Relationships don’t show up on the income statement. Their effects do.

It’s easy to talk about relationships, group dynamics and psychological safety as “soft issues.”

But what happens if we follow the chain all the way through?

If people have relationships that allow them to trust each other, ask for help, share information and challenge a bad idea, that should affect how well they can do their jobs together.

And if they do their jobs better together, sooner or later that should show up somewhere in the organization’s results…

In its latest large-scale meta-analysis, Gallup studied just over 183,000 work teams and business units, involving more than 3.3 million employees across 347 organizations in 90 countries. Among other things, they compared groups with the highest and lowest levels of engagement.

The differences are hardly small.

Compared with the lowest quartile, groups in the highest quartile had, among other things:

23% higher profitability.

14% higher productivity, measured through production data and evaluations. For sales productivity, the difference was 18%.

78% lower absenteeism.

And employee turnover was 21% lower in organizations with high turnover and 51% lower in organizations where turnover is normally lower.

Now, we should be careful. This does not mean that better relationships automatically lead to 23% higher profits. Gallup measures engagement, and the figures show associations between engagement and business outcomes.

But I still think they show something important. Engagement does not arise in a vacuum.

How I function at work is affected by the people around me. Can I trust my colleagues? Do I get help when I need it? Does anyone listen to my ideas? Do we dare to disagree with each other? Do I feel that I am actually part of the group?

Relationships do not directly affect a line on the income statement.

💸 But employee turnover does.

💸 Absenteeism does.

💸 Productivity does.

💸 Quality issues do.

Add it all up, and it hits profitability hard.

That’s why I think we need to stop treating relationships between people as something that is important, but impossible to connect to business results.

We need to understand the chain between relationships, how the organization functions and the results it actually creates.

That is also where Organizational Relationship Intelligence becomes economically interesting.