Written by Chris Smith, Ph.D.
I’ve worked with hundreds of successful leaders, and I get a common question: “I get that relationships are important, but what’s the ROI?”
To answer this very important question, consider that the goal is not just minimizing negative outcomes; the goal is also maximizing positive outcomes and creating new opportunities. By focusing on relationships, leaders can increase efficiency, decrease expenses, and identify opportunities to achieve other positive measures of organizational success.
Let’s start with one of the key metrics demonstrating the significant ROI of strong workplace relationships: retention. One thing we know from experience and research is that when stronger workplace relationships exist, retention increases. Research demonstrates a significant relationship between executive connection and intent to quit. Said another way, employees are less likely to leave when they believe they have a strong relationship with the executives at their organization (Gallagher et al., 2023). It’s also widely accepted that relationships with one’s direct supervisor affect retention (Rubenstein et al., 2018). It’s imperative that executives intentionally seek out and foster trust, understanding, and connection with all levels of the organization.
Workplace relationships are particularly important when organizations and industries are in cycles of high change, high stress, and experiencing a lack of clarity about what the next year, or even next quarter, may hold. That’s a very powerful and timely statement because every organization I'm working with right now is experiencing all of these challenging variables. In moments like these, people that we work with look to the leader for hope, for clarity, and for guidance to realize: “Hey, I can manage this storm and I'll be okay on the other side.” I am reminded of a Mastering Leadership Dynamics™ participant I worked with a few years ago. In sharing a story about his time in the United States Marine Corps, he said, “If I had a leader that I trusted, I'd literally run through a wall for that leader without knowing what's on the other side—even knowing that what’s on the other side might not be pretty.” What’s the key ingredient to that unquestioning followership? The answer: A relationship built on trust! One might wonder how that’s connected to average workplace relationships.
The connection involves the idea that a relationship is built on trust, and that the human brain perceives change as a threat. In today’s world, change has become a constant, stress levels are high, recruiting and retention are tough, and it’s hard to give employees a clear picture of the path forward. Leaders should make a choice to focus on developing trust and strengthening relationships. If people have trust in their leader and sense a strong relationship, they’re more likely to stick around because they trust that they’re going to get through this challenge together (Rubenstein et al., 2018).
More and more, I’m hearing from our clients that change is not just a process that we must endure in the moment, but rather a new way of being in the workplace. Market forces change rapidly, technological innovation accelerates, customers increasingly demand customized solutions, and employer expectations continue to grow (Knight, 2023). Consultants and researchers often use terms like “agility” and “agile organizations” to describe the concept and its implications (Aghina et al., 2018). If that reality is true in your organization, the next question should be “How can I and my leadership team help our people embrace change as a constant and as an opportunity for continued personal development?” We encourage leaders to be authentic throughout these shifts – Reframing Leadership Authenticity.
When teammates are asked to implement a change that wasn't their idea, many will react with denial and resistance while others will embrace it. Denial and resistance are rooted in doubt and grief, whereas exploration and commitment are rooted in optimism and hope. We also know that a trusted leader, with whom there is a strong relationship, can help accelerate their movement into exploration and commitment, by helping them see that there's a rewarding opportunity on the other side of the change (Rosenbaum et al., 2018). It’s imperative that we leverage relationships to help the people we lead navigate through change. Without effective relationships, an organization will fail to capitalize on increased efficiency, decreased expenses, or identify opportunities to achieve other positive measures of organizational success such as shareholder value and community impact.
So, you may be asking yourself…how do I become more effective at strengthening relationships in my organization? The first step is for us, as leaders, to dig deep and figure out why relationships are important to us. How have relationships been critical to your development, your ability to overcome challenges, and to be successful? How can those lessons help serve teammates and help this organization succeed? What is your personal leadership purpose—your why—and how can it shape interactions with others? Start with your beliefs and let those drive your behaviors.
