Regardless of whether you sit on the board for a fortune 500 company, are the CEO of large private company or are the founder of a new startup understanding the four relationships in a business will help you achieve your goals.
In any business of any size there is an ongoing dynamic relationship between 4 groups. For ease of visualisation instead of thinking we will describe each of these groups as individuals.
When a business is formed each of these individuals must come together to form a group and once that group is formed the business can grow.
Each individual in the group has essential things to offer, but each also have things they expect in return. As in any relationship, if one party stops putting into the group what is needed of them, or stops getting from the group what they expect in return things go wrong.
Us human are complicated things so it's usual to expect that the group dynamics of this four way relationship have their ups and downs. The problems become serious however when a problem remains for an extended period of time.
There are only two reasons that any of the relationships in this group will go from harmonious to challenging. Either one person in the group stops or reduces providing the thing they have always provided. Or the the demands of one of the group change but the other parts of the group don't accommodate to those new demands.
Through this simplified view we can gain understanding into why virtually ANY problems occur in a business and what to do about them.
Let's use this four way relationship to explore why so many businesses are struggling with employee engagement and subsequently growth.
First of all let's get to know each person a little more.
The Owner or Board
Why they come into the group
The owner of the business creates the business for two major reasons. The first is passion. They see a problem or opportunity and have a vision of a product or service that could address that problem. The desire to bring that vision to life is passion.
The second reason is to experience the positive outcome of that vision coming to reality. Although how this is measured differs between each person it is typically - financial renumeration, recognition/fame, the positive impact the thing has on people or in the world.
What they give
The owner of the business agrees to give strategic direction, ideas, and hard work. The owner is the most invested person in the idea. The owner also agrees to take full responsibility for the growth of the business until it is either sold or closed off.
What they expect in return
In return for their efforts the owner typically expects two things in return.
Firstly they expect to enjoy the satisfaction that accompanies bringing this vision to life and the impact it has.
Secondly, they expect to be rewarded for this effort either through wealth and or fame/recognition.
Although many new business owners start of mainly motivated by the first factor, the second is also essential. If the second is not important we are no longer discussing a business but a charity. At the opposite end of the spectrum boards can be more driven by the finances than the impact of the vision.
The Employee
Why they come into the group
The employee comes into the group again for two major reasons. The most obvious reason is for financial renumeration. In recent years however, as quality of life and number of jobs has increased employees the focus of the employee has changed. Money is still important but now other factors such as meaning, purpose and development are placing highly on the agenda.
What they give
Historically what was expected from an employee was mainly manual labor. Over recent years manual labor has decreased in demand whereas innovation and ideas have increased.
What they expect in return
As life changes at break neck speed, so are the expectation of the employee. Historically, when quality of life was low and unemployment high the employee expected nothing more from this relationship than money and an environment that didn't kill them. If that sounds over the top to you then read about the working conditions of the coal mines in the 1960s. Today the employee still expects money but they also expect meaning, value, development and flexible working.
The Customer
Why they come into the group
The customer comes into the group for one of three reasons. So you can solve their problem, so you can get them closer to their goals or so you can give them temporary pleasure/relief.
What they give
Simply put the customer gives money to the group. The customer trades their money for the service or product that is created by the group.
What they expect in return
The customer expects a service or product gives them an experience that is equal to or greater than the money they exchanged for it. As with the employee, rapidly changing times are changing the expectation levels of the customer. One of the most noticeable changing expectations of the customer is the speed in which either results or products are expected.
The Business
Why they come into the group
Although the business is not a person it is useful to think of it as a living individual. The business comes into this group to become the solution or product.
What they give
The business acts as the glue for the other three parties. It promises to adapt and evolve to the needs of each of the other group members. It acts as the medium that each of the other members communicate and complete their transactions through.
What they expect in return
This is why it's useful to picture the business as a person. Like all people the business wants to grow. The business wants to evolve and become the best it can be, it wants to reach self actualisation. When the business stops growing/evolving for a long period of time or it goes backward it becomes unfulfilled. This effects everyone in the relationship and eventually leads to the group breaking down.
I'm not suggesting that a business can't simplify or downsize, but it has to constantly evolve. A powerlifter might decide to prioritise health and lose a significant amount of weight and strength but increase vitality. Even though the powerlifter got smaller and lost strength, they were still evolving.
The business of course also expects money to flow and grow.
Now that we understand the basic principles of the group dynamic and mindset of each of the parties, we more simply recognise why issues arise in businesses.
Let's start with the issue of employee engagement which is severely hampering business and economic growth in the UK currently (2023).
The structural systems that businesses use are evolutions of what was developed during the industrial revolution. Although these systems have changed slightly when you break them down they are still virtually the same. The issue is the systems were designed by business owners and leaders during a time when the expectations of the employees and customers were very different to what they are today.
Although these systems still 'work' they struggle to meet the expectations of the customer and don't meet the expectations of the employee.
The expectations of the employee have changed dramatically from the industrial revolution period to now.
During the industrial revolution period quality of life was low and unemployment was high. Employees or prospective employees during this time were happy for a job that didn't kill them and menial wage. So businesses could pay minimum wage for back breaking labor and never be in short supply of workers. As this was before the internet and global markets high level of innovation were not required to meet the demands of customers.
The systems were built to keep each individual in the group happy. Employees were paid little, owners were paid lots, customers got products that didn't need to change quickly and businesses were profitable.
Although it certainly wasn't a fair system that relied on employers exploiting employees, it worked.
Everyone was putting into and and getting in return what they expected from the relationship.
Take a moment to consider what people and management systems would keep each of the above circles green during this time. The owners find a market and set up shop to produce products for that market.
Owners create a business plan based on minimum wage human labor that is available in abundant supply
Management teams receive targets and employees are shown how to complete repetitive tasks.
Management teams ensure targets are met by keeping employees working physically hard and efficiently. Employees are willing to work hard in exchange for pay that keeps them just out of poverty.
Now think about how different things are today.
Computing combined with the internet has given rise to global markets. Innovation is happening at lightening speed. Therefore customers demand the latest and greatest products or services delivered to them rapidly. Quality of life has improved and job availability has sky rocketed. In 2021 the BBC reported their being more job vacancies than unemployed people for the first time since records began.
The expectations of the customer and the employee have changed. Interestingly they are both still willing to provide the same or similar inputs into the group but expect more in return. The customer is still willing to spend money, actually more money. The employee is still willing to work hard but this might mean mentally not physically dependent on the job.
As the employee is no longer living in poverty, and jobs are no longer in limited supply, the employee is no longer willing to work hard for in return for a menial wage. The employee is no longer driven by survival instincts but growth instincts. The employee is now willing to work hard in exchange for enjoyment, meaning, connection, learning and development.
This is good news for business because the modern business needs to constantly adapt and innovate to keep up with the market and meet the demands of the modern customer. The latest and greatest products and services can only be developed and delivered by hard working engaged teams.
A clear win win situation. There is a big problem however. The problem is we humans are emotional things. Due to our emotions we like to resist change because change feels scary. The more humans that are involved in a thing changing, the harder it is to make that thing change. What are lots of humans involved in? Businesses. What are businesses built on? Systems that need to change. Therefore businesses aren't changing or they're not changing quickly enough.
If you're in a business where strategic goal setting is done at board or owner level then disseminated down through the ranks into to-do lists, you're in a business relying on outdated systems. If you're in a business where peoples value is evaluated by how many hours they work and not what they achieve you're in a business relying on outdated systems. If you're in a business where team members only get to implement but not influence the strategy, you're in an business relying on outdated systems.
When modern businesses rely on outdated systems the relationships in the group break down. Remember, these systems worked in the past but the expectations of the employees and the customers are different now. When you rely on outdated systems employees get fed up, no matter how much you pay them. Your organisation is held back by low employee productivity, a lack of team collaboration and high employee turnover. Due to these issues you can't keep ahead of the competition, instead of leading the way and exciting a loyal customer base you're constantly reacting trying not to become insignificant.
Looking at the image above you can see that it's the expectations of the employee that have changed the most closely followed by the customer. Looking at those expectations consider how ill fitted most business strategy and people systems are to todays environment. A Mon-Fri 9-5 we'll give you money to carry out tasks passed down from the senior leadership team approach doesn't cut it. You have pools of employees who want to work hard for businesses, who want to be creative, who want to share ideas and solve problems that will meet and exceed the expectations of customers. But if they are placed into a business with the old systems they'll quickly become disheartened. When the employees are disheartened in this rapidly changing environment products and service development stalls. When employees are disheartened the quality of service delivery declines rapidly. This leads to customers becoming disengaged and scoping out the wide pool of competitors that can be found at the swipe of a finger. As customers spend less and buy else where profits drop.
I could explain further but you get the point.
In 1964 Bob Dylan gave us all a heads up by releasing 'The Times They Are A-Changin'. When it comes to business the relationship dynamic hasn't changed but the expectations of the people in the relationship has. Our emotional resistance to change is creating a nationwide struggle with engagement, productivity and innovation in our businesses.
Our workers are passionate, talented highly motivated people. By embracing these new times and changing the way we approach our work we can become one of the most productive, innovate and therefore healthy nations on the planet. We just have to understand the simple dynamics of the relationship and how to harness them.
Is your business/team making the most of these relationships or is it relying on outdated systems? Find out in just 2 minutes by taking the free HELPS scorecard here.
AUTHOR
Mike Jones Better Happy Founder
Mike founded Better Happy in 2018 to address the workplace unhappiness problem.
He now works with a variety of businesses ranging from small accountancies up to large organisations such as Travelodge on improving business performance through employee happiness. Mike's vision and the vision of Better Happy is 'Every employee happy, every business thriving'