The role of emotional intelligence in business rescue in South Africa.
Loading...
Date
2022
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
Existing literature highlights a positive correlation between leadership performance and emotional
intelligence (EQ). EQ is a person’s ability to understand their emotions, act on their intentions
and make decisions on important matters. A business rescue practitioner (BRP) plays a fundamental
role in rescue proceedings, having to develop a business rescue plan and turnaround the affairs of
the financially distressed company within a defined space of time. Therefore, it is key for a
powerful BRP to be appointed to increase the likelihood of the business rescue case being a
success.
Due to the low success rate of business rescue in South Africa, it is questionable whether the EQ
of a BRP is considered during an appointment to a business rescue case. Section 138 of the
Companies Act is silent in this regard.
This study focused on the EQ traits required for a BRP to be successful in South Africa. This was a
quantitative study that used a closed-ended questionnaire to gather data for the study. The
questionnaire was administered to 161 BRPs that are currently licensed by the Companies and
Intellectual Property Commission (CIPC) to operate in South Africa and the response rate was 20%.
Secondary data in the form of previous studies and findings was used to corroborate the findings of
this study. The Statistical Package for the Social Sciences (SPSS) was used to analyse the data
that was derived from the questionnaire.
Results of the questionnaire revealed that the EQ of the BRP is not considered upon appointment.
Moreover, the respondents agreed that the BRP takes on the role of a leader, having to make
decisions and resolve conflicts. Their tasks include collaboration with stakeholders, dealing with
setbacks and adapting to these accordingly. The findings showed that the respondents of the
questionnaire were in agreement that an effective BRP should display self-awareness,
self-regulation, motivation, social skills and empathy in their tasks. This study developed a
framework of questions that can be used by courts of law to assess the EQ of a BRP upon
appointment. These questions were based on the tasks of the BRP.
The results indicate that EQ is an important contributing factor for a successful BRP.
Therefore, it is recommended that the interview process should include questions that
would assess the level of EQ of the BRP upon appointment. This will help to determine
whether the BRP will be successful in rehabilitating the financially distressed company.
Description
Masters Degree. University of KwaZulu-Natal, Pietermaritzburg.