7 months, 24 days ago

The relationship is the asset

Link: http://weblog.tetradian.com/2018/04/19/the-relationship-is-the-asset/

“Our people are our greatest asset!”

How often have you heard that phrase? How often have you used that phrase yourself? But how often have you stopped to think about what it means? – and what it implies in real business practice?

No doubt it’s intended as a compliment, a statement of collective pride and purpose. Yet this well-meant platitude can conceal a fundamental flaw in business reasoning – a flaw so serious that it can easily destroy an entire enterprise. The key is that it all depends on what we mean by ‘asset’ – which in turn depends on what we mean by ‘ownership’.

An asset is an item of value that is owned. Yet there are two fundamentally different concepts of ownership: possession, and responsibility. In most common usage – especially in business – it’s the former meaning that applies: to ‘own’ something is to possess it; “possession is nine-tenths of the law”, and suchlike expressions.

Which is a problem. If ‘our’ implies possession, and we then say “Our people are our greatest asset”, it becomes all too easy to view people as assets that we possess. Objects – or subjects, perhaps – that we have an inherent, inalienable right to exploit in any way we need, just as with any other asset. That way madness lies…

The only time that people are ‘assets’ is when they are slaves. So to describe people as ‘assets’ is not a compliment: it’s more like an insult, an overt declaration of intent to enslave. Not exactly a wise move in present-day business – especially if we need the continued commitment, collaboration and cooperation of those people in the collective enterprise. People are not assets. Repeat it again: people are not assets – ever.

Yet there is a real asset there; and it’s one that does need our active promotion and protection, just as with any other business asset. To get there, though, we need to do some serious sidewise thinking.

First, drop the idea that ownership equates to possession: in this context at least, it doesn’t, and it can’t. The only kind of ownership that works here is responsibility-based: to ‘own’ something is to acknowledge and act on one’s personal responsibilities to, toward and for that ‘something’.

Next, we move back up one step. The person is not the asset: it is the relationship with that person that is the asset.

The relationship is the asset. Or rather, there are two distinct forms of relationship here that are ‘the asset’: the links between people and the collective – the enterprise, the corporation, business-unit, department, work-team – and the specific person-to-person links between individuals. (One illustration of this distinction is the phrase “people join companies and leave people”: they create a relationship that is an asset they share with the company, but leave because person-to-person relationships with others in the company – an overly-demanding manager, for example, or a bullying co-worker – have changed from positive-value assets to negative-value liabilities.)

These assets are fundamentally different from physical assets (conventional ‘property’) and virtual assets (‘intellectual property’). Not only can they never be ‘possessed’ as such, but they actually exist only as responsibilities, in the sense of ‘response-ability’. In both cases, they’re strongly dependent on feelings – probably far more so than anything concrete, in fact. The relationship with the collective is an odd kind of ‘one-way’ link from the person to the company or whatever, which depends on abstract feelings about reputation and ‘belonging’ and the like; there is nothing that we within the company can do directly to change that (though a great deal that we can do indirectly to change it – especially if we’re not aware of the relational impact of what we do and don’t do). The person-to-person link is more direct, often literally visceral, and importantly depends on the responsibility of both parties to maintain it: if either party drops their end of the relationship, the link is lost.

People only become ‘our’ people when those relationships exist: abstract links with the shared enterprise, and personal links with the other people in the enterprise with whom they interact. The connection with the enterprise – and hence the ability to engage in and contribute to the enterprise – depends almost entirely on the strength of those relationships. Physical presence may mean almost nothing: ‘presenteeism’ is endemic in most large organisations. Likewise virtual presence: as the dot-com debacle demonstrated all too well, ‘eye-balls’ do not automatically equate to actual sales. It’s only when people are emotionally present that things start to happen: and they can only be emotionally present if the relationships exist to enable them to do so.

The relationship is the asset.

So treat it as an asset. Exactly like any other business asset:

  • how do you measure the value of the asset?
  • how do you convert a liability (negative-value) to an asset (positive-value), and prevent an asset from becoming a liability?
  • how do you monitor depreciation, wear, and other forms of erosion of value of the asset?
  • how do you maintain the asset itself, in order to maintain the value of the asset?

You already do much of this in a sales-development process, from prospect to contact to pre-sales to sales-point to after-sales to maintenance and follow-up. A continuing sales-relationship is a high-value asset, as long as it remains of value to both parties. (That last point is where many so-called ‘customer-relationship management’ systems will fail: they only check the value from the company’s perspective, not the clients’, and hence pester ‘high-value’ clients to the extent that the latter will drop the relationship from their end – a fact that will not, however, be noticed by the system, because it has no means to do so.) Note though, that this only works if we take a responsibility-based approach to the asset: the moment we think that we ‘possess’ the customer is where it all starts to go horribly wrong…

The same is true for employee-relationships. People are not assets: the assets are the relationships through which employees feel themselves to belong as ‘our people’. To be ‘our’, to be a member of ‘us’, is a relationship with and as one of ‘us’. The relationship is the asset through which we connect with ‘our people’, through which employees are ‘our people’. So how do you measure that asset? How do you measure its value? – because if you don’t measure the value, from both directions, you have no means to identify when that asset is at risk of becoming a liability. How do you monitor changes in that value? How do you monitor potential and actual depreciation and wear? What actions do you take to maintain the asset, and the value of that asset? Much as for virtual-assets, how are these relational assets created, reviewed, updated, destroyed? – and why and for what purpose would you do each of these actions?

And there are other, more subtle issues around those two different types of relational assets: person-to-person, versus person-to-collective. The purpose of a brand, for example, is to provide an anchor for the latter type of asset: without the brand, or some other means to identify (and identify with) the collective, the only relationships that people can have with a company or other collective will be person-to-person. A key concern of personal-service firms, for example, is to link customer-relationships with the company rather than with the person providing the service – otherwise if and when that person moves on, the company’s nominal relationships with clients will move with the person, rather than remain with the company. In a similar way, if a manager or co-worker damages or destroys a person-to-person relationship with an employee – such as through bullying, for example – the employee probably move on; but whilst the person-to-person connection then ceases to exist, the company is left with an active liability in terms of damage to reputation and other aspects of that person’s relational link with the collective – which may well fester and infect others’ relationships with the company if nothing is done to repair the damage. The opposite is true, too: good reputation extends itself, virally, automatically helping to create high-value relational-assets without additional direct effort by the company and its representatives. Relationships are assets; relationships matter.

So make a habit, perhaps, to view relationships as assets, in exactly the same way as any other asset. Employees, customers, shareholders, everyone else: no person is an asset. Ever. But every relationship with those people is an asset. And if we fail to take care of that asset, it risks becoming a liability that can drag us down – just as with every other type of asset. The asset is the relationship – and, as an asset, it’s always our reponsibility to maintain it.

People are not assets: it is the relationship with each person that is the asset.

The asset is the relationship – not the person.

(Topic suggested by comments in an article on business-storytelling by Peter Bregman, on the Harvard Business website: “A good way to change corporate culture”.)


[Note: This post was originally published on my now-defunct Sidewise blog on 12 July 2009 as ‘The relationship is the asset’. I’m republishing it here because it’s still very much relevant to whole-enterprise architecture and the like. I’ve had to do some very minor re-edits to remove references to other now-inaccessible posts on that now-defunct website.]