Personal relationships are on the decline, according to Robert E. Hall, the author of “This Land of Strangers,” a book that takes a look at our disposable society and how discarded relationships have affected our economy and the way we do business along with our personal lives.
Hall cites four consequences of the demise of relationships: extreme economic disparity, businesses involved in fiercely competitive battles, gridlocked politicians and divisive communities.
Hall begins his book by describing what exactly the issue is. Beginning by pointing to the increasing number of children growing up in single-parent homes, Hall also notes that our communities are dwindling. As people travel more and spend more time inside their homes or opt for private pools, schools neighborhoods, they are shutting out their neighbors. While communities used to resemble villages where people could rely on each other, many people now hardly ever speak to their neighbors.
In the corporate world, consumer trust in businesses has been on the decline as relationships have deteriorated. Hall considers customer defections to be like divorces, and they’re also on the rise. Hall considers customer loyalty to be largely a thing of the past, and that has a devastating effect on business. Loyal customers are typically willing to pay more, give recommendations and be patient and forgiving with the companies they trust.
The reason for this loss of loyalty, according to Hall, comes from poor customer relationships. And the effects are monumental.
“On average, businesses are losing better than 100 percent of their customer base every five years, in spite of research, spending, technology installations, and incentives all directed at retaining these relationships,” Hall says.” On the flip side, businesses that are seen as loyalty leaders are growing revenue twice as fast as their competitors, and even at a lower cost, according to a Bain and Company study.
Customers aren’t the only ones losing trust in business. In the office, employee/employer relationships are eroding as well. Employee turnover has been rising steadily for more than a decade, according to Hall. According to a Conference Board study performed in 2010, only 45 percent of Americans are satisfied with their jobs, the lowest recorded number for employee satisfaction ever.
These poor relationships between employees and their bosses and coworkers leads to a lack of loyalty that can devastate a business. Hall cites that 55 percent of employees who work for what they consider to be “ethical organizations” consider themselves truly loyal to their companies. But for those who feel they don’t work for an ethical organization, the loyalty number plummets to a shocking 9 percent.
The reasons for this loss of employee loyalty lie in how hard employees are pushed to benefit the bottom line. Hall says employee loyalty drops when workers feel their goals are set too high or they are forced to do unethical work, such as oversell, to boost revenue.
It’s not just lower-level employees who are experiencing these high turnover rates. The average CMO tenure sits at just 23 months right now, and in 2007, nearly one-quarter of all CFO positions at Fortune 1000 companies were open during the year.
Hall’s book points to relationship decline as the driving force behind a struggling economy and business environment. Specifically, he details four causes of these relationship breakdowns: extreme commercialism, extreme consumerism, faceless technology and extreme institutionalization.
Americans have been encouraged to consume, and we’ve responded. Consumer debt is at an all-time high, while personal savings have reached an all-time low. According to Hall, this excess spending goes hand in hand with relationship decline, as extreme consumerism places more value in things over people. Americans are obsessed with money, striving to have more than their neighbors, look better or fit in, all of which leads to further separation and abandonment from their peers.
Hall says extreme commercialism spells the death of truth and promotes the deception in marketing, accounting and selling that has led to a breakdown in trust.
“Extreme desire for commercial gain lobotomizes our collective conscience and cannibalizes the very relationships that are the foundation for commercial success,” Hall says.
Extreme consumerism has led to risky business in the marketplace, with companies knowingly using unsafe materials or rushing unsafe products to market, all in the name of staying competitive. In an effort to keep up with demand and stay relevant, companies turn to marketing efforts, often doing nothing but inflating their messages, which elevates consumers’ expectations without actually improving products or services. Companies knowingly benefit from hidden fees, further defeating customer trust, leading to something Hall refers to as our “distrust economy.”
This distrust economy began to appear as far back as the 90s, and it’s only gotten worse. Right now, two-thirds of our economy is driven by word of mouth, which U.S. consumers vastly prefer to TV advertising, where many companies invest dramatic amounts of money. This reliance on word-of-mouth advertising is a large part of why social networks are so powerful.
Faceless technology has made doing business less personal, deteriorating relationships in a very visible way. More employees are being replaced by computers, causing a further disconnect between customers and businesses. While tech can aid some relationships, it depersonalizes many working relationships, such as bank customers who no longer set foot in a bank, instead conducting transactions on their phones, and major corporations, such as RadioShack, sending a faceless email to lay off hundreds of employees at once.
Companies become even more faceless as they grow into huge institutions, further losing their once loyal customers’ confidence. The bigger companies become, the smaller their appeal.
“We have lost confidence in the very institutions on which we rely,” Hall says. “We are still living together, but we’re estranged.”
Despite all of these breakdowns, Hall is optimistic about a turnaround. He claims that what’s needed to help get things back on track is to reclaim and revalue relationships. Hall has seen this happening across the country, such as a hospital in Dallas that expanded its ICU to allow for patients’ families to stay with their loved ones more comfortably.
This focus on long-term improvements over short term gains is the key to businesses regaining their customers’ trust and rebuilding beneficial relationships with employees.
Hall defines human capital as our human abilities, and he believes developing human capital is a must for reclaiming relationships. He suggests that businesses regain employee trust by implementing team-oriented incentives that are both financial and non-financial.
Hall also suggests that businesses and individuals alike give back to the community through volunteerism, as helping others can heal emptiness and reduce self-absorption.
In the workplace, Hall advises executives to take on relational leadership, a new kind of leadership that focuses on being more engaged with employees. Relational leadership is inviting and engaging, which results in a bigger commitment from employees. Hall believes the best leaders, the ones who inspire confidence, also serve as mentors and coaches and show they are ready to sacrifice their own outcomes to share effort as well as results with employees.
Dacia Rivers is a writer & editor for Texas CEO Magazine.
“This Land of Strangers” is published by the Greenleaf Book Group Press. Author Robert E. Hall is based in Dallas. @Robertehall1
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