MAINTAINING HUMAN RELATIONS WITH BUSINESS GROWTH: Importance of the Human Rerations Issue

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Dr. John Psarouthakis, Executive Editor of www.BusinessThinker.com, Distinguished Visiting Fellow at the Institute of Advanced Studies in the Humanities, University of Edinburgh, Scotland, publisher of www.GavdosPress.com.  Founder and former CEO, JPIndusries, Inc., a Fortune 500 industrial corporation

In this series of articles, we examine the human relations issue in the corporate environment for growth. After a discussion on what is “Human Relations” it would be very instructive to browse through a set of questions in order to focus your thoughts on human relations in your own company.

Overall we will write articles on the following aspects of this major topic:

WHAT IS HUMAN RELATIONS?

ASSESSING YOUR HUMAN RELATIONS STRATEGY

IMPORTANCE OF THE HUMAN RELATIONS ISSUE

CHARISMA, CORPORATE CULTURE AND SHIFTS IN HUMAN RELATIONS

CHOICE OF VALUES

HOW FIRMS SHARE VALUES AND GOALS

EFFECTIVENESS OF HUMAN RELATIONS STRATEGIES

CHANGE IN THE APPROACH TO FOSTERING SHARED VALUES

RETAINING COMMITMENT TO MISSION WITH GROWTH

BUILDING CULTURE AT JPI

SOME GUIDELINES FOR EFFECTIVE HUMAN RELATIONS

As we will show in a later article, human relations is an integral part of the Dynamic System Model of managing the business.  We find links to most indicators of organization effectiveness, including profitability, sales growth, work flow, public relations and technical mastery.  Human relations is also linked to resource acquisition and resource allocation.  In short, it is intertwined with all the key issues of managing well.

Morale and profits are linked. The relevance of human relations has been debated over several decades because its effects are delayed or lagged — a phenomenon Likert first noted in the 1950’s.  These results are less apparent in cross-sectional studies–those that test ideas by comparing people or companies at the same point of time.  Lagged effects clearly show up in our own study, reinforcing Likert’s long-standing claims that morale and profits are linked.

Growth boosts morale. Our findings further suggest that rather than straining relations among people, rapid growth may be a boost to morale.  It is much more exciting to be part of a success.

Human relations is linked with work flow, company image and productivity. Not surprisingly, firms with better human relations report smoother work flow, too.  Employees can serve as ambassadors of goodwill–or harbingers of ill will.  Poorer morale is reflected in a worse reputation. Of the different components of technical mastery, productivity is most closely linked to human relations effectiveness, including morale and goal integration.

Human relations is also clearly linked with resource acquisition and allocation but we lack the right kind of data to pin down which is the cause. We might guess, though, that when people have the right resources to work with, they do their jobs more easily and encounter fewer frustrations.

 

For an in depth treatment of this management process read the four related articles recently published in this magazine and the book:

“Dynamic Management of Growing Firms”
University of Michigan Press. 1998

 

 

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