You Are Not A True Leader Without Relationship Capital
Traditional command and control leadership is not elevating employee engagement, performance, and workplace culture. It is now a barrier to a company achieving its mission as well as financial goals. Let me make a compelling case for what we call Relationship Capital Leadership and why it is important.
Character and Competence
Stephen M.R. Covey, author of the Speed of Trust talked about trust being necessary for two main areas. He called it character and competence. Competence is the same as ability. You have to have both in anything significant. You can believe that this person has wonderful competence in that they know what they are doing, but if they don’t have character, the chances are you are not going to buy from them, you are not going to follow them, you are not going to join them. You are not going to do anything significant with this person. They have competence, but not moral character. On the other hand, you can see they have unquestioned character. Their character is beyond reproach, but if they don’t have competence in anything significant, you are not going to do any business with them. You are not going to buy from them; you are not going to follow them, etc. So both character and competence are important.
Now when it comes to competence and character and the importance of trust, I think that both are important. But one has more perceived value. I think actual value and that’s character. Why? I believe that today when I speak to audiences of 50 to 15,000, I ask how many of you truly believe by a show of hands that we now live in a “low-trust” society? Pretty much everyone raises their hand. I do not think that people are any more or any less trustworthy than they ever were. I think there have always been people who are pretty trustworthy or even amazingly trustworthy. It is a sliding scale. And then there are some that are not trustworthy and never will be. But I think that today there is a perception today of low trust. A lot of that is because of the way people think.
It does not sell papers or the news to say “CEO Acted Ethically”. People tend to believe what they see. Because we have more media now and more ways of distributing these kinds of negative stories, it paints a picture of a lack of trustworthiness. The good news is a person who can quickly and effectively establish their trustworthiness, are 9 steps ahead of a 10-step game.
The measurement of a person’s Relationship Capital (RC) is a results-oriented process. Declaring and keeping commitments is fundamental to earning RC and high-performing leaders and businesses have always understood this. The difference today is the hyper-connected and transparent social world we are in, the speed by which other’s perceptions of you, your product/service, or business is not only very fast but is amplified by brand advocates “word of mouth”.
Characteristics of Relationship Capital Leaders
Relationship Capital Leadership, in its simplest terms, is understanding and doing what is right. The difficulty is in defining “right.” Different individuals, different cultures, and different religions define it in different ways. The general treatment of women and mindsets toward slavery in different cultures during different times in history provides prime examples of how what’s “right” can vary.
Relationship Capital leaders distinguish themselves by doing that which may be difficult, disliked, and even unprofitable in the short-term for the creation of long-term vitality and value. They view the world as interconnected and develop end-to-end solutions to address complex problems that appear in the course of business operations. Rather than routinely extending payment terms to a supplier during economic downturns, ethical leaders study the financial strength of the supplier and/or partner, possible negative impacts to the supplier (as well as to the supplier’s employees and its suppliers — and to the company itself) if payment terms are lengthened.
Relationship Capital business leaders also consider other solutions (e.g., sharing best practices with suppliers and partners) that may require an investment but generate more value over the long term. “RC leaders” extend relationship capital trust to their employees, creating an empowering environment necessary to enable employees, suppliers, partners, and even customers to take the required risks to produce breakthrough innovations. For example, the Ritz-Carlton’s leadership team authorizes each employee to spend up to $2,000 to resolve customer issues at his or her own judgment.
What’s more, Relationship Capital leadership is a renewable human resource and, for this reason, represents one of the most efficient and practical assets an organization can put to use.
What is Relationship Capital Credibility?
Peer SaaS is an HR technology platform that captures, measures, and manages p2p commitments & appreciation that a person makes to another person in a social interaction. The objective of the Relationship Capital (RC) mindset is to build a more engaged & committed organizational culture as well as it’s ecosystem of clients, suppliers, and partners. A social business of purpose, performance, and relationship capital credibility.
By accounting for fulfilled commitments and appreciation, you can better manage this intangible asset that is critical to the success of high-performing businesses. Each employee, partner, supplier and/or client that participates in the Relationship Capital Interaction process registers for a Peer SaaS User Account or RCA by which RC is credited or debited.
Relationship Capital is Earned:
1. Completed Commitment Submittal
You can accept a commitment request or negotiate and make a commitment to another person. When you submit that commitment as completed you receive Relationship Capital Points or “RCPs”.
2. Commitment Feedback
After the Commitment Maker submits the commitment as completed. The Commitment Requester answers 5 questions from 1 to 5 ⭐️’s.
3. Appreciation/Recognition Badges
Any person you are connected to on the Peer SaaS platform is eligible to give or receive Peer Appreciation “Badges”.
What are badges or rewards?
Badges are focused on various ways people may go above and beyond the normal relationship, here are the current 10 badges available & the relationship capital points (RCPs) given:
- SUPER CLIPPER (5 RCPs) — This badge is intended for use when someone within your community has provided a picture, article or some information via email, phone or text and you want to recognize that action.
- BUILDING BLOCK (10 RCPs) — This badge is intended for use when someone within your community has provided a key piece of a new project or contract. Can be informed via email, phone or text and you want to recognize that action.
- SUPER SCORE (15 RCPs) — Congratulatory Badge for achieving 5 stars or a great feedback on a completed commitment where the Maker performed over and above. Could be any member of your community that scored a new client or customer.
- MAGIC WAND (20 RCPs) — Badge intended for any action where a person seems to have pulled off a minor miracle.
- IDEATION (25 RCPs) — This badge is for any person who has provided input, thoughts or guidance on an existing problem that needed a fix.
- COLLABORATION (30 RCPs) — A badge that acknowledges those on a team within your community where they have done well working together.
- CREATIVITY (35 RCPs) — Intended where a person in your community provided a really creative approach, solution or methodology.
- COMMUNICATIONS (40 RCPs) — Provided to people within your community where they have demonstrated above average communication skills.
- ARTISTIC PRESENTATION (45RCPs) — Available for actions by people who have provided a creative and artistic presentation platform for clients, peer or management.
- INNOVATION (50 RCPs) — This reserved for anyone who has demonstrated extraordinary ideas, thought leadership or methodology expansion for the good of the group.
- THE HIGH FIVE (0 RCPs) — This is a general pat on the back badge that allows you to express thanks for a job well done without any points, just a sincere thanks. Mid-term accolades for example.
The giver is responsible for defining the parameters and conveying this to the receiver. There is a limit of one badge per month per recipient. We do this to help people focus on the reason for the badge rather than the number.
From Relationship Capital to CRI
The Credibility Reliability Index (CRI) is a measurement that was developed as part of the Peer SaaS platform to establish a basis for understanding trust and focus on being trustworthy. The basic premise is, the more commitments you successfully keep the more reliable you will be and hence more trustworthy.
CRI is a score of your reliability, much as FICO is. The higher the CRI score, the more reliable the individual or company is to deliver on their commitments- the lower the score, the less reliable they are.
How is CRI calculated?
A Credibility Reliability Index (CRI) is a measurement that was developed as part of the PE-ER platform to establish a basis for understanding trust and focus on being trustworthy. The basic premise is, the more commitments you successfully keep the more reliable you will be and hence more trustworthy.
Therefore, it’s really quite simple. The higher the Credibility Reliability Index score, the more reliable the individual or company is to deliver on their commitments- the lower the score, the less reliable they are.
As a guideline, the Credibility Reliability Index figure is calculated as a combination of:
- The number of commitments you met or exceeded on the timeline,
- The number of commitments that you missed delivery on,
- The total number of points available for commitments requested
- The feedback scores received on all completed commitments
So it’s not simply a case of recording how many commitments you make — it’s much more comprehensive than that and the data is constantly updated.
Not all commitments are present in the CRI — only when you and your collaborative partner have determined that a particular commitment has sufficient visibility and value to warrant tracking does it become data reality. However, the more commitments tracked successfully the better the integrity of the Index.
It is our thought that once you have developed a habit of completing high visibility, high-value commitments well, then the small commitments become second nature and improve also. If you try to track every commitment you make in a day, you will find yourself buried in a morass of detail that will cause you to lose focus and destroy your productivity. It is all about balance.
A commitment is formed by type, due date, priority, and expectations. This ensures that no single commitment can unduly influence a maker’s overall Index figure.
Another thing to bear in mind when reviewing an individual’s CRI score is that it can be dependent on the diligence and discipline of each partner in terms of recording correctly. I like to refer people to the acronym: F.D.A. or Full Disclosure Always when it comes to building commitments.
Business Benefits of Relationship Capital Leadership
Anything you want more of or less of in an organization improves when you build higher levels of relationship capital with your stakeholders. You get more risk-taking that generate more innovation that results in greater financial performance. And it all starts with TRUST and Relationship Capital (RC) is the metric that accounts for it. The image just is based on research data from LRN (Dov Seidman’s company) based on research conducted in 18 countries and millions of observations:
Conclusion
The emerging world of social business makes interactions and behavior transparent for all to see and judge. It will be these judgments or perceptions that will have a profound impact on your organization’s culture and level of trust. In fact, these perceptions have always been critical in offline business, but it is through the implementation of open standards of Relationship Capital (RC) and the sharing of these perceptions across social media that will reveal your cultural behavior and guiding principles.
Relationship Capital (RC) is earned by an individual or team
- Declared Commitments/Values: What a company or individual promises or declared its values.
- Reputation: What people think the organization or individual is.
- Behavior: How an organization or individual truly acts toward the customers and the stakeholders it serves.
Partly because of digital and social technologies, reputational risk and its effect on business sustainability have started the transformational shift of traditional leadership signified by command & control power to that of influence, trust, and credibility. There will be growing demand for a global ecosystem of Relationship Capital (RC) education, training, and implementation services working with business leaders, employees, suppliers, and partners in implementing the standards and best practices. In a for-profit business, A true leader is about integrating results and relationships not one over the other; and that requires earning relationship capital.
