Internal
Internal emotional capital is the value of the emotional commitments held in the hearts of the people within your business. It differs from what has been known as "customer loyalty", "brand recognition" and company attributes associated with being in business for a number of years, benefitting from "word of mouth" advertising bringing in new customers, and other non-tangible business assets that are not taxable components of the valuation, but often the sole market value of a service business marketing only to a local customer base; i.e., dance schools, karate schools, etc. Internal emotional capital represents the energy, focus and determination of the employees to achieve and maintain the company's goals, achieve maximum product quality and efficiency. It has become a more difficult for companies to create and maintain such an environment and thus build on whatever emotional capital they might have for two distinct and measurable reasons: 1) where company goals are aligned with quarterly stock and bond share value rather than long term productivity, quality and value; 2) the resultant migration of the best employees based on their perceived value to other companies, and remaining employees resultant perception that their contributions will not protect their livelihood, thus they are unwilling to take risks that might improve production, quality or reduce costs, and similar intangible contributions management requires to keep a competitive edge. Example: a layoff to reduce overhead and increase profit in the short term, will signal to those remaining that their job security is at risk forcing them to seek new employment opportunities in the immediate future, leaving the company with only those whose qualifications were insufficient to gain new employment. Example: Apple computer created an industry with a hardware advantage to accomplish the human/machine visual interface that became standard with the introduction of Windows, which required massive amounts of memory to run the software that emulated Apple's protected hardware advantage. Apple became the industry standard for designers, publishers, photographers, advertising and other visual image professionals who responded to subtle improvements in the visual design elements of Apple products and Steve Job's appreciation of the company's product image. One only has to recall various new product venues, or visit an Apple retail store to become instantly aware of this internal emotional capital that is felt by every element of the company's product line, from the elegant packaging, to the instantly obvious quality of their screens so important to the producers of visual images that increasingly inhabit the modern world. The aluminum case on an IPOD signals instant quality by its solid feel in a world of plastic. Apple doesn't need to "sell" quality with tv ads, anyone who picks up or uses their products, regardless of technical expertise, recognizes it. Moreover, Apple encouraged employee input, made managers visually accessible by removing office doors, and sometimes walls, giving paid time off to exercise, provided Friday afternoon baseball games, and other team recreation that built a sense of connection and value. Thus Apple has enjoyed the employment of the best in the industry and acknowledged it. Their internal emotional capital is maintained in part by their continued efforts to always produce the best products and willingness to invest in constant improvement of every element of the product line. This not only builds customer loyalty, it build emotional capital with employees enjoying the ability to make the company the best and enjoy the stability of employment that is the result. This long term vision has also resulted in greater share value over time than a host of personal computer companies that are no longer in the market, that fell as quickly as they fell, making money for the founder, but only short term wages for the employees - in short, they had no internal emotional capital and couldn't survive without it.
It can be described as the feelings, beliefs and values held by everyone working in the business. Motivation, engagement, internal trust of employees, shareholders, management and stakeholders, coherence inside the company and aligned management behaviour.
Strongly connected to External Emotional Capital, the internal values of a company may strengthen or weaken a company's support system. Negative emotional capital is called emotional liability. It includes scandals, strikes, demotivation and distrust. Emotional capital minus emotional liability equals emotional equity. Emotional equity plus knowledge equity equals intangible value or immaterial value (goodwill).
Read more about this topic: Emotional Capital
Famous quotes containing the word internal:
“Personal change, growth, development, identity formation—these tasks that once were thought to belong to childhood and adolescence alone now are recognized as part of adult life as well. Gone is the belief that adulthood is, or ought to be, a time of internal peace and comfort, that growing pains belong only to the young; gone the belief that these are marker events—a job, a mate, a child—through which we will pass into a life of relative ease.”
—Lillian Breslow Rubin (20th century)
“We have our difficulties, true; but we are a wiser and a tougher nation than we were in 1932. Never have there been six years of such far flung internal preparedness in all of history. And this has been done without any dictator’s power to command, without conscription of labor or confiscation of capital, without concentration camps and without a scratch on freedom of speech, freedom of the press or the rest of the Bill of Rights.”
—Franklin D. Roosevelt (1882–1945)
“A State, in idea, is the opposite of a Church. A State regards classes, and not individuals; and it estimates classes, not by internal merit, but external accidents, as property, birth, etc. But a church does the reverse of this, and disregards all external accidents, and looks at men as individual persons, allowing no gradations of ranks, but such as greater or less wisdom, learning, and holiness ought to confer. A Church is, therefore, in idea, the only pure democracy.”
—Samuel Taylor Coleridge (1772–1834)