The Power Of Relationships

As you all know I agree with Margaret Wheatley that the most important influence in organizations is relationships; not systems, not technology, but relationships.

I had the occasion to join a friend last evening with a friend and colleague of his I hadn't previously met. I found his friend to be charming, personable and very articulate. As our discussion turned to the inevitable " so what business are you in", he said that he worked for an organization that distributes a pharmaceutical type of product that is manufactured in Europe. What was especially interesting was that he shared their "distribution" network was almost exclusively based on relationship selling; no large sales force , no "cold calling". It is based on trust and referral.

A week or so ago I mentioned an article by Jeffrey Pfeffer of Stanford. He opined that much of the issue with health care in the United States is in many ways relationship based; most Americans rely on their employer for health care and for economic security. Compared to other countries our "safety net" is pretty small. He talked about the effects of stress about their employment and the accompanying systems like health care tied to employment and the direct correlation to health care issues. I agree with him.

I read some articles and listened to a couple of "idea casts" on BNET this week that illustrated the same thing from a different angle- the relationship between employees and leaders and how in these times especially employees watch their leaders for any sign of positive or negative events or signs. They do that normally, but in these times it is exacerbated to the nth degree. Marcus Buckingham says the most important attribute of leadership is clarity- people want to believe their leaders have a vision.

My own personal research validates information published by Peppers and Rogers, BlessingWhite, Gallup, and others about the power of engagement. I am talking about true engagement which includes customer, employee, shareholder, and stakeholder. Organization's with high engagement outperform their competitors consistently and by an order of magnitude. Engagement is about relationships.

I have written and spoken a lot lately about social networks and their increasing importance in communications strategy. I believe that social networking is about relationships.

I have also written and spoken about the "social contract". In historical times the poor were tied to the wealthy. They literally "belonged" to the property or estate for hundreds of years. The American "experiment" was all about eliminating that. You could come here and reinvent yourself.
You could homestead a piece of property of start a business. Then we ran out of frontier. Consistent with the rest of the world the Industrial revolution occurred. We exchanged the value of personal competence for the promise of "security" in return for "obedience" The power of the great capitalist was tempered only by the labor movement. That was about relationships,
however dysfunctional.

The "world" economy changed that social contract. American industry was not always dominant, our quality suffered and correspondingly so did our market share. Interestingly much of the "new" management models like lean manufacturing and TQM have very strong relationship components to them. U.S. companies retreated from economic security in return for "loyalty". Traditional pension plans are almost obsolete. The parental relationship between employers and employed relative to health care is in crisis mode. Our health care model is parental. We don't address root causes of costs, we shift them around. People don't want to share responsibility for their health or the costs of treating them. That is a relationship, although another dysfunctional one.

I am not suggesting that a "parental" model is appropriate. Anybody that has ever heard me speak, worked with me, or read any of my writing knows better. I rather like the concept of "personal competence" and relationships founded on mutual respect and honesty between employer and employed, taxpayer and government, supplier and customer, and individuals. A relationship based on respect, information, and mutual responsibility and built on a foundation of trust. Maybe I am just nostalgic or misguided, but I think that is what the Founding Fathers meant so many years ago when they formed this country.

Tomorrow is Independence Day, maybe a good day to reflect on what they meant and the critical relationships in each of our lives. I think that is what I'll do, how about you?

Negotiating the Rapids

Well it has been another interesting week. The market is lower, some folks are already declaring the stimulus package a failure (I think it's a little premature) and businesses and people are very nervous.
The next few months are what I am referring to as the rapids. We are going to be facing challenges that we haven't faced before and how we navigate has long term implications. Here are some of my thoughts:

• Act, don't react. Many organizations are going to look at rapidly softening markets and look for actions to take. Action is good as long as there is thought around it. Organizations will be in a position of looking at their staffing requirements, marketing expenditures, training, etc . In our service economy "payroll" is one of our largest expenses. It is necessary and appropriate to adjust our workforce from time to time. Do it carefully and methodically. Things like across the board cuts, hiring freezes, etc. are all tactics. Be sure they are the right ones. If you don't have a strong performance management and measurement methodology now might be a real good time to implement one.
• Clarity is king. I have quoted Marcus Buckingham multiple times on the most important role of leadership as being clear. At times like these the need for clear confident leadership becomes even more critical. Your employees are going to want to know that you see a future, that there is a plan.
• Involve your team. This is a time when a management team can really gel or come apart. I believe that when we are making critical decisions we need to involve all levels of management. You don't have to involve them in the same way, but retreating to a place where you make all the decisions or in larger organizations all the decisions are made at the C level does a couple of things, neither of them positive. Number one, it says we don't think you are smart or competent enough to participate. Number two, it puts them in a position where they can not explain or share accountability for the decisions that are made.
• Make adjustments to your budgets and your staff surgically. I talked with a client this morning who is struggling because they reduced the majority of their "production" staff earlier. Now they have brought in some significant orders and are struggling to meet their commitments because they don't have the staff. You may have a situation where you literally need to add staff in one area while reducing in another.
• Think before you slash training or marketing budgets. One of the first casualties I see in many downturns is training followed by marketing. My concern in this area is that as I have written previously less 30% of the organizations in the world have what could be labeled high engagement workforces. The most important part of high engagement is trust and communications. We don't do a good job of teaching that in our colleges and B schools. We need managers who are highly capable in that area. You also send a message to your high performers that you are reducing investment in their skills development and potential. Similarly with marketing if you are not looking for "blue ocean" or refining products where is your future business going to come from? I have seen organizations so consumed with a downturn or a singular initiative that they "take their eye of the ball" in other areas. The world doesn't stop, your competitors are monitoring your vulnerabilities.
• Play your game. I wrote a piece last week where I talked about best practices among other sacred cows. They may be best practices- for somebody else! Don't blindly follow "what we have always done" or "the industry best practices". This way sound overly simplistic, but after the second guy implements it, it isn't the best practice any more; it is the standard practice.

I am an optimist by nature an explorer if you will. I believe that this downturn may be the catalyst to make us re-examine many things that we have done and change them.

I have written a lot about personal competency. Personal competency is the idea that employee and employer are partners in achieving organizational and individual goals. This downturn is making us realize that our current model of corporate codependency where we "take care of employees" can't continue. Corporate America can't fund it and neither can the government. People are going to have to get involved with decisions about their health care, their retirement, and their future. Trickle down economics didn't trickle down.

I find it somewhat interesting how outraged some politicians are about the stimulus program, but they didn't say much about our "investments" in the wars in Iraq and Afghanistan

So, wear your life jacket, plot your course and you will survive this trip!