Why Relationship-Smart Cultures are Critical in the Digital Age

This article was a collaborative effort, written by Culture Consultant Marcus Stephens, and Maddison Grigsby (LOCAL).

Two Numbers. One Word. A Business Necessity.

Leaders driving change need to grasp two key numbers and one critical word.

First, the numbers:

• $82.7 billion: Expected spend on CRM systems in 2024 to engage, grow, and manage customer relationships.
• $1.8 trillion: The cost of disengaged employees in U.S. companies, climbing to nearly $9 trillion globally.

And the word? Relationships.

While billions go into external relationships with customers, internal relationships often get overlooked. But the health of these relationships is vital—it affects engagement, collaboration, productivity, and ultimately, profitability. Companies are losing trillions every year, but there’s something we can do about it. 

The Hidden Cost of Ignoring Workplace Relationships

Businesses often focus on efficiency, growth, and innovation but neglect the relationships that make these possible. Healthy customer relationships start with healthy internal relationships built on trust, collaboration, and accountability. Without strong internal relationships, companies face:

• Siloed teams
• Resistance to change
• Declining engagement and productivity
• High turnover and increased hiring costs

Disengagement isn’t just an HR issue—it’s a serious business risk. Organizations with engaged employees have 10% more customer loyalty and 147% more earnings per share, on average, than organizations with disengaged employees (Gallup).

In today’s business landscape and with the continued implementation of AI, change is literally everywhere all the time across organizations. In order for organizations to successfully navigate and integrate change, they must engage those who are responsible for the change's success - their people. Change is much more difficult, if not impossible, when trust, collaboration, and good communication are not present internally. 

Being Relationship-Smart at Work

A relationship-smart culture treats workplace relationships with the same care as customer relationships. It’s not just about team-building or leadership training. While those are good, they aren’t enough. It’s about giving employees the tools to manage relationships effectively and creating a culture where tough conversations are easier, day in and day out.

For example, feedback isn’t just a formal process—it happens constantly in subtle ways, even if unintentionally. Consider this scenario: Chris talks to Leslie about some ways of working that he’d like to improve, and she’s distracted, scrolling on her phone. Chris might feel disrespected and avoid future feedback, assuming it will fall flat. This creates undercurrents of frustration and friction. A relationship-smart culture recognizes these subtle dynamics and helps teams navigate them productively.

The Business Case for Relationship-Smart Cultures

A culture built on strong relationships offers clear benefits:

• Higher Employee Engagement: Engaged employees lead to 23% higher profits, 51% lower turnover, and 32% fewer quality issues (Gallup).
• Better Decision-Making: Open communication speeds up problem-solving.
• Less Conflict: Healthy relationships reduce friction and foster collaboration.
• Stronger Customer Relationships: Employees who trust each other extend that trust to customers, boosting loyalty and revenue.

Turning Strategy into Action

Building a relationship-smart culture is about action, not theory. Companies should integrate relationship-building into:

• Performance management: Measuring and developing relationship skills. It’s not enough to hold people accountable for strong relationships - you must give them the tools and resources to get there, and provide regular check-ins for feedback. 
• Leadership development: It starts at the top. Leaders must lead by example, build trust, communicate clearly and consistently, and hold themselves and others accountable.
• Daily operations: Aligning processes with behaviors that encourage collaboration.

The Time to Act is Now

Leaders who focus on internal relationships will build resilient, high-performing teams. The alternative is continued disengagement and massive financial losses. In a world dominated by AI and digital transformation, the best investment is in the people driving success.

A relationship-smart culture isn’t optional—it’s the foundation of long-term success.

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