Whether your firm involves multi-generation family members or new, younger employees or partners, the relational capital you develop within your business is just as critical as your relationship with your clients. And, when business is involved, that relationship capital has a monetary cost, too, according to Mike McGrann, executive director of the Initiative for Family Business and Entrepreneurship at Saint Joseph’s University in Pennsylvania.

“You’re either building relationship capital or you’re destroying it,” noted McGrann during the recent Professional Dairy Producers of Wisconsin (PDPW) Business Conference. He combined humor, storytelling and audience interaction with tried-and-true information in his presentation: “Managing Conflict and Building Relationship Capital between Generations.”

“Real family relationships – and boss-and-employee relationships – are about emotion and conversation,” McGrann stated. “It’s relationship capital – which isn’t a soft and mushy thing.

“The relational reserve of trust, loyalty, positive attributions, benefit of the doubt, goodwill, grace, forgiveness, commitment and stewardship motives allows for effective interpersonal interactions and long-run health,” he added.

McGrann said destroying relationship capital has a monetary cost.

“Disharmony has led to businesses being shut down; teams not working together have resulted in missed sale deliveries; and long-standing avoidance of real issues have lessened work effectiveness,” he said.

Why aren’t leaders better leaders? Quoting one of his favorite books, “Simplicity: The New Competitive Advantage,” McGrann said, “Because they pretend that the challenge of leadership is rational and tactical . . . rather than emotional and conversational.”

McGrann cited eight skills that he urged employers to learn and practice:

  • Ask questions that seek clarity and give the other person a voice.
  • Respond — being thoughtful and inquiring—rather than react, being defensive and giving an emotional retort.
  • Watch tone of voice and body language.
  • Don’t personalize—take statements at face value rather than hearing words through your beliefs.
  • Assess your attributions, as they dictate how you feel or think about another person.
  • Integrate opposites, acknowledging your own strengths and weaknesses and being OK with the good and the bad.
  • Process out loud, verbalizing out loud what you are feeling or thinking as this creates a frame for the interaction.
  • Reprocess a process that is didn’t work.

“We all make mistakes, and it’s OK,” he stated. “Although it’s hard for some of us, we each need to practice forgiving ourselves.

“And we need to say ‘I’m sorry’ when we make a move that jeopardizes a relationship,” McGrann said. “Reprocessing is processing out loud properly and fully what you should have said the first time. It is re-establishing the relationship with authenticity.”

Noting that all teams have conflict, McGrann advised individuals to step out of ”right vs. wrong” and to recognize that aggression crosses the line of a person’s psychological space. Aggression can be displayed via words, tone of voice and/or body language. On the opposite end of the spectrum, avoidance doesn’t work either when it comes to having effective relationships.

“To be viewed as a strong leader, you must demonstrate humility,” he stated. “True humility sets an amazing place to work.”