Relationship Management Is a Waste of Resources
Relationship management can be defined as a continuous process of engagement between an organisation and its audience with the aim of creating a partnership between the organisation and its audience . The audience are customers, suppliers, regulators, media, and government among others. An argument that relationship management is a waste of resources for organisations may be considered as misleading as relationship management makes the base for sustainable growth. Relationship management also ensures the survival of businesses during difficult times.
Relationships between an organisation and its stakeholders are critical to its success. As a consequence, the outcome of such relationships cannot be left to chance but require proactive management. The most important stakeholder in any organisation is the customer. Managing relationships with customers is thus critical. Through proactive management of customer relationships and organisation can easily understand the customer’s expectations and needs. An organisation that anticipates customers needs and meets them will be sustainable as it will always have a market for the service and products it then sells.
Relationship management, however, is a process that consumes resources but without it an organisation can never anticipate the customers’ needs. A process of continuous engagement is also important as customer needs are always evolving. Relationship management allows the continuous engagement resulting in an organisations being at all times positioned to meet the evolving needs. For customers relationship management is not producing a product and forcing it down client’s throats but anticipating their needs through a process of continuous engagement and fulfilment of those needs.
Relationship management with suppliers is also important for an organisation. Establishing and maintaining good relations with suppliers is important as on many occasions your product or service is determined by quality, timeliness and availability of your supplies. A firm must thus invest in ensuring that its relations with suppliers are at all times at their best. If there are people or systems that are continuously engaging suppliers, quality of supplies will be poor. Continuous engagement ensures supply of the right quality of products as there will be constant contact.
As an illustration, a bank may decide to switch to more secure ATM cards with a chip card in line with security concerns by customers on ordinary ATM cards. If the bank is not in constant contact with their vendor for ATM machines, the new chip cards may not be compatible with the existing machines. The supplier of ATM machines may also fail to install the interface that allows compatibility with existing machines. The result will be costly as the firm would have ignored relationship management with a supplier resulting production of cards that are not compatible with existing machines.
If there is relationship management, exchanges on upcoming developments, that is upgrading to chip cards, would have resulted on the need to establish if the existing ATM terminals are compatible with chip cards. An appropriate business decision would then be made based on the probable need to replace ATM terminals as well. Managing supplier and service provider relations also means you will be supported in crisis situation. A supplier may release goods or gives services even when payments are delayed. Relationship management internally in an organisation is also of utmost important.
Relationship management internally means every employee understands the role of the next employee and of the next department or unit. If there is no continuous engagement employees or units will operate as standalone units and fail to render each other support for the company to succeed in serving its customers well. Without relationship management between business units it means a customer that makes initial contact with for example the production department while following up on their account will be shut out as they would only understand their role as production not sales or credit that deals directly with accounts.
If relationship management exists amongst units, then production would appreciate the need to transfer a customer to credit or sales depending on their need. Every employee would have an organisational view and understand that customers come first for everyone in the organisation. All employees would aim to ensure that they provide quality service to the next unit as this is the key driver to having delighted customers. Relationship management also entails management anticipating what the employees need for them to remain productive and deliver quality service to customers.
Management should endeavour to understand the priorities of employees. If it is safety at the workplace, management must ensure that the work environment is safe for employees. As an example safety is important in a mining set up that is employees will work more comfortably with safety helmets, safety boots, air cleaners and dust extractors. In some economies job security would be no one priority and as such for employees to be able to serve customers well the employer must provide job security. At the same time the employer must also engage the employees such that they understand the expectations of the employer.
Employers and employees must proactively manage their relations as ignoring these will result in unnecessary job stoppages, strikes by employees, high employee turnover and low employee morale. With such a scenario customers cannot be served well thus pointing to the fact that relationship management is not a waste of resources. Every organisation must also proactively manage its relations with the government, regulators and licensing authorities. Depending on the nature and size of the organisations operations, it must establish and manage relationships with the government, regulators and licensing authorities.
The other factor that may increase the need to proactively manage relations with this group of stakeholders is the operating environment. As an example a mining giant like Zimplats cannot ignore the need to have good relations with government as failure to do might result for example in repossession of mining claims. It would be in the company’s interest that plays to tune of government. The company must do gestures that reduce the risk of having reprisals from the government of the day while at the same time remaining professional.
The company must also actively manage its relations with the tax authorities and the regulators. As an example with continuous engagement company may avoid being garnished by ZIMRA. If a company has a good relationship with ZIMRA, it means even ZIMRA will call them to notify upcoming tax payment deadlines. The company will also on the other hand engage ZIMRA advising of their challenges in meeting the deadlines and they make even get an extension. Assuming there is no relationship management, the company will just wake up one day to find its accounts garnished.
This means it will not be able to pay suppliers, service providers and even employees which would have negative impact on the business operations and even its reputation as it would fail to deliver to its customers. The last group that illustrates the importance of relationship management is the media. Most news media professionals perform very ethically and appropriately, but it is easy for lines to be crossed and messages to be mixed when a company and a reporter are not quite on the same page. This entails the organisation must make an attempt to understand the behaviours of stakeholders in the media sector.
Failure to understand them will result in the organisation being interpreted inappropriately or wrongly. It is important for an organisation to develop relationships with the media who might cover stories about your organisation so that it is less likely you are communicating with a stranger in the event that there is a crisis and there is need for damage control and limit the impact of bad publicity. It will also help even when you seek good publicity. With poor relationship management, bad publicity will be given prominence or better coverage than good publicity. Relationship management will take a toll on the company’s resources.
This is so because every process of relationship management will entail engagement of resources, time and effort. It is noteworthy that neglect of relationship management will result in even greater losses for a company. Failure to invest in relationship management will result in poor service levels, low employee morale, uncooperative regulators and licensing authorities, disruptions from suppliers and services providers. The benefits of relationship management far outweigh the cost of relationship management. The notion that relationship management is a waste of resources is thus not true.