Establishing the concept of relationship capital

In my last post, I mentioned the concept of relationship capital. Yesterday, I received several e-mails asking about it.

In my last post, I mentioned the concept of relationship capital. Yesterday, I received several e-mails asking about it.

Here are some thoughts on the concept: Companies recognize physical and tangible assets on their balance sheet (facilities, equipment, cash). Over the past decade, companies have begun to recognize intangible assets, such as brand value (as measured by Interbrand, for example), and the concept of human capital as an asset has gained credibility.

I think it's time to develop a measure of relationship capital and recognize it on the balance sheet of a company, with a monetary value. Here's why: Companies don't go to market as single entities anymore. They go as networks or ecosystems of relationships, including business partners, suppliers, employees, alumni, consultants, and influencers. The competitiveness of a company can be assessed based on the quality (height, width, and depth) of these relationships.

A case in point: If you were in a position to buy a company and you had two companies to choose from, wouldn't you place a higher value on the one that could measurably show that it had tighter relationships with thousands of key stakeholders rather than the other one, which didn't systematically cultivate those connections and couldn't show the quality of their relationships?

The bottom line is this: Imagine what would happen to the perceived and real value of the public relations discipline if management started asking for regular updates on the value of their company's relationship capital and started including the metric in the annual report.

Rob Flaherty is senior partner and president at Ketchum

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