marketing campaigns, attract and retain

more customers and increase customer profitability, they have to understand

that it is only possible to achieve these performance goals with the high level

of commitment and involvement of its important stakeholder its employees.

Therefore the performance of the individual which is dependent upon his

behavioral component is possible in a conducive environment i.e

organizational climate.

This study thus aims to establish whether there exists a relation between a very

important individual behavioral components Emotional Intelligence and

whether it affects the organizational factor of climate and ultimately whether it

results in organizational citizenship behavior. Every employee expends

physical and mental labour when they put their bodies and cognitive abilities,

respectively into their job but do employees also have to put in

organizationally desired emotions into their work in order to function

18

effectively. Felt emotions and expressed emotions and organizationally

desired emotions can cause a lot of emotional dissonance which in turn could

affect the overall environment of the organizations.

(From -The McKinsey Quarterly Chart Focus Newsletter)

Exhibit 1.1:% of people who experienced their moments of truth during 24

hours.

19

Many consumer-facing businesses perform poorly on the front line. Their

employees should make use of emotional intelligence, or EQ, during

moments of truththose few interactions when the customer feels strongly

about the outcome. At banks, for example, they involve activities such as

receiving financial advice and negotiating mortgages as opposed to more

mundane matters, like buying travelers checks. After a positive moment of

truth at a bank, more than 85 percent of the consumers in a survey increased

their value to it by purchasing additional products or investing additional

assets; when things turned sour, upward of 70 percent reduced their

commitment, though not all of them ended it totally.

1.8. Changes in Financial Services Sector

Financial Services sector has undergone a sea change in the past two decades.

The financial sector reforms in India like any other country are based on two

approaches. The first is focused on liberalization which seeks to reduce the

number of direct controls over banks to introduce efficiency and productivity

in the system. The second is focused on stronger regulation of the financial

sector for its stability. The major reforms introduced in the financial sector

since the past two decades include

Interest rate deregulation and liberalization on deposits and lending

Entry deregulated for private and foreign players

Reduction of reserve requirement

Recapitalization of public sector banks

20

Prudential supervision to enhance market transparency and

introduction of international best practices

Ownership of public sector is broadened through disinvestment

These reforms have unleashed severe competition where to survive calls for

innovation even in the best practices. In this new and emergent marketplace,

the occurrence of loyal and often inherited relationships between a customer

and his or her bank has become increasingly scarce (Levesque and

McDougall,1996).In the Western world ,banking is one of the many services

industries where research on customer satisfaction has been the focus. Several

strategies have been tried and adopted to retain customers. With the intention

of increasing customer loyalty many banks have introduced innovative

products and services (Median,1996).

1.9. Importance of Behavioral Dimensions in Banks

This phase of banking revolution has made it mandatory for banks to look for

ways and means to reinvent itself. Decision making, negotiation skills, conflict

management, working in teams, maintenance of relations with peer group

employees, subordinates as well as superiors, handling frustrations,

disappointments interactions with customers clients certain skills and abilities

beyond the technical are of prime importance. This is where emotional

Intelligence comes into play affecting the overall climate of the organization.

One of the most provocative ideas to emerge from recent discussions of

management concerns the possibility that a new form of intelligence

pertaining to emotions is related to the performance of organization members

21

(Goleman, 1998; Caruso and Salovey, 2004). According to this idea, some

organization members may perform effectively because they have high

emotional intelligence. Emotional intelligence is a set of abilities that includes

the abilities to perceive emotions in the self and in others, use emotions to

facilitate performance, understand emotions and emotional knowledge, and

regulate emotions in the self and in others (Mayer and Salovey, 1997). The

concept of emotional intelligence has had an unusually important impact on

managerial practice (Ashkanasy and Daus, 2002). Several organizations have

incorporated emotional intelligence into their employee development

programs (Fast Company, 2000), and some business schools have added the

training of emotional competencies to their curriculums (Boyatzis, Stubbs, and

Taylor, 2002). The appeal of emotional intelligence may reflect the idea that

success is not simply determined by well-known abilities, such as verbal and

quantitative abilities, but also by abilities pertaining to emotions. Researchers

have built the case for emotional intelligence, in part, by arguing that it

explains variance in job performance that is not explained by extant constructs

such as cognitive intelligence (Mayer and Salovey, 1997; Goleman, 1998;

Mayer, Salovey, and Caruso, 2000).

In a Business Environment that is extremely volatile, banks are always

searching for answers and means to create a workforce with competencies that

will make them globally competitive. This study mainly focuses on the

behavioral competencies of the employees and its contributions to the growth

of the bank. An often overlooked area especially in the private banks where

22

there is a great deal of focus on all the other stakeholders and not much on the

employees.

Is the study of Organizational Climate so vital to the understanding of life

within the organization? Organizational Climate is the measureable

psychological life space (Lewin) within organizations. Climate research

languished as an increasingly large number of dimensions were added to its

conceptualization; with new facets added each time a researcher thought that

climate might be useful to understand some interesting phenomenon. Climate

is useful when it has strategic focus (Schneider 1975). For example there is

good evidence to support the idea that the service climate experienced by

employees in organizations is shared also by the customers those employees

serve (Schneider, White & Paul, 1998).Organizations have climates that

individuals feel immediately upon entering them. Climate is embedded in the

physical look of the place, the emotionality exhibited by employees, the

experiences of visitors or new employees upon entry.(Schein). To

understand climate fully one must understand what goes on in organizations

and why it happens the way it does.

Changes in the nature of banking clearly have a knock-on effect on employee

relations (defined broadly to include industrial relations, communications,

training, remuneration policy, etc.) as banks move towards being more market

driven organizations with a culture consistent with that, and with staff being

regarded more as a resource than a cost (Wilkinson, 1990).

23

Historically, it has been the case that employee relations have been relegated

to a second order strategy, purely facilitative and not fully integrated into

overall business strategy (e.g. Timperley, 1980; Purcell, 1983; Wilkinson,

1990). Hence, there was little consideration of employee relations at the top

corporate level implications unless the level of unrest was such that labour was

seen as a problem, as for instance in the car industry (e.g. Willman and Winch,

1985). Although there has been a gradual rise in the number of personnel

professionals at Board level, these are still a minority. Lack of serious

consideration of employee relations has also been said to owe something to the

dominance of financial control at this level (Batstone, 1984, pp.70-2).

Research in the 1970s discovered an avoidance strategy whereby industrial

relations were regarded as somehow external to the enterprise (Winkler,

1974). In the corporate planning agenda the human resources occupy a

secondary position. However, there are dangers of looking at HR issues in

this way. The importance of ensuring the active co-operation of employees in

industry has been emphasized for example by Walton (1985), who examined

the shift away from emphasizing control to one of commitment, and this can

be even more significant for the service sector. In retail banking, for example

where the product differentiations between the banks are not significantly

different the consumer is influenced more by convenience and image. This is

largely created by contact with staff, and there is thus a clear strategic link

with quality of service and staff quality. Yet, in banking though traditionally

staff have not been recruited or developed for customer contact skills but for

technical and administrative ability, the scene is now changing. Most banks

24

wanting to move away from being regarded merely as providers of a money

transmission service to the selling of a range of financial products and services

with tellers becoming sellers, the organization will, need to become more

organic and less mechanistic, (Burns and Stalker, 1961) which will require far

greater commitment and co-operation rather than mere compliance from staff.

The notion of (OCB) was introduced by Bateman and Organ (1983, p.4) and

defined as individual behavior that is discretionary, not directly or explicitly

recognized by the formal reward system, and that in the aggregate promotes

the effective functioning of the organization (Organ, 1988, p.4). Although

there is an increasing research interest in OCB, a consensus is yet to be

reached regarding what the different types of behaviors constitute OCB.

However, Organizational Citizenship Behavior is reported to have seven

common themes. These are: Helping behavior, sportsmanship, organizational

loyalty, organizational compliance, individual initiative, civic virtue and self-

development. OCB, therefore, may contribute to organizational success for the

following reasons: enhanced co-worker and managerial productivity, freeing

up resources that can be used for more productive purposes, helping to

coordinate activities within and across groups, strengthening the

organizations ability to attract and retain the best employees, increasing the

stability of the organizations performance and allowing the organization to

adapt more effectively to organizational changes (Podsakoff et al., 2000). It is

positively related to both the quantity and quality of product output (Podsakoff

et al., 1997), contributes to team effectiveness (MacKenzie, Podsakoff, and

Ahearne, 1996, as cited in Podsakoff and MacKenzie, 1997). OCB has also

25

been found to contribute to overall performance (Podsakoff and MacKenzie,

1994) as well as overall operating efficiency and customer satisfaction (Walz

and Niehoff, 1996 as cited in Podsakoff and MacKenzie, 1997).

The recent emphasis on human resource management, suggests that not only is

the management of labour being given more attention, but that the issues

discussed are broader and more strategic as well as tactical. Miller (borrowing

from Porter (1985)) defines strategic human resource management as those

decisions and actions which concern the management of employees at all

levels in the business and which are related to the implementation of strategies

directed towards creating and sustaining competitive advantage. Thus, unlike

the traditional peripheral function of many personnel managers, the newer

style of human resource managers attempts to: relate personnel practices to

beliefs, to link each and every process of the recruitment, induction, training,

appraisal rewarding of individuals to an overall set of articulated beliefs of

organization.

Every organization, therefore, strikes for greater productivity, elimination of

wastes, lower costs and higher wages, so the industry needs a stable and

energetic labor force that can boast of production by increased productivity.

To achieve these objectives a good recruitment process is essential. By which

industry strikes right number of persons and right kind of persons at the right

time and at right places through and the planning period without hampering

productivity. An organization is nothing without human resources.

26

The HR function in contemporary Indian Business settings is more integrated

with the strategic objectives of the company (Budhwar and Khatri,2001;

Budhwar and Sparrow,1997) and HR policies and procedures are derived from

the business strategy. In the current scenario the HR functions are changing

rapidly by realizing that the functions have to be integrated into the strategic

business goals . Hence the focus has shifted to the individual within the

organization with individual oriented stress being directed to areas of Job

satisfaction, employee involvement, intrinsic motivation, perceptions work

place emotions, learning and other extra role behavior. It is no longer enough

for the employee to perform well , he has to now cross the barriers of just what

his role demands from him to give something beyond that. This is where Extra

role behavior like Organizational Citizenship behavior is of such prime

importance.

All HR strategies of the future must look at every employee aspect so that they

can be both drivers and catalysts for change understanding the complexities

of the new business environment. Without any argument the most important

area that HR must look into is the behavioral aspects and Emotional

intelligence of employees is one of the most important behavioral aspects of

improving Organizational Climate and thus enhancing Organizational


27

CHAPTER 2

LITERATURE REVIEW

It is not the strongest of the species that survives, or the most intelligent, but

the one most responsive to change.

Charles Darwin

28

CHAPTER 2

LITERATURE REVIEW

Big Five and other Personality theories have considered Emotional Stability as

a very important Personality trait. Different models have been proposed for the

definition of EI and disagreement exists as to how the term should be used.

The earliest roots of emotional intelligence can be traced to Darwin's work on

the importance of emotional expression for survival and adaptation. In the

1900s, even though traditional definitions of intelligence emphasized

cognitive aspects such as memory and problem-solving, several influential

researchers in the intelligence field of study had begun to recognize the

importance of the non-cognitive aspects. For instance, as early as 1920, E.L.

Thorndike used the term social intelligence to describe the skill of

understanding and managing other people. The first use of the term "emotional

intelligence" is usually attributed to Wayne Payne's doctoral thesis, - A Study

of Emotion: Developing Emotional Intelligence from 1985. However, prior to

this, the term "emotional intelligence" had appeared in Leuner (1966).

Greenspan (1989) also put forward an Emotional Intelligence model, followed

by Salovey and Mayer (1990), and Goleman (1995). The distinction between

trait emotional intelligence and ability emotional intelligence was introduced

in 2000.

Similarly, in 1940 David Wechsler described the influence of non-intellective

factors on intelligent behavior, and further argued that our models of

intelligence would not be complete until we can adequately describe these

29

factors. In 1983, Howard Gardner's - Frames of Mind: The Theory of Multiple

Intelligences introduced the idea of multiple intelligences which included both

Interpersonal intelligence (the capacity to understand the intentions,

motivations and desires of other people) and Intrapersonal intelligence (the

capacity to understand oneself, to appreciate one's feelings, fears and

motivations). In Gardner's view, traditional types of intelligence, such as IQ,

fail to fully explain cognitive ability. Thus, even though the names given to

the concept varied, there was a common belief that traditional definitions of

intelligence are lacking in ability to fully explain performance outcomes.

The concept of Emotional Intelligence also overlaps with Gardners notion of

Social Intelligence (1983) which he refers to as Personal Intelligence. Part of

Gardners definition focuses specifically on the processing of affective

information. Interpersonal intelligence includes the ability to understand other

people and know what they feel. Intrapersonal intelligence involves access to

one's own feelings, the capacity to effect discriminations among these feelings

and draw on them as a means of guiding behavior. In attempting to locate

these "intelligences" within the traditional psychometric domain, Carroll

(1993) suggested that interpersonal intelligence is a specialized type of

acquired knowledge (i.e., crystallized ability). However, Gardner's

intrapersonal intelligence (access to one's own feelings) finds no counterpart in

Carroll's taxonomic model. Arguably, this situation has arisen because

adequate assessment of this type of ability has never appeared in the extant

factor-analytic literature.

Although various authors have proposed that emotional intelligence is a type

30

of intelligence, in the traditional sense, contemporary research and theorizing

lack any conceptual model of intelligence within which the construct might be

placed. The theory of fluid and crystallized ability proposed by Cattell (1987),

Horn (1988), and their associates (see, e.g., Horn & Noll, 1994; Horn &

Stankov, 1982) is arguably the most efficacious empirically based

psychometric model of intelligence (see Stankov, Boyle, & Cattell, 1995). It

may be speculated that, within this theory, emotional intelligence will

constitute an additional aspect of (possibly one or more primary mental

abilities underlying) crystallized ability. This assertion is based on the

assumption that the appraisal, expression, regulation, and use of emotion

develop through experience and social interaction in much the same way as do

other psychological processes constituting crystallized intelligence.

If emotional intelligence is a type of intelligence, then its distinguishability

from various personality traits found in the literature must be demonstrated

(cf. H. J. Eysenck & Eysenck, 1991). As Mayer and Salovey have pointed out,

"a trait is a behavioral preference, rather than ability". As is the case with

many measures of emotional intelligence, the typical instruments for assessing

personality rely on selfreport techniques. If emotional intelligence is to qualify

as a form of intelligence, it must be shown to be independent from the

personality traits assessed by these instruments. The inclusion of the Eysenck

Personality Questionnaire-Revised (EPQR) the Trait-Self Description

Inventory (TSDI; Christal, 1994), and the NEO Personality Inventory (Costa

& McCrae, 1985) in each of the three studies (respectively) allowed this issue

to be addressed. These instruments have been shown to provide both valid and

31

reliable assessments of several personality constructs: Extraversion,

Neuroticism, and Psychoticism (EPQ-R) and Extraversion, Neuroticism,

Conscientiousness, Agreeableness, and Openness (NEO Personality Inventory

and TSDI). A number of tests measuring aspects of emotional intelligence are

already known to have moderate to high correlations with personality

constructs. Consider, for example, the four subscales derived from the

Emotional Control Questionnaire (Roger &Najarian, 1989). Rehearsal

(specifically, dissatisfaction with interpersonal encounters and an inability to

resolve interpersonal conflict) has been found to have a significant correlation

with Neuroticism. Similarly, Emotional Inhibition has been found to have a

noteworthy negative correlation with Extraversion. Furthermore, Benign

Control, which is viewed primarily as an index of impulsivity, correlates with

the Psychoticism scale of the EPQ (Roger & Najarian, 1989). This finding is

not surprising given that the Psychoticism scale contains items assessing an

individual's tendency to act impulsively.

In 1990, Mayer and Salovey published two articles on emotional intelligence.

The first article (Salovey & Mayer, 1990) reviewed literature throughout the

disciplines of psychology and psychiatry, artificial intelligence, and other

areas, and concluded that there might exist a human ability fairly called

emotional intelligence. The idea was that some people reasoned with emotions

better than others, and also, that some peoples reasoning was more enhanced

by emotions than others. The companion article (Mayer, DiPaolo, & Salovey,

1990) presented a first ability model of emotional intelligence a suggestion

that emotional intelligence, measured as a true intelligence, might exist. Since

32

that time, Mayer, Salovey, and their colleagues refined their model of

emotional intelligence (see Mayer & Salovey, 1997), and expended

considerable efforts toward developing a high-quality ability measure in the

area. The newly developed Mayer-Salovey-Caruso Emotional Intelligence

Test (MSCEIT V2.0; Pronounced "Mes-keet"; Mayer, et al., 1999, 2000) is the

result of this theoretical and empirical research. The MSCEIT is an ability

model of emotional intelligence. The model consists of four classes or

branches of emotional abilities (Mayer, Caruso, & Salovey, 2000b; Mayer &

Salovey, 1997; Mayer, et al., 2000a; Salovey & Mayer, 1990). The MSCEIT

(Mayer & Salovey, 1997), measures ones potential or set of abilities to

reason with emotions and emotional signals, and to use emotion to enhance

thought; hence the term emotional intelligence.

The term Emotional Intelligence (EI) to refer to the mental processes involved

in the recognition, use, understanding, and management of ones own and

others emotional states to solve problems and regulate behavior (Mayer &

Salovey, 1997; Salovey & Mayer, 1990). That is, we view EI as ability- or

competency-based (cf. Saarni, 1999), as distinguished from being rooted in

personality attributes (see Brackett & Mayer, 2003; Mayer, Salovey, &

Caruso, 2000 for theoretical and empirical distinctions). Emotional

intelligence from this tradition refers to an individuals capacity to reason

about emotions and to process emotional information in order to enhance

cognitive processes.

Two journal articles in 1990, formally defined EI and presented a preliminary

demonstration of how the construct could be measured as an ability (Mayer,

33

DiPaolo, & Salovey, 1990; Salovey & Mayer, 1990). Their initial definition of

EI was the ability to monitor ones own and others feelings and emotions, to

discriminate among them and to use this information to guide ones thinking

and actions (Salovey & Mayer, 1990, ). They then refined their thinking

about Emotional Intelligence and published a four-branch model, which

defined Emotional Intelligence as the ability to (a) perceive emotion, (b) use

emotion to facilitate thought, (c) understand emotions, and (d) manage

emotion (Mayer &Salovey, 1997). Here, they describe the MSCEIT, its

psychometric properties, and recent validation studies with the instrument (see

also Mayer, Salovey, & Caruso, 2002b). Evidence supports the idea that EI

(operationalized by the MSCEIT) meets classical criteria of a standard

intelligence and predicts outcomes of social importance (Mayer, Salovey,

Caruso, & Sitarenios, 2001, 2003). To acquaint the reader with our theory of

EI, they begin with a brief review of the four-branch model. Elsewhere, the

theory is described in more detail (Salovey, Mayer, & Caruso, 2002).

Exhibit -2.1: MSCEIT Total - Adapted from Mayer, & Caruso, 2002

34

Four-Branch model of emotional intelligence their analyses of emotion-related

abilities led them to conceive of EI as comprising of four branches or abilities,

as illustrated in Exhibit 2. Whereas the perception, understanding, and

management of emotions (Branches 1, 3, and 4) involve reasoning about

emotions, Branch 2 (the use of emotions to facilitate thought) involves using

emotions to enhance reasoning.

An example of the research on the limits of IQ as a predictor is the

Sommerville study, a 40 year longitudinal investigation of 450 boys who grew

up in Sommerville, Massachusetts. Two thirds of the boys were from welfare

families, and one-third had IQ.s below 90. However, IQ had little relation to

how well they did at work or in the rest of their lives. What made the biggest

difference was childhood abilities such as being able to handle frustration,

control emotions, and get along with other people (Snarey & Vaillant,

1985).Another good example is a study of 80 Ph.D.s in science who

underwent a battery of personality tests, IQ tests, and interviews in the 1950s

when they were graduate students at Berkeley. Forty years later, when they

were in their early seventies, they were tracked down and estimates were made

of their success based on resumes, evaluations by experts in their own fields,

and sources like - American Men and Women of Science. It turned out that

social and emotional abilities were four times more important than IQ in

determining professional success and prestige (Feist & Barron, 1996)

35

In their paper ,Dr. Silva Karkoulian, Nour Al Harake, and Dr. Leila Canaan

Messarra Correlates of Organizational Commitment and Knowledge Sharing

via Emotional Intelligence: An Empirical Investigation ,they investigate the

relationship between organizational commitment and knowledge sharing via

emotional intelligence.. However, emotional intelligence mediated the

relationships in organizations such that the relationship between normative

commitment and knowledge sharing remained positive, but affective

commitment was not a function of knowledge sharing anymore.

In the paper Emotional Intelligence: In Search of an Elusive Construct

Michaela Davies and Lazar Stankov, Richard D. Roberts viewed that

emotional intelligence should be included within the traditional cognitive

abilities framework was explored in 3 studies by investigating the relations

among measures of emotional intelligence, traditional human cognitive

abilities, and personality. The studies suggest that the status of the emotional

intelligence construct is limited by measurement properties of its tests.

Measures based on consensual scoring exhibited low reliability. Self-report

measures had salient loadings on well-established personality factors,

indicating a lack of divergent validity. These data provide controvertible

evidence for the existence of a separate Emotion Perception factor that

(perhaps) represents the ability to monitor another individual's emotions. This

factor is narrower than that postulated within current models of emotional

intelligence.

Sanjay Kumar Singh (2009) meta-analyzes available research findings on

Emotional Intelligence to develop a framework to be used by industry

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practitioners in the paper Leveraging Emotional Intelligence for managing

Executives Job Stress: A Framework. Kavita Singh(2008) discusses the link

between Emotional Intelligence and Work place Effectiveness in an article by

the same title. Mamta Mohapatra and Abhinav Gupta (2010) explore the

relationship between Emotional Intelligence , Work Values and Internal Locus

of Control among working executives taking the case of Indian public Sector

organization in their work Relationship of Emotional Intelligence with Work

Values & Internal Locus of Control: A Study of Managers in a Public Sector

Organization. Findings of this study suggest a high correlation between work-

values and all factors of Emotional Intelligence. The study also shows that

executives internal locus of control has a significant correlation with factors

such as managing emotions in self, social skills and utilizing emotions.

In the article Emotionally Intelligent Managers & Transformational

Leadership Styles Omar Bin Sayeed & Meera Shanker (2009) examines

multivariate relationships between Emotional Intelligence and

Transformational Leadership dimensions. The canonical correlation between

Emotional Intelligence and Transformational leadership dimensions revealed

significant relationships. The paper Emotional Intelligence & Managerial

Effectiveness: Role of Rational Emotive behavior Nivedita Srivastava &

Sreekumar K.Nair (2010) undertakes an empirical study to see the influence of

emotional Intelligence and rational emotive behavior on managerial

effectiveness. The results show that both the variables positively influence

managerial effectiveness.

Examining Managerial Thinking Style, EQ, and Organizational

37

Commitment- Kevin S. Groves ,Charles M. Vance examine the relationship

between linear and nonlinear dimensions of managerial thinking style and

emotional intelligence. Results demonstrate that linear thinking style was

positively associated with the regulation of emotions, nonlinear thinking was

related to utilizing emotions to facilitate thinking, and a balanced use of linear

and nonlinear thinking was a predictor of overall EI.

The relationship between emotional intelligence and work attitudes, behavior

and Outcomes An examination among senior managers Abraham Carmeli.

suggests that managerial skills in general, and emotional intelligence in

particular, play a significant role in the success of senior managers in the

workplace. This argument, despite its popularity, remains elusive. This can be

attributed to the fact that although a few studies have provided evidence to

support this argument, it has not received an appropriate empirical

investigation. He attempts to narrow this gap by empirically examining the

extent to which senior managers with a high emotional intelligence employed

in public sector organizations develop positive work attitudes, behavior and

outcomes. The results indicate that emotional intelligence augments positive

work attitudes, altruistic behavior and work outcomes, and moderates the

effect of work-family conflict on career commitment but not the effect on job

satisfaction.

Emotional Intelligence and Negotiation: The Tension between creating and

claiming value Maw Der Foo , Hillary Anger Elfenbein, Hwee Hoon Tan ,

Voon Chuan Aik .As a departure from past research on emotional intelligence

(El), which generally examines the influence of an individual's level of El on

38

that individual's consequences, they examined relationships between the

emotional intelligence (El) of both members of dyads involved in a

negotiation in order to explain objective and subjective outcomes. As

expected, individuals high in El reported a more positive experience.

However, surprisingly, such individuals also achieved significantly lower

objective scores than their counterparts. By contrast, having a partner high in

El predicted greater objective gain, and a more positive negotiating

experience. Thus, high El individuals appeared to benefit in affective terms,

but appeared to create objective value that they were less able to claim. They

discuss the tension between creating and claiming value, and implications for

emotion in organizations.

As a result of the growing acknowledgement by professionals of the

importance and relevance of emotions to work outcomes, the research on the

topic continued to gain momentum, but it wasn't until the publication of

Daniel Goleman's best seller - Emotional Intelligence: Why It Can Matter

More Than IQ that the term became widely popularized. Nancy Gibbs' 1995

Time magazine article highlighted Goleman's book and was the first in a

string of mainstream media interest in EI.

Defining Emotional Intelligence: Substantial disagreement exists regarding

the definition of EI, with respect to both terminology and operationalizations.

There has been much confusion regarding the exact meaning of this construct.

The definitions are so varied, and the field is growing so rapidly, that

39

researchers are constantly re-evaluating even their own definitions of the

construct. At the present time, there are three main models of EI:

Ability EI models

Mixed models of EI

Trait EI model

The Ability Based Model: Salovey and Mayer's conception of EI strives to

define EI within the confines of the standard criteria for a new intelligence.

Following their continuing research, their initial definition of EI was revised to

"The ability to perceive emotion, integrate emotion to facilitate thought,

understand emotions and to regulate emotions to promote personal growth."

The ability based model views emotions as useful sources of information that

help one to make sense of and navigate the social environment. The model

proposes that individuals vary in their ability to process information of an

emotional nature and in their ability to relate emotional processing to a wider

cognition. This ability is seen to manifest itself in certain adaptive behaviors.

The model claims that EI includes four types of abilities:

1. Perceiving emotions the ability to detect and decipher emotions in

faces, pictures, voices, and cultural artifactsincluding the ability to

identify one's own emotions.

2. Using emotions the ability to harness emotions to facilitate various

cognitive activities, such as thinking and problem solving.

40

3. Understanding emotions the ability to comprehend emotion language

and to appreciate complicated relationships among emotions.

4. Managing emotions the ability to regulate emotions in both ourselves

and in others.

The model introduced by Daniel Goleman focuses on EI as a wide array of

competencies and skills that drive leadership performance. Goleman's model

outlines four main EI constructs:

1. Self-awareness the ability to read one's emotions and recognize their

impact while using gut feelings to guide decisions.

2. Self-management involves controlling one's emotions and impulses

and adapting to changing circumstances.

3. Social awareness the ability to sense, understand, and react to others'

emotions while comprehending social networks.

4. Relationship management the ability to inspire, influence, and

develop others while managing conflict.

Goleman includes a set of emotional competencies within each construct of

EI. Emotional competencies are not innate talents, but rather learned

capabilities that must be worked on and can be developed to achieve

outstanding performance Goleman posits that individuals are born with a

general emotional intelligence that determines their potential for learning

emotional competencies.

41


Decades of research has emphasized on the importance of Organizational

Climate on important business outcomes (e.g. Boruci and Burke,1991; Collins

and Smith 2006; Schneider ,Enhart, Mayer, Saltz, Niles & Jolly2005;

Schneider, Parkington & Buxton,1980;Schneider,White and Paul 1998).

Reichers and Schneider (1990) provides a historical overview of Climate.

Climate research derives from a confluence of field theory and the quantitative

study of attitudes within organizations. Field theory is the label

Lewin(1948,1951) and his colleagues gave to their attempts to represent any

social processes as part of larger context or field. Their emphasis on Gestalt

psychology of perception being developed by other German immigrants to the

United States during the middle decades of the 20th

century. Climate was a

way of characterizing context and it was not complex. It fell into three

categories of autocratic, democratic and laissez-faire. These styles of

leadership were not important as behaviors but as a dependable means of

producing a social situation , a climate.

When the same concept appeared in organizational studies, the meaning of

climate changed. It is not certain how the idea would have developed had it

not been for Lewins premature death in 1947.Shortly thereafter ,his successor

as director of the Research center for Group Dynamics, Dorwin Cartwright,

moved the center to the University of Michigan to become part of the Survey

Research Center within the Institute for Social Research (ISR). Cartwright

followed interests at the group level rather than at the organizational or

societal level. Eventually that move brought Lewins legacy into direct contact

42

with another quite different line of work at ISR, that of Rensis Likert. Likerts

contribution to climate study was System 4 view of effective Management

(Likert,1961). His problem was how best to capture the climate of an

organization so that he could work with the organizations senior Managers to

monitor and promote its comprehensive improvement. The Likert scale that he

invented for sociological and psychological research provided the starting

point to capture an organizations climate. Climate came to be represented by

an aggregation of individual data from attitude scales.

One conceptual framework of climate (Litwin and Stringer, 1968) emphasizes

motivational linkages. This framework seems to be quite relevant for studying

Organizational Climate. The six factors propounded are - Achievemement,

Expert Influence, Control, Extension, and Dependency. Likert (1967)

proposed six dimensions of Organizational Climate: leadership, motivation,

communication, decision, goals and control. Likert and Stringer (1968)

proposed seven dimensions: conformity, responsibility standards, rewards,

organizational clarity, warmth and support, and leadership as important

components of organizational climate. Uday Parekh after review and

discussions with managers suggested the following 12 processes- Orientation,

Interpersonal Relationships, Supervision, Problem Management, Management

of Mistakes, Conflict Management, Communication, Decision Making, Trust,

Management of rewards, Risk Taking , Innovation and Change.

Stringer' identified the six dimensions of OC as organizational

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