The Future of Leadership Development (Applied Psychology Series) by Unknown

Author:Unknown
Language: eng
Format: mobi
Publisher: Taylor and Francis
Published: 2003-09-11T14:00:00+00:00

MAKING THE CASE FOR RELATIONSHIPS: THE VALUE OF SOCIAL CAPITAL

As organizations continue to face challenges and demands from external environments, effective work relationships will no longer be an option but a critical source of competitive advantage (Bouty, 2000; Brass & Krackhardt, 1999; Drath, 1998; McCall, 1998; Uhl-Bien et al., 2000). This is largely due to the social capital that effective relationships generate. Social capital is derived through the social structure of the organization and facilitates the actions of individuals within the larger organizational framework (Nahapiet & Ghoshal, 1998). This capital generates resources through networks of mutual acquaintance and recognition (Uhl-Bien et al., 2000; Whitener, 2000). In contrast to human capital, which is a quality of individuals (e.g., KSAs: knowledge, skills, and abilities), social capital is a quality created among people. Social capital comes from the assets created and leveraged from interpersonal relationships developed through a history of interactions among individuals (Bordieu, 1986). Therefore, we cannot consider employees’ knowledge, skills, and abilities as human capital until we recognize that their contributions to firm performance depend on how they interact with one another through interpersonal relationships.

Despite this, as a theoretical domain in the management literature, interpersonal work relationships have not received as much attention as they should (Nahapiet & Ghoshal, 1998; Uhl-Bien et al., 2000). Interpersonal relationships are often considered as variables in management research, but work relationships have not emerged as a dominant field of inquiry in organizational behavior study (Graen & Uhl-Bien, 1995; Hollander & Offermann, 1990). In the human resource (HR) literature, relationships have hardly been mentioned at all. For example, Schuler and MacMillan (1984) argued that companies that systematically plan with their human resources in mind are most likely to gain a competitive advantage by having “the right people at the right place in the right time” to produce quality products efficiently. This focus on individuals, however, does not address the fact that within organizations people do not act in isolation. To more accurately reflect leadership and HR functioning, we must realign our focus toward the “right people at the right place in the right time with the right relationships.”

The value of a relational focus is shown by research examining the positive benefits of high-quality manager–subordinate relationships on work-related outcomes. Mayfield and Mayfield (1996) showed that performance is about 20% higher and satisfaction about 50% higher for subordinates who have higher quality relationships with their supervisors than subordinates with lower quality relationships. More importantly, low-quality relationships can present tremendous costs to organizations (Gerstner & Day, 1997), with employees in lower quality relationships tending to quit after approximately 12 months, costing the organization training and recruitment expenses (Mayfield & Mayfield, 1998). Employees in higher quality relationship move on for promotions within the same firm.

A focus on relationships, therefore, represents a largely untapped opportunity to improve firm performance. To understand how to capitalize on this opportunity, we must first understand what leadership is and how it is linked to relationships.

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