Perspectives January 29, 2014

Relationship Capital

You’ve heard of financial capital, but do you know about relationship capital?
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Relationship capital is one of the most valuable assets an organization has. It is the international currency of sustainable business growth, especially in business networking. The network of people and organizations that represents customers, partners, suppliers, employees, etc. constitutes an organization’s relationship capital. Just like financial capital, relationship capital is accumulated by individuals and used in the production of wealth. It worked for me and I know it has worked for you at times too.

An Organization’s Relationship Capital =  ALL THE RELATIONSHIPS + ALL THE PEOPLE 

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Relationship capital is accumulated by providing help, advice, information, referrals, and other benefits to the people you are in relationship with, while not thinking at all about what you’ll get back in return.

For most of human history, building relationship capital came naturally, especially in smaller communities. But as small communities grew into cities, the sense of community and the close, personal relationships that went with it, disappeared. A vacuum was created by the disappearance of community-based networking. I’ve committed my life to teaching business people how to once again develop the strong relationships needed to create sustainable business growth.

The focus of networking should be 90% giving. Connect with others and brand yourself through generosity. Instead of thinking only about what you can gain…or get…from a relationship, think about how you can give. Relationships develop rapidly when you are a giver, and people will remember you. What do you have that is worth giving? Demonstrate that you can be a resource to others with your professional expertise, external business connections, internal business connections, and community and family connections. Give versus Get.  Pretty unique way of thinking about business growth isn’t it?

Understanding your connections’ needs is equally important.  Spending time with someone that you will eventually have a long term relationship with requires a keen ear and acute listening skills.  Once we understand someone's desires and personal makeup we can truly help them through possible network and personal connections. 

Create systems—through technology and tracking—to help with follow up and follow through to ensure you never forget a name or lose track of a relationship again. If you say you are going to do something, DO IT! If in conversation you say you have a solution, or a recommendation, or something tangible or intangible that would be helpful to that person, be sure you follow through. Trust is the foundation of your reputation and why people recommend you to others. Relationship capital is a catalyst for building trust with people who don't already know you and while providing opportunities based on your reputation.

All these interactions involve the sharing of knowledge, the solving of problems and the creation of connections. Networking IS NOT about the number of connections you've amassed. Networking IS about the quality of your connections and your reputation with those connections.

 

Andy Bluestone is a networker and relationship development strategist. He is an author of numerous articles and a new book, “Harnessing the Power of Relationships." As president and CEO of Selective Benefits Group, he has recruited more than 2,300 sales reps and is engaged in helping closely held companies reduce costs in their 401(k) plans and create an added value to the participants' experience in their plans.     

Selective Benefits Group, 17 Wilrich Glen Morristown, NJ 07960  973-417-6880  abluestone@sbgroup.com    

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

 

The Markets January 29, 2014

More Pensions Move to De-Risk

In an effort to decrease pension risk exposure and insulate their plans from fluctuating economic conditions, more defined benefit (DB) plan sponsors are realigning plan assets to better reflect projected liabilities.
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According to Aon Hewitt's survey of more than 220 U.S. companies with DB plans representing 5.8 million workers, 62% of pension plan sponsors are somewhat or very likely to adjust their plan's investments to better match the liabilities in the year ahead, compared to just one-in-six that do so today. Some companies plan to go one step further and adopt dynamic investment policies or glide paths that increase exposure to fixed income and risk-hedging options as their plan's funded status improves. Twenty-two percent of employers currently have a glide path strategy in place. By the end of 2014, 30% of companies are expected to have embraced this approach.

The survey also found companies are adopting a more thorough approach to monitoring and managing pension risk by focusing on three key areas:

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  • Understanding potential risk. Nearly one-quarter (24%) of pension plan sponsors have  recently conducted an asset liability study to get a better picture of their plan's performance under varying economic conditions—double the number of companies that had done so in 2012. Of the companies that had not yet conducted a study, 45% are somewhat or very likely to do so in the next 12 months.
  • Monitoring funded status. One-in-eight employers have already established a method to monitor daily funded status of its plan—twice the number of employers than in 2012. One-quarter of the plan sponsors that do not have this monitoring in place are somewhat or very likely to do so in 2014.
  • Reducing liabilities. Pension plan sponsors continue to adopt strategies to limit their liabilities. Lump-sum settlements through a "window" are becoming increasingly popular. Twelve percent of plan sponsors recently introduced or expanded the availability of lump-sum windows for retirees or terminated vested participants, and 43% are somewhat or very likely to complete a lump-sum window for inactive participants during 2014.

"Employers used to only evaluate their plan's funded status once each year when they were required to report on the plan's performance," explains Rob Austin, director of retirement research at Aon Hewitt. "Now they understand that it is critical to have a real-time view of how market and economic conditions are impacting the plan to enable them to adjust and execute their investment strategy at a moment's notice."

"As PBGC premiums have increased, the fixed costs of maintaining a qualified pension plan have also increased, making it more desirable for plan sponsors to settle plan liabilities through lump-sum payouts," adds Ari Jacobs, global retirement solutions leader at Aon Hewitt. "These settlements allow companies to reduce their pension obligations while at the same time, give workers access to their retirement funds much earlier than planned." 

The Aon Hewitt survey report may be downloaded from here. 

For more on important considerations in DB plan de-risking, see “Some Glide Path Can Trigger Bad Bond Buying.”

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