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People’s connections with others, both within and outside their organization, contribute to the creation of wealth in organizations. The research scientist’s work is enhanced by collaboration with a colleague at another university or campus. The systems programmer knows the person developing a new product and configures the program to process its sales. The purchasing agent gets a long-term vendor to telescope normal delivery time in an emergency. The salesperson’s solid relationship with a customer provides instant awareness when a new sales opportunity arises.

These sustained connections have been termed social capital or relationship capital. They are the sum of the “trust, mutual understanding, and shared values and behaviors that bind the members of human networks and communities and make cooperative action possible”.

Relationships serve many purposes, supporting collaboration, creativity, and interaction and enhancing commitment and initiative. Knowledge work in particular is done in the context of relationships and these relationships facilitate knowledge exchange. In fact, knowledge work cannot be done without “persuasiveness, shared decisions, the pooling of knowledge and the creative sparks people strike off one another,” which depend on relationships with others.

Service work is also relationship-driven—employees’ relationships with the organization and each other affect their relationships with customers, and those relationships have become key to profitability. Customers have more power to make demands on suppliers as the number of competitors and access to suppliers have increased through the Internet. At the same time customers’ expectations have risen as they themselves must deliver better, faster, and cheaper products to their own customers. They must have swift, customized responses, which only come through people who maintain customer relationships, respond to customer demands, and anticipate future customer needs.

Relational capital also acts as a lubricant; organizations rich in relational capital can be more efficient. As Robert Reich says, a strong bank account of relational capital enables people doing business together to know who knows whom, who knows what, and who can be relied on. In durable relationships where people know and trust one another, things move more smoothly and swiftly; extra steps are avoided, and communications are expedited. Participants avoid false starts and corrections, lowering transaction costs. These efficiencies happen only with a presumption of trust, built up over many experiences, which is why relationships are hard to replicate quickly.

These mutual and meaningful connections also create value to the people in them. They help people gain a sense of purpose, which feeds their commitment, engagement, and initiative, creating a virtuous circle. They can be energizing and rewarding; they even improve self-understanding.

Relational connections are distinctly individual—they are exchanges and relationships between individuals; some people are better at developing them than others. Even so, organizations have a part in facilitating relationships. Relational capital grows when the organization is stable and is destroyed through the volatility of mergers and rapid organizational changes that do not recognize the human element in these activities. It requires an ecology of trust, mutuality, shared understandings and goals, and common frames of reference shared by people.