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If only it were just about defining scope, creating a project plan, and tracking costs! Project Management obviously encompasses all those things, but now more than ever it’s also about relationship development, team building, influencing, collaborating, and negotiating often in a very complex environment. As my father often said, this job would be easy, if it weren’t for the people!The pervasive school of thought among corporate leaders until recently was that a person’s IQ score is the best indicator of how successful that person will perform in the work environment, and that emotions are something to be checked at the door, considered to be a hindrance to the individual’s success. But this thinking is changing as a new generation of managers enters the leadership ranks. Enter Emotional Intelligence (EI). Awareness of EI started with Peter Salovey and John Mayer in 1990, and Salovey considers EI to be the “ability to monitor one’s own and other’s feelings and emotions, to discriminate among them, and use this information to guide one’s thinking and action”. Daniel Goleman popularized the EI theory with his book “Emotional Intelligence” in 1995, and there are a number of other critical contributors to the discussion on EI. This article will use the model developed by Dr. Steven Stein, CEO of Multi Health Systems, based on the Emotional Intelligence Skills Assessment (EISA) published by Pfeiffer, an Imprint of John Wiley & sons, to show that EI is a critical skill for a Project Manager to be successful. The EISA stems from the previous work of BarOn (1997), Mayer, Salovey, and Caruso (1997), and Goleman (1998), and has evolved into a five factor model that assesses the interconnected components of emotional intelligence that are directly tied to emotional and social functioning.So why does a Project Manager need an understanding of Emotional Intelligence as well as the ability to track schedules and budgets? Project Managers need to be able to do the following:• Operate in complex matrix environments – Project Managers need to influence, negotiate, and collaborate with other departments and teams for resources and to understand project dependencies. The ability to build relationships and understand how to get the best from others is a critical skill that a Project Manager needs to be effective in a matrix environment.• Build effective teams – People are key to the success of any project, and Project Managers rarely have direct ‘control’ over the staff with which they are expected to complete the project. They need to be able to motivate staff, build teams from disparate sources, and manage conflict, all skills that require the ability to understand people and their particular wants and needs.• Manage change – by their very nature, projects cause change. Building a technical solution is only one component of a project; understanding and managing the impact of that technical solution on a user population, and the effect of that change, is a critical skill for a Project Manager.• Provide leadership – Project Managers need to provide leadership to the people on the project, the stakeholders, and other groups with which they interact. As well as the ability to make decisions based on well thought out analysis of the situation, the ability to make decisions based on the understanding of the impact on people is also an important leadership aspect.• Deliver results – The complexity of the environment and the degree to which collaboration needs to be successful is unprecedented, and simply being able to track a project plan is unlikely to be enough to allow a Project Manager to be successful. Understanding one’s own emotions, the emotions of others, and how those can be most effectively managed can have a dramatic effect on a Project Manager’s ability to deliver results.The EISA framework is based on Reuven Bar-On’s Emotional Quotient Inventory (EQ-i) model and is a simplified version providing a starting point for understanding EI based behaviors, recognizing them in ourselves and others, and building action plans to modify behaviors in the future to obtain different outcomes. The framework has 5 basic EI factors, as follows:
- Perceiving – the ability to accurately recognize, attend to, and understand emotion
- Managing – the ability to effectively manage, control and express emotions
- Decision Making – the appropriate application of emotion to manage change and solve problems
- Achieving – the ability to generate the necessary emotions and to self motivate in the pursuit of realistic and meaningful objectives
- Influencing – the ability to recognize, manage and evoke emotion within oneself and others to promote changeThe framework is laid out with Perceiving and Managing surrounding the other three factors, on the basis that a person requires the ability to perceive and manage emotions to be able to apply EI to the remaining factors. Increasing the level of awareness of one’s self and others through perceiving and managing emotions is a great starting point in itself, and is the foundation for improving our outcomes in the areas of decision making, achieving and influencing.The EI skill of Perceiving is based on the ability of an individual to recognize, attend to, and understand emotions in themselves and others. Related to this are the critical abilities to demonstrate empathy, differentiate between emotions, and identify the impact that emotions have on a situation. Research shows that approximately 55% of what we perceive from someone comes from their body language, about 38% from the tone of their voice and a mere 7% from the actual words that they use. Perceiving emotional cues for Project Managers is a critical skill. For example, misunderstanding a resource manager’s body language when trying to negotiate for project resources from another part of the organization could be a critical factor in determining not only whether the Project Manager gets the resources they need, but also in determining the tone of the relationship with that manager for the remainder of the project schedule.The EISA framework indicates that those with a lower score on the Perceiving scale are likely to have more difficulty discriminating between emotions, exhibit less positive emotions, and may be more emotionally unpredictable. Those with a higher score on the Perceiving scale are likely to have a greater ability to discriminate between emotions, be more able to gauge the intensity of a person’s feelings, be more empathic, and be more emotionally predictable. While working on a recent project at the Federal Government, I came across an individual with whom we had to collaborate in order to obtain approval for our technical designs. We could have proceeded without his approval, but had we done so, he would likely have caused us more problems later in the project lifecycle when the cost of correcting course would have been considerably higher. In one meeting we were discussing a particular solution to a database design, and he was becoming increasingly agitated at one point because the solution we were proposing went against his preference. Rather than charge forward, we not only heard the words and tone with which he was resisting the solution, but also saw the body language, and decided that a compromise was necessary. Despite feeling that our technical solution was valid, we responded calmly, validated his opinion, and asked him questions until a compromise was found that all parties agreed to. The result was that not only did we get a better outcome in this particular instance, but our relationship with him improved drastically in other areas, and he became a big supporter of our team. It would have been easy for our team to get as tied to our technical solution as he was to his, and had we done so my guess is that while the project might have been completed from a technical perspective, any chance of collaboration and good will for the future would have been eliminated.The EI skill of Managing is the ability to effectively manage, control and express emotions. Identifying our own moods and the impact of our moods on our behavior is a critical aspect of self awareness. How many Project Managers have had to present project status to senior management, have it not go as well as they had hoped, and come out of feeling stressed? At the same time, they have staff that need their attention, who may only be working on the project part-time. The Project Manager must be aware of their own stress, and then make a choice about how to respond to the needs of their staff. If they run to the staff directly after the meeting without understanding their own level of stress, there is a risk that the stress will be passed on to the staff, resulting in a lowering of staff motivation. If they are able to take time out to cool off and rebalance themselves and then talk to their staff they are less likely to pass on their stress, and therefore the conversation is likely to have a better outcome. In a matrix environment, where staff are only assigned part-time to a project, a Project Manager passing their stress on to their staff can cause a team member to ‘hide’ behind the matrix structure and result in them spending their time elsewhere. It can often take a Project Manager a while to realize that this is happening, at which point the delivery of the project has been impacted.The EISA framework indicates that those with a lower score on the Managing scale are more likely to mismatch emotions, cope with stress less effectively, and have more difficulty building relationships and networks. Those with a higher score on the Managing scale are more likely to appropriately express their emotions, have better coping skills, and have more meaningful interpersonal relationships and networks. The effect of emotions and mood can have either a positive or negative effect on those with which we have to work. One of the best bosses I’ve ever had used humor to change the emotion of a group. At the start of one of the largest Electronic Health Record implementations outside of the Federal Government, he started a new role collaborating with a group in Hawaii. This was especially challenging as many of our meetings were over the phone, with clinicians who were only minimally enthusiastic about working with IT staff. He could sense some negative emotion, even over the phone, and so decided to tell a story about how he accidentally took his wife’s HRT tablets in place of a sleeping tablet (and interestingly got a very good night sleep!). His story resulted immediately in laughter, and the rest of the meeting went very smoothly. All sides provided positive contribution to the discussion, and this laid the foundation for a good relationship for the remainder of the project. His ability to identify a negative emotion, control his own emotional response to that (which could have been to get aggressive or defensive) and develop a strategy to put the group in a different mood demonstrated skillful use of EI in a project management setting.The EI skill of Decision Making is the ability to appropriately apply emotion to manage and solve problems, something that a Project Manager needs to do on a daily basis. Project Managers need to be able to make decisions by analyzing all aspects of a situation, without distorting reality in either a positive or negative manner, and understanding the people aspects and impacts of any decision made. Decisions often result in change, and so part of making grounded decisions is being able to identify and understand the emotional impact of change on other people. Change can cause ambiguity, and this is often very stressful for those impacted. If Project Managers can stay calm in the face of change, it can often reduce the level of anxiety for others, resulting in a lower negative impact on the project as a whole.The EISA framework indicates that those with a lower score on the Decision Making scale are more likely to generate emotions that are less appropriate for the task in hand, be more impulsive or paralyzed when making decisions, and perhaps even make inaccurate or untimely decisions. Those with a higher score on the Decision Making scale are more likely to generate emotions appropriate for the task in hand, be more flexible, pragmatic and perceptive of the effect that decisions have on people and a situation. It’s easy to get swept away by excitement when making decisions, although it is also true that a positive mood can more often result in good decisions, and a negative mood result in bad decisions. Emotions can affect our decisions in many ways. I worked for an Insurance company in the UK years ago, that had just spent millions of pounds on a custom built system. When a vendor came in to show them a new package solution, for only a fraction of the price, the enthusiasm that the organization felt about saving so much money was palpable. However, in the excitement of such a decision, the reality of implementing a package solution, with all of the activities related to analysis, testing, implementation, etc, was underestimated. The result was that the system was implemented, causing significant change for the users, but the final cost to the organization was not very different than the cost of implementing the original custom built solution.The EI skill of Achieving is the ability to generate the necessary emotions to motivate ourselves in the pursuit of realistic and meaningful objectives. Go-getters tend to set goals for themselves, and if they fail they are typically able to stand back, analyze what they could do better next time, and move forward with their corrective action. There are others that talk and complain that they’re not achieving what they want in life, but don’t make the necessary changes to meet goals, and blame others for their frustrations. Determination and vigor are feelings that help us move forward into action and achievement, and as Project Managers our ability to be able to achieve, often in the face of adversity, is critical to our success.The EISA framework indicates that those with a lower score on the Achieving scale tend to avoid risk, be only outcome oriented, avoid emotions associated with failure, and have little task ownership. Those with a higher score on the Achieving scale tend to be intrinsically motivated, take pleasure in success, take responsibility and ownership, tend to be in a positive mood, and are comfortable taking moderate risk. I worked on a large healthcare conversion project some years ago that was staffed by a mixture of employees and contractors from multiple different consulting companies. We had a strict scope and timeline, and no-one wanted to miss the deadline. The project was full of negative emotion, caused by poor processes, a fractured organization structure, poor communication, and a lot of turf wars between the various groups. The project met the deadline, but people worked many hours, there was infighting, and some of the relationships with the user base were damaged for a considerable time due to forcing the system to go live before it was really ready from a quality perspective. So while the project achieved its results at some level, in that it met the deadline, there were other casualties in terms of relationships and staff that took a long time to repair.The EI skill of Influencing is the ability to recognize, manage and evoke emotion in others to promote change. It is the ability to appraise a situation, interpret the emotional tone and understand the impact of this in our ability to build and maintain social relationships. How a Project Manager handles his or her emotions, as well as the emotions of others, can have a significant impact on the nature of a relationship. Positive emotions tend to result in a more collaborative relationship; negative emotions tend to reduce the likelihood of collaboration. Since a Project Manager almost always has a variety of groups to influence in order to be successful – operations groups, IT support services, functional managers, business stakeholders, vendors etc – the ability to positively influence relationships to achieve collaboration can have a dramatic effect on results.The EISA framework indicates that those with a lower Influencing score tend to be rarely or ineffectively assertive, prefer one on one communication, have difficulty managing others, and tend to be more instructive in their style of management. Those with a higher Influencing score are typically effectively assertive, often show a confident demeanor, are optimistic and inspire others. I made reference earlier in this article to my boss on an EHR project. What made him one of the best bosses I’ve ever had were his leadership qualities, which included empathy, a collaborative nature, flexibility, understanding, compassion, creativity and credibility. It was not at all related to his technical skill in managing a project, but rather the tone that he set as a leader. Many of us had been on a prior iteration of the same project, with entirely different leaders, resulting in an entirely different project culture. My boss took a deliberate strategy to be collaborative as he started his new role, and set up a variety of cross functional groups to buy people into the. The project was extremely successful, and this was a significant contributing factor.So in summary, Project Managers work in increasingly complex environments, and it’s not sufficient to bring only technical skills to that role to be successful. Relationships need to be developed, teams need to be motivated, change needs to be managed. If we can improve our ability to perceive emotions of others, we can empathize, and adjust our style to get a better outcome. If we can manage our emotions, we can be sure that the emotions we express are appropriate for the situation. If we can use our emotions to improve our decision making, we can enhance our ability to solve problems. If we can self-motivate we can achieve more realistic goals. Finally, if we can enhance our ability to interpret emotional tone, we can build more effective relationships and influence the goals and outcomes of a project. In doing so, Project Managers can be more effective leaders, resulting in more successful project delivery. So is Emotional Intelligence a nice to have or a necessity? Only you can decide, but I think it depends on just how successful you want to be!

There are several potential financing options available to cash-strapped businesses that need a healthy dose of working capital. A bank loan or line of credit is often the first option that owners think of – and for businesses that qualify, this may be the best option.

In today’s uncertain business, economic and regulatory environment, qualifying for a bank loan can be difficult – especially for start-up companies and those that have experienced any type of financial difficulty. Sometimes, owners of businesses that don’t qualify for a bank loan decide that seeking venture capital or bringing on equity investors are other viable options.

But are they really? While there are some potential benefits to bringing venture capital and so-called “angel” investors into your business, there are drawbacks as well. Unfortunately, owners sometimes don’t think about these drawbacks until the ink has dried on a contract with a venture capitalist or angel investor – and it’s too late to back out of the deal.

Different Types of Financing

One problem with bringing in equity investors to help provide a working capital boost is that working capital and equity are really two different types of financing.

Working capital – or the money that is used to pay business expenses incurred during the time lag until cash from sales (or accounts receivable) is collected – is short-term in nature, so it should be financed via a short-term financing tool. Equity, however, should generally be used to finance rapid growth, business expansion, acquisitions or the purchase of long-term assets, which are defined as assets that are repaid over more than one 12-month business cycle.

But the biggest drawback to bringing equity investors into your business is a potential loss of control. When you sell equity (or shares) in your business to venture capitalists or angels, you are giving up a percentage of ownership in your business, and you may be doing so at an inopportune time. With this dilution of ownership most often comes a loss of control over some or all of the most important business decisions that must be made.

Sometimes, owners are enticed to sell equity by the fact that there is little (if any) out-of-pocket expense. Unlike debt financing, you don’t usually pay interest with equity financing. The equity investor gains its return via the ownership stake gained in your business. But the long-term “cost” of selling equity is always much higher than the short-term cost of debt, in terms of both actual cash cost as well as soft costs like the loss of control and stewardship of your company and the potential future value of the ownership shares that are sold.

Alternative Financing Solutions

But what if your business needs working capital and you don’t qualify for a bank loan or line of credit? Alternative financing solutions are often appropriate for injecting working capital into businesses in this situation. Three of the most common types of alternative financing used by such businesses are:

1. Full-Service Factoring – Businesses sell outstanding accounts receivable on an ongoing basis to a commercial finance (or factoring) company at a discount. The factoring company then manages the receivable until it is paid. Factoring is a well-established and accepted method of temporary alternative finance that is especially well-suited for rapidly growing companies and those with customer concentrations.

2. Accounts Receivable (A/R) Financing – A/R financing is an ideal solution for companies that are not yet bankable but have a stable financial condition and a more diverse customer base. Here, the business provides details on all accounts receivable and pledges those assets as collateral. The proceeds of those receivables are sent to a lockbox while the finance company calculates a borrowing base to determine the amount the company can borrow. When the borrower needs money, it makes an advance request and the finance company advances money using a percentage of the accounts receivable.

3. Asset-Based Lending (ABL) – This is a credit facility secured by all of a company’s assets, which may include A/R, equipment and inventory. Unlike with factoring, the business continues to manage and collect its own receivables and submits collateral reports on an ongoing basis to the finance company, which will review and periodically audit the reports.

In addition to providing working capital and enabling owners to maintain business control, alternative financing may provide other benefits as well:

It’s easy to determine the exact cost of financing and obtain an increase.
Professional collateral management can be included depending on the facility type and the lender.
Real-time, online interactive reporting is often available.
It may provide the business with access to more capital.
It’s flexible – financing ebbs and flows with the business’ needs.
It’s important to note that there are some circumstances in which equity is a viable and attractive financing solution. This is especially true in cases of business expansion and acquisition and new product launches – these are capital needs that are not generally well suited to debt financing. However, equity is not usually the appropriate financing solution to solve a working capital problem or help plug a cash-flow gap.

A Precious Commodity

Remember that business equity is a precious commodity that should only be considered under the right circumstances and at the right time. When equity financing is sought, ideally this should be done at a time when the company has good growth prospects and a significant cash need for this growth. Ideally, majority ownership (and thus, absolute control) should remain with the company founder(s).

Alternative financing solutions like factoring, A/R financing and ABL can provide the working capital boost many cash-strapped businesses that don’t qualify for bank financing need – without diluting ownership and possibly giving up business control at an inopportune time for the owner. If and when these companies become bankable later, it’s often an easy transition to a traditional bank line of credit. Your banker may be able to refer you to a commercial finance company that can offer the right type of alternative financing solution for your particular situation.

Taking the time to understand all the different financing options available to your business, and the pros and cons of each, is the best way to make sure you choose the best option for your business. The use of alternative financing can help your company grow without diluting your ownership. After all, it’s your business – shouldn’t you keep as much of it as possible?