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Title: Relational Wealth: The Advantages of Stability in a Changing Economy by Carrie R. Leana, Denise M. Rousseau ISBN: 0-19-513447-8 Publisher: Oxford University Press Pub. Date: July, 2000 Format: Hardcover Volumes: 1 List Price(USD): $45.00

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Average Customer Rating: 4 (1 review)

Rating: 4
Summary: Read RELATIONAL WEALTH to glimpse beyond "best practices"
Comment: The primary reason for a business reader to undertake this challenging book would be to discover new perspectives on attracting/retaining talent, and on the value of internal relationships in building competitive advantage. The book is not written for a mass business audience. The academic writing style could cause many readers to give up on it. However, that would be a mistake-particularly if one is looking for ideas that are not yet popularized.

The editors of Relational Wealth are Carrie Leana of the University of Pittsburgh and Denise Rousseau of Carnegie Mellon University. The two co-authored the very readable introductory and concluding chapters, and also joined with other co-authors on several other portions. The material included is a combination of theory, research summaries, and opinion.

The Book's Core Ideas

Leana and Rousseau define relational wealth as the value created by and for a firm through its internal relations among and with employees, as well as its external alliances and reputation. Relational wealth is an attribute of the organization; its value accrues to the organization directly, and only indirectly to individual members.

There are several aspects of relational wealth that the authors believe lead to measurable value. These include:
Trust-The positive expectations that firm members have of each other's
intentions and behavior. If trust is low, organizations build redundancies
into their systems. If trust is high, members spend less time negotiating
with each other, lowering transaction costs.

Knowing Who Knows What. Where organization memory is lacking, due to
work force turnover or other instability, members have difficulty accessing
important information. Sometimes costs are remarkably high in inefficiencies
and accidents.

Reputation. A firm held in high regard in the broader community has advantages
accessing highly qualified employees. Reputation creates the capacity to form
new relationships with different people.

The ability of a firm to realize the value of relational wealth is seen as depending upon its ability to balance flexibility with stability in the workforce, i.e., the need for short-term results with the long-term employee commitment. In the main body of the book, contributors discuss various aspects of this dilemma in employment policy. A few chapters highlighted here seem particularly relevant.

A few of the most thought-provoking highlights are:
·A helpful summary of research relating work force diversity issues and
employee commitment

·A timely critique of the effectiveness of corporate mentoring programs

·Observations about cynicism concerning the use of teams

·Elaboration of one of the concepts associated with relational wealth-
the "commons" --which refers to the resources shared by a group

·An argument for a shift in the way firms and investors keep score-away
from short-term financials and toward non-financial indicators

The Book's Other Message

Many of the book's contributors blend social criticism with their social science. A point of view seemingly held by most is that U.S. corporations generally have done poorly in fostering relational wealth, and that a new dose of government regulation will do us all some good. This theme appears in various chapters, where we find such observations as these:

"Without consistent government intervention, it is unlikely that most employers
will change their historical indifference to the problem of a growing underclass."
(p. 190)

"..corporate executives...may have little regard for what happens in the
communities in which their funds are invested" Therefore government should
create "exit barriers for disinvestment" and other requirements. (p.222)

There is a need for "meaningful penalties to induce firms to comply with
existing labor laws." (p.289)

This brings to light another reason for reading Relational Wealth. The contributors are respected academicians who are listened to by governmental leaders and students. Business leaders need to hear and understand their viewpoints.

Summary

Relational Wealth is not an easy read. Many business readers could find themselves in philosophical disagreement with the authors. However, the book contains some new ways of framing crucial, continuing issues in the field of Human Resources. Practitioners ready to go beyond the popular sources in search of original ideas might find this book rewarding.

A longer version of this review appears in HUMAN RESOURCE PLANNING, 2002, Volume 25.4