THE VALUE OF RELATIONSHIP CAPITAL

New ventures put much of their energy into securing financial capital; money to invest in fixed assets on the one hand and working capital on the other. While conventional accounting takes little account of relational capital, in all orginisations it is the foundation of their strength and distinctiveness. The concept of relational capital is used to capture the quality of relationships within which economic exchanges take place and it is on the range and depth of its relationships that an organisation’s fortunes depend. Relational capital comprises the knowledge and trust built up between an orginisation, its users and suppliers, and the relationships established between an orginisation and its staff and/or circle of volunteers. 

These relationships are multifaceted; they include the nature of its connections to users, investors, suppliers, distributors and its own staff, board and volunteers. With many of them there will be formal agreements, but whereas in the private market economy relationships take place across a territory demarcated by the interests and boundaries of private property and contract, for a social venture the boundaries are more porous and internal and external interests mesh. An organisation’s ability to motivate from within and attract support and resources from outside itself on the basis of its ideas and the way it works to realise them, is a tremendous asset, but creates particular issues for management.

Even the smallest companies deal with people, and being a successful business owner requires having good interpersonal skills. It is important to build strong relationships — not only with clients and customers, but also with employees. In fact, your success may hinge on how you navigate these relationships. Making a business successful is a group effort. As the lead operator in your business, it is up to you to ensure that each employee understands the importance of their role in making the business successful. 

Studies have repeatedly shown that business environments with high levels of trust foster significantly more creative and productive employees which, in turn, drives business profits. Therefore, make trustworthiness a top priority in your company. When employees rely on and have confidence in their superior(s) and their colleagues, they will feel more comfortable sharing their ideas and concerns. The result is an increased focus on common goals and teamwork. 

Treat every employee with respect and consideration, regardless of their status within the business. Listen to what they think and feel, then show them that you’ve listened by taking action based on their input. Even if you don’t agree with them, never announce so in a team setting. Honest and open communication encourages respect and mutual respect will engender trust. 

Employees will respect you more if you’re candid about your strengths and weaknesses. Your employees are looking for a leader and a mentor, not a superhero or a robot. Admitting to an employee when they are stronger at a task than you are will encourage them to do their best. 

If you promised someone a day off in exchange for overtime, it is your responsibility and obligation to give it to them when they ask for it. Staying true to your word is one of the best ways to build trust; breaking your word is one of the surest ways to erode trust. 

When employees know they can depend on management’s integrity, their trust and faith in the company as a whole grows. Employees want to have confidence and faith in their employer and the company, and they will work harder when they do. As a business owner, it’s your job to stand behind your employees. 

When your employees understand that you care about their wellbeing, a bond will form. Do your best to exhibit goodwill and patience, to show tolerance and strive to be a good teacher and communicator. By leading with your heart and supporting your employees throughout the workday and beyond, chances are good that your business, and you, will profit. 

Consider it your obligation to provide an interesting work environment and professional growth opportunities for your employees. Encouraging them to continue their education or professional development shows your support. 

Take a sincere interest in your employees, their professional goals, their families, their personal hobbies, and their passions. When employees feel that you’re truly interested in them, they’ll be far more dedicated to their work and to the company’s success. 

You can never express too much appreciation for the work your employees do; a simple ‘thank you’ is a great motivator. Be specific in your praise, zeroing in on something they did for a particular client or job assignment. 

Strive to keep the lines of communication between you and your staff open. Many successful managers make it a point to regularly solicit their employees for ideas and to ask after their concerns. You never know what you may learn, what novel idea someone may have, or how this simple gesture may benefit your business.