Relationships

Personal relationships are the important thing for ever and ever, and not this outer life of telegrams and anger. E. M. Forster

Relationships may be of a non-commercial nature, such as that with the local newspaper, chamber of commerce, local community groups or trade associations. Others may be subject to formal contracts with customers, suppliers and partners. Yet other relationships may be due to statutory or legal requirements such as with local government or the tax authorities.

Relationships can be crucial: A single contract may be crucial to the operation of the organization as in the case of a football club which is sponsored by a single company. The organization which promotes Formula 1 motor racing owns no racing circuits, cars or drivers - its critical asset is the right to negotiate contracts with television companies for screening the races. One of the most valuable assets of British Airways is the agreement it has for the number of take-off and landing slots at London’s Heathrow airport. Other airlines are prepared to pay millions of dollars to have the right to use just one of these daily slots!  The relationship that firms have with their customers is sometimes valued as ‘goodwill’ when the organization is sold.

Networking: Networking, that is developing relationships both inside and outside an organization, is seen as being increasingly important. It is the responsibility of senior managers to make sure that there are productive relationships with external organizations and also between the organization's own internal departments. In many countries there are various government sponsored groups which have been set up to assist organizations in the area of external contacts, and members are able to meet with others in business, the arts, science, the media, politics and academia to exchange ideas.

Maintaining relationships: The Royal Mail calculates that it costs six times more to establish a relationship with a new customer than to maintain an existing one. Relationships have to be maintained, nurtured and developed and time should not be wasted on unproductive ones or those which are too one-sided against the organization. Care should be taken that long-standing relationships are not taken for granted, for example, when discounts are only given to new customers!  There are some organizations where personal relationships are key. A particular hair stylist may attract custom to a salon with some customers always asking for  'Chris'. However, if Chris leaves the salon, the customers will follow suit to the new employer. >>>