Interpersonal Effectiveness Boosts Bottom Line

Listen to boardroom conversations about what really boosts profits and theories abound.

Some directors might argue it’s the brilliant strategy, great vision, the talented technicians and modern systems. Others may contend that the cutting edge HR programs are responsible while still others assert it’s the thoughtful organizational structure or the excellent customer service. And someone will certainly chime in that it is the marketing strategy or the new product line.

All of these do, in fact, make a business profitable.

But they’re not enough.

What makes a business truly profitable rests in the daily interactions between people in the workplace.

This “stuff” that goes on between people is otherwise known as interpersonal effectiveness. It’s the lifeblood of the organization. It can fuel invention and productivity or stifle imagination and crush initiative.

It’s the difference between having a great day at work or dreading the next 25 years.

What goes on between people and how they treat each other can lead to profits and productivity or illness and bankruptcy.

We know this intuitively and scientifically. We know that psychologically healthy organizations are profitable and productive.

Specifically, we know that profitability and productivity depends on an engaged, healthy workforce

But what does this mean?

It means you have to focus on interpersonal effectiveness all the time. No company has made money in the long-term without its leaders watching how people treat each other. Having things explained properly, knowing what’s expected, having the tools to do the job, being appreciated or being offered growth opportunities happen because of conversations between people.

You can have the greatest HR programs imaginable, but if positive interpersonal relationships aren’t fostered, they are worthless and in some cases, harmful. For example, one company offered employees the opportunity to take time off to see their children in school plays and concerts.

A positive work/life balance idea, right? Yet, when a worker approached his supervisor for authorization to be at his child’s school for a 10:00 am performance—the supervisor signed off but added that this was not the kind of thing ambitious people at the company took advantage of. The purpose was defeated: Great program. Lousy interpersonal relationships.

This is not to say that employee programs and policies are a waste.

They are a necessity. There are five building blocks of any psychologically healthy organization:

– Organizational Strategy and Operations
This building block is devoted to debating, creating and implementing a company vision, mission, financials, business plan, and marketing strategy in a high functioning senior team environment (research shows that senior teams that develop strategy in an interpersonally effective manner come from profitable organizations). The creation of psychologically healthy business strategy is key. For example, if part of the business strategy highlights customer satisfaction as important to success, all efforts are focused on creating an interpersonal climate that fosters excellent service. Or, if growing the business is key, the budget includes resources for seizing opportunity and maximizing innovation through interpersonal support within and outside the company (e.g., research indicates that high performing teams that tend to see and seek opportunity have highly encouraging and supportive team interactions versus low performers who engage in cynical and sarcastic communication). – Employee Involvement
A psychologically healthy business plan is driven by high employee involvement. This means companies create programs and policies that help employees solve problems, resolve conflict, recognize accomplishments and participate in constructive performance evaluations.

– Family Support
Fostering work-family balance has been shown to increase business success and offering flex-time policies, reducing over-time, providing help with childcare and eldercare and Employee Assistance Programs create a psychologically healthy workplace.

– Employee Growth and Development
Training and team-building programs, coaching and career advancement opportunities contribute to healthy organizational ss plans.

– Health and Safety
Psychologically healthy companies include health and safety policies that encourage physical safety, reduce injury, sick time and absenteeism, promote wellness and provide medical information and monitoring.

However, what can get lost in the creation of policy, programs and strategy is the importance of interpersonal relationships in making the organization ultimately effective.

Health and safety issues are good examples.

Take arthritis. If a significant number of the workforce has arthritis, a great wellness initiative would be to hire experts to talk about the issue and to include exercise plans such as yoga, dietary guidelines and fundraisers for the Arthritis Society. These health and safety initiatives involve employees, educate them and support them with their concerns. Plus, the initiatives fit snugly with the business plan which calls for wellness initiatives targeting employees suffering from chronic conditions to reduce absenteeism. All help make the workplace a great place.

There’s one thing missing.

Research shows there is a direct way to benefit arthritis suffers at work: improve their workplace interpersonal relationships.

That’s because interpersonal problems at work contribute more to physical suffering in arthritic workers than issues outside work such as trouble with family members or personality problems, according to a 2002 article in the Journal of Applied Psychology.

So, include the yoga, the diet, the Employee Assistance Program and the ergonomics but don’t forget the pain caused by sour workplace relations. The argument an arthritic worker had with the manager or the upset with a colleague causes more pain and time away from work than diet.

The solution is to do more training, coaching and the like for leaders, managers, line-supervisors and staff. Add interpersonal effectiveness competencies to the performance review process. Hire interpersonally effective personnel, create policies to deal with interpersonal harassment and monitor staff engagement scores more closely.

But the most helpful initiative of all is the one where people are encouraged, convinced, and supported to deal respectfully with one another on a daily basis to get the job done well. This is especially true when misunderstandings occur or differences of opinion inevitably arise.

Invite people to get involved with each other. Talk to them about how to do it. Train it, coach it, offer information sessions and lots of feedback. Make interpersonal effectiveness a mainstay. If it’s getting ignored and people aren’t working things out, or there are no programs targeting it, or if the performance reviews don’t mention it, tell someone right away.

In the meantime, you should be straight-up and constructive. Find ways to work things out. Create systems that give people opportunities to stay on track such as individual development meetings once per month that are focused on reaching goals. Remember the reason why a project or task flounders is usually due to interpersonal causes.

Consider the following common scenario: “Ken didn’t bring the report in, so I wasn’t able to use it in the analysis. If we had that bit of information we probably would have taken a different tack.”

Why did Ken fail to bring the information forward? Why did his colleague not talk to him about the missing details? What made it difficult to double check with Ken that all the relevant information was submitted? It could be that Ken didn’t think it was important because the objectives of the project were unclear, maybe Ken is hard to approach for clarification, maybe his colleague is swamped and was happy he didn’t have to consider another piece if information.

Finding out the answer to these questions requires regular constructive conversations about what is going on between people to create scenarios like these.

Interpersonal effectiveness is not a thing. It can’t be checked off the “To Do” list and relegated to a training day. It can’t be mastered and then forgotten. It’s an ongoing, constantly changing idea with a life of its own. Just like workers.

Dr. Jennifer Newman and Dr. Darryl Grigg are registered psychologists and directors of Newman & Grigg Psychological and Consulting Services Ltd., a Vancouver-based corporate training and development partnership. They can be contacted at

Identifying information in cases cited has been changed to protect confidentiality.

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