What Is Emotional Capital?

February 20, 2024

A big part of my work is helping leaders create a better work culture in their businesses.            

What’s the value in building better culture?

For starters, burnout has reached astronomical rates of prevalence – over 50% in some industries. To translate this into a dollar amount, just take a look at the economic equivalent of burnout – employee turnover, which, according to Gallup authors McFeely and Wigert, has reached an industry-wide cost of one trillion dollars a year. One. Trillion. That’s a “one” with twelve “zeros” behind it. That much money down the drain each year because of what can arguably be boiled down to bad work culture.

Besides the financial toll, there is a human cost. At the height of the pandemic, physician suicides skyrocketed. Many attributed the tragedy to radically unsustainable work demands and work culture. The loss of human life exceeds any dollar amount.

Culture is important. But how do we go about creating change?

As a broad framework to help people think differently about what goes into the creation of work culture, I use a model called the Cultural Resource Triangle. This triangle is shaped less like a pyramid and more like an arrow. I’ll explain that part in just a bit.

The three points on the Cultural Resource Triangle correspond to three types of resources, or capital.

The first is Financial Capital – most people know exactly what this is.

The second point on the triangle is Intellectual Capital, which refers to technical expertise and know-how.

The last and most important point on the Cultural Resource Triangle is Emotional Capital. This is the one that most people misunderstand.

Emotional Capital is the collection of soft skills that help to harness collective energy and channel it toward specific values and goals. It’s not about catering to the whims of the most anxious person on your team. And it’s not about doing trust falls, team retreats, or any other HR fad. “Emotion” is just another word for “energy,” and energy is simply the ability to get things done.

When evaluating job candidates on the criteria of technical skills versus emotional skills, the mega-successful restaurateur Danny Meyer always looks for a breakdown of 49% technical skills and 51% emotional skills. This of course is a pragmatic heuristic, not a hyper-literal policy. The point is, anybody can be taught what wine pairs best with a certain dish or the proper way to execute a table setting. It’s much harder, almost impossible, to teach someone to anticipate the myriad of ways that a guest is made to feel valued, to anticipate needs, to pick up on the subtleties of body language, and to create an authentic emotional experience for every single guest night after night.

This is not unique to the food service industry.

Every business is a relationship business.

This idea is echoed in almost every corner of clinical and organizational psychology as well. When it comes to content (technical data or raw information) versus process (how that information is communicated), process always carries more weight. And when it comes to money, research has long showed that salary correlates weakly with job satisfaction.

Among the three points on the Cultural Resource Triangle, Emotional Capital is the outlier in terms of weight. All three points are vital, but Emotional Capital is by far the most important. Emotional Capital skews the shape of the triangle into an arrow that possesses powerful aerodynamic force. Wherever the arrow points is where the other resources will follow.

So when it comes to improving work culture, always lead with energy.

Practical Action Steps:

  1. Remember that every business is a relationship business.
  2. Demonstrate real empathy for others.
  3. Surround yourself with people who have a vested interest in bringing out the best parts of you.
  4. Be willing to reallocate resources to prioritize deep-rooted human connections.

Do these things and watch what happens to the culture around you – and to your bottom line.


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