17 Feb

Measuring Relationships: a route to competitive advantage and reduced risk

Mervyn King

This article originally appeared as a blog on the International Integrated Reporting Council website. It is reposted with permission from the International integrated Reporting Council.

Corporate failures and scandals often have deep relational roots. So too does success, for the essence of any business is to invite people into relationship as investors, customers, employees or suppliers and to make such relationships more valuable. Yet, as the authors of The Relational Lens recently published by Cambridge University Press point out, these relationships are too often like dark matter – the fabric of the universe that passes unseen.

As a global leader on corporate governance and reporting I have advocated since 1994 that in its decision making process a board needs to take account of the legitimate and reasonable needs, interests and expectations (NIE’s) of its primary stakeholders.

Either management must have an ongoing communication with stakeholders or a Corporate Stakeholder Relationship Officer (CSRO) should do so. The CSRO informs management of the stakeholders’ NIE’s and does a written report to the board on the quality of the relationships.  At every board meeting there should be an agenda item “Stakeholder relationships.”  This will result in the board having an oversight which is informed in regard to managements’ proposals on strategy.

The Salz Review into Barclays, the National Commission on the BP Deepwater Horizon Oil Spill, the Inquiry into the death of Victoria Climbie (a major UK public service failure), or indeed the reviews into almost any corporate failure show that weaknesses in relationships between the company and its stakeholders are readily identified after things have gone wrong. But would Volkswagen or Deutsche Bank have landed in their current situations if their internal and external stakeholder relationships had been better founded and managed?  Could the many corporate disasters, of which Enron, Lehmans, Cendant, Worldcom, HealthSouth, Tyco, Qwest Communications, Toshiba, BP and Arthur Andersen are just some of a long litany, have been avoided by a more systematic management of stakeholder relationships?

Restoring confidence in corporate, political and other institutions will require more than clever PR. It requires systematic measurement and reporting on the quality of relationships with all major stakeholders so that companies can take specific steps to address the key issues seriously.

Andy Haldane, Chief Economist at the Bank of England puts it this way in his comments on The Relational Lens: “There is widening acceptance that organizations – large and small, public and private, commercial and charitable – may be failing to meet the needs of their societal stakeholders. This has, in some cases, caused a rupturing of trust, a loss of social licence. This book … equips companies with the tools to begin the slow process of rebuilding trust, relationship by relationship.”

In corporate reporting on social and relational capital, companies have too often resorted simply to recording their CSR spend. With integrated thinking and embedding sustainability issues into a company’s business strategy CSR has become yesterday’s thinking.

The lack of available quantitative measures is perhaps the main reason why the boards of companies, as well as executives and managers, invest so little monetary, temporal and other resources into understanding, managing and measuring relationships with their stakeholders.

A way forward is shown by the new book by John Ashcroft and his colleagues, based on over 20 years of measuring relationships within and between organizations across the public and private sectors, as well as in different parts of the world. They demonstrate persuasively that all relationships operate in 5 domains – communication, time, information, power and purpose. Using these 5 domains will aid the CSRO in carrying out their mandate.

This approach identifies whether the conditions for effective relationships are being put in place and identifying perceptions gaps around the effectiveness of such measures. Looking at the preconditions for relationships serves as a way to assess a leading indicator of risk, focuses on the relational building blocks of such outcomes as trust, accountability or loyalty, identifies the factors that can be managed and changed, as well as enabling more constructive and effective dialogue about the issues identified.

All that makes this book timely, especially for the corporate world.

Here is the framework, here are the tools and the case studies to enable companies to give stakeholder relationships the kind of detailed and systematic attention which will bring an informed understanding to a board about a company’s social capital, and help bridge the divide between financial and social capitals.

‘The Relational Lens: Understanding, Managing and Measuring Stakeholder Relationships’ was published by Cambridge University Press in October 2016. A video of the launch can be found at Relational Analytics.

Author: Professor Mervyn King SC, Chairman, International Integrated Reporting Council

Photo: Mervyn King by Sveriges Kommunikatörer on Flickr.

23 Jun

Orlando: How our Ideology is Killing us

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By Robert Hall – 

He who knows only his own side of the case knows little of that.
John Stuart Mill

Orlando now joins San Bernardino, Paris, Fort Hood and many others. Attempts to understand these atrocities focus on the ideology and theology of the killers – issues around ISIS, radical Islam, and hate crimes. But those issues beg a bigger question. How have our own ideology and theology immobilized our ability to respond? We lament that the enemy does not change their ideology while we steadfastly hold on to ours, leaving us unable to act. In light of that old adage, “It’s not what happens to you, but what you do about it” – we are failing.

It is our country’s own ideological divide that makes many of today’s headlines. Presidential candidate Donald Trump accuses President Obama of stupidity, indifference or “something else.” Obama goes on a tirade denouncing Trump’s statement about Muslims. Trump retorts that Obama is angrier at him than at the Orlando shooter. Our gravest risk is not that terrorism will destroy us but that it will provoke us to destroy ourselves.

We keep asking: When are we going to wake up and take action about – fill-in-the-blank. For some the blank is filled in by stricter gun laws, limits on immigration, more effective mental health programs, or more aggressive police or military action. But as a nation we are immobilized by the depth of our disagreement. Our response is heightened worry, but not heightened action.

Our inability to agree on a holistic, strategic response means that we eventually become a part of the problem – but at least it is a part we can do something about. We have met the enemy and it is not just guns, bad guys, ineffectual military efforts or dysfunctional mental health system. The enemy is also us and our broken relationships that prevent constructive engagement and thus constructive solutions on behalf of future innocent victims. The first one or two incidents – shame on the perpetrator. The last ten, shame on them AND on us and our disabled relationships.

We may not be able to control “them” but what to do about “us”? That should be a different story but it requires leadership.

It is time for leaders and followers to stop asking: How do I convert others to think like me? The more constructive question is: What about your ideology or theology would you be willing to repurpose in order to reach a shared solution that would save lives and save our Union? What would you be willing to concede, not by forfeiting your personal beliefs, but in support of a shared higher-purpose solution for the country.

Until leaders and followers humble ourselves regarding our own imperfect beliefs, we will remain stuck. Let me suggest three keys for thinking more relationally about ideology.

Recognize broken relationships as our greatest long-term risk.
No matter how you disdain violence, loss of innocent lives, and any opposition you consider the enemy – ISIS, gun lobby, religious extremism, immigration policies – we are stuck unless we come together enough to craft solutions.

Years ago General Peter Pace, then Chairman of the Joint Chiefs of Staff commented on the sectarian violence in the midst of the Iraq war:

“If the Iraqi people as a whole decided today that, in my words now, they love their children more than they hate their neighbors…this could come to a quick conclusion.”

If we could decide we love those future people who will be gunned down and blown up more than we hate our fellow citizen’s solutions, that would be the starting point.

Place relationships at the center of ideology and theology. The preamble to the U.S. constitution begins with these words: “We the People of the United States, in Order to form a more perfect Union…”. Our Constitution – the supreme law of the land – seeks union. As a nation of individuals with diverse backgrounds, beliefs, and needs – the founding hope was union and relationship as the best means to serve and benefit from our diversity.

Theologically, we all have beliefs, be they faith-based or secular. I am a Christian and since that is the largest group in this country, let’s start there. In Matthew 22 Christ was asked what is the greatest commandment. His answer was relationship: Love your God with all your heart mind and soul and love your neighbor as yourself. Then he added: All the law and all prophets hang on these. The Bible is the supreme law of Christianity and Christ described the law as a means to a higher purpose – relationship.

To disagree is human. To deploy our differences as weapons trained on each other is self-destructive. Making productive relationships our highest priority is crucial to creating broader, more holistic strategic solutions.

Sacrifice for the purpose of relationship. Sacrifice is the acid test of commitment. If productive relationships represent higher purpose, we must be willing to sacrifice some of our favored ideology if we are to reach common ground with those who have their own favored ideology. Remember John F. Kennedy’s famous question: “Ask not what your country can do for you, but ask what you can do for your country.” Said differently, ask not what you can get others to do for your belief, ask what you can do to “sacrifice” for shared belief that increases safety for all. Assault rifles, immigration policy, more invasive law enforcement — it is a fool’s errand to ask others to sacrifice what they hold sacred if we are unwilling to also. The arrogance of our self-righteousness is daunting – I am righteous and of God and thou art an evil idiot. It is the ideology we disdain in our enemies and it must cheer the hearts of those who would kill us to see its disabling effect on us.

Our enemy’s beliefs and connected actions threaten our safety and our way of life. Our failure to connect our beliefs to the higher purpose of constructive relationships blocks our attempts to respond with holistic, strategic action. It is time to Relationship-up!

This was originally published on 17/06/2016 by the Huffington Post and has been re-published here with the author’s permission.

09 Jun

Relationships and Mental Health

Daughter and father

The Mental Health Foundation have released an excellent report, which you can read here, which sets out further evidence that investing in relationships is at least as important to our health and wellbeing as not smoking. Their argument, like that of Relational Thinking Network, is that  both as a society and as individuals we need urgently to prioritise relationships and tackle the barriers to forming them.

The importance of relationships for health

Looking at a range of evidence, the authors show that people who are more socially connected to family, friends, or their community are happier, physically healthier and live longer than people who are less well connected.

Indeed, a review of 148 studies concluded that:

the influence of social relationships on the risk of death are comparable with well-established risk factors for mortality such as smoking and alcohol consumption and exceed the influence of other risk factors such as physical inactivity and obesity.

They make reference to a longitudinal Harvard study, that began in 1938 and published in the 2012 book ‘Triumphs of Experience’, that found that that relationships are the most important factors for health and happiness.

Factors causing relationship problems

The report discusses a number of inter-related factors that negatively affect relationships. For example:

  • Moving away from one’s hometown, family and friends can have a very real impact on our relationships. Moving means having to adapt to a new physical and social environment. Studies suggest that one of the biggest challenges facing individuals when they move is building relationships and connecting with others.
  • Social media and other online technologies have many positives. However, the report notes that almost half of internet uses in the UK reported that the internet had not increased their contact with friends or family who had moved away.

Indeed, while they have increase our sense of belonging, online relationships cannot replace our offline relationships.

The neurochemical response that occurs during face-to-face interactions contributes to our sense of connection, understanding and ultimately wellbeing. In other words, face-to-face communication still matters.

  • Bullying can have a negative effect on people’s health. Conversely a positive experience at school, particularly with teachers, can “act as a buffer and help protect young people during this difficult time.” This is something that Relational Schools has been researching on.
  • Loneliness and isolation are a significant issue for older people. See an earlier blog post we wrote about this here.

Actions to be taken

The report ends by calling, as the Relational Thinking Network has done, for “a sea change in thinking”. We need to not only recognise the importance of relationships, (which we instinctively do), but that we take an active approach in the way we build and maintain relationships, and to tackle the barriers that prevents strong relationships from being built.

 

24 Mar

The Toughest Testing Ground – Relational Risk and Peace

Peace

War zones and regions of inter-community tension and civic unrest are, almost by definition, high in Relational Risk. But how does Relational Risk help us not only understand instability but also find solutions in places like Ireland?

Watch below to see Pádraig Ó Tuama speak powerfully on relationships and peace. Pádraig is the Corrymeela Community leader and brings interests in poetry, language, theology and conflict to his work. You can find out more about Pádraig here.

Image: Peace (By Tessi on Flickr)

01 May

Brave enough to challenge your boss?

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Many will recognize it: the fear of speaking up to point out a mistake of someone senior to us. But this lack of ‘parity’ (power balance), which prevents us from speaking up, can have destructive consequences.

In 1977, two planes collided at Tenerife airport killing 583 people, making it the deadliest accident in aviation history. There were numerous factors contributing to the crash, but perhaps the most fundamental reason is that Captain Veldhuyzen van Zanten decided to take off without clearance from Air Traffic Control. The more junior first officer and flight engineer spotted this mistake but were hesitant to speak up against him.

The fundamental problem was a lack of parity in the relationship between the pilot and the first officer and flight engineers. These junior co-pilots were powerless to question the actions of the Captain. In the airline industry at the time, there was a culture of ‘the pilot is always right’. Furthermore, Captain Veldhuyzen van Zanten was one of the most respected pilots in the airline and had recently trained the pilots himself.

The significant disparity in the relationships in the cockpit meant warning voices weren’t heard and thus the tragic accident happened. Since then new training procedures, known as crew resource management, have been brought in to enable junior staff to speak up to more senior staff, including pilots, if they believe they have made a mistake.

The airline industry know that parity reduces risk. And so does the medical industry. For example, when some young children died during heart operations at a Bristol hospital it was found that nurses were unable to make their concerns heard.

As a result, pilots have been helping to train medical staff to stand up to their bosses. It is hoped this training will give doctors and nurses the boldness and language to challenge more senior staff when they believe a mistake has been made. Strong relationships with parity of power between staff reduce risk. When the balance is right, junior staff can question a senior colleague if they believe they are making a mistake.

When power is fairly used it increases organisational effectiveness. It empowers the effective participation of all involved which causes achievement to increase because it enables the contributions of others in time, skills and knowledge.

Parity is fundamental for interpersonal relationships to flourish. However disparity can reduce respect. This might mean failing to recognise a company’s history or working practices, or it might simply lead to bullying.

Through tragic accidents, the airline industry and the medical industry have been able to learn the importance of parity and the importance of effective relationships between colleagues and therefore equip staff to avoid future accidents. However, for many people, communities and organisations, there is a complete lack of awareness of the significant problems that can be caused by disparity. Yet, as the airline and medical industries have shown, the risk is great. Get parity wrong in a relationship, and the effects can be devastating.

Read more about ‘Parity’ and how it affects relationships here and here. For Partners of the Network more documents can be found in the Resource Hub in the Partner Section of the website.

Also, if you are interested in topic, why not come to our ANNUAL CONFERENCE where we will be exploring what happens when relationships are stressed and damaged, and what kind of risks organizations are exposed to through the relationships they depend on.

03 Mar

Relational Thinking International Conference: Relational Risk & Sustainability

Cambridge

This years Relational Thinking conference will bring together thinkers and practitioners from around the world to look at the issue of Relational Risk; how it manifests itself in different contexts and how we can learn to manage and build with it: from business to the environment and from international relations to communities.

We’re pleased to announce that the following speakers are confirmed for our annual conference:

  • Professor Bob White (Professor of Geophysics in the Department of Earth Sciences at Cambridge)
  • Dr. Ted Malloch (Research Fellow at the SAID Business School and former US Ambassador to the World Trade Organization),
  • Dato Dr Kim Tan (Scientist and investor), and
  • Mrs Beris Gwynne (Director Global Advocacy, World Vision).

Conference registration will be up very soon on our website, so watch this space!

RTN Conference

 

05 Nov

Relational Thinking™ International Conference 2015

CambridgeSquare

CAMBRIDGE – After the successful Relational Thinking™ conference earlier this year in South Africa, we’ve started to prepare for next year’s International Conference. We’re excited to announce that the theme will be Relational Risk & Sustainability: Building strong companies, organisations and communities.

In a time where the world faces a variety of challenges on many different levels, relational risk surfaces in almost every area, from schools to healthcare to business to family.

Please note the dates in your diary – it will be from 16-18 September 2015 in Cambridge, UK.

More news will follow in due course, so watch this space.

Hope to see you all there!