Policy Papers

JUSTICE: BROKEN RELATIONSHIPS ARE THE HEART OF THE PROBLEM

Getting relationships right is foundational to preventing crime, achieving fair outcomes for victims, and restoring offenders to a meaningful place in society.

TRENDS

Criminal justice systems in Western societies have generally failed to reduce the number of criminal offences. Both the U.S. and the UK have overcrowded prisons with little sign of numbers going down. According to the Prison Reform Trust (2014), the prison system as a whole in England and Wales has been overcrowded every year since 1994. At the end of March 2014, 77 of the 119 prisons in England and Wales were overcrowded. In England and Wales, 46% percent of adults are reconvicted within one year of release. Reoffending by all recent ex-prisoners in 2007-08 cost the economy between £9.5 and £13 billion. In the year 2000, the ratio of prison officers to prisoners was 1:2.9. By the end of September 2013 this had increased to almost 1:5.

ISSUES

What are we trying to do?
The most fundamental question about criminal justice is what we are trying to achieve. The current system consists of a rather uneasy blend of objectives. Justice is about retribution – inflicting pain on the offender because he or she has disobeyed the rules of society. It is also about public safety – keeping the offender away from potential future victims. And simultaneously it is about rehabilitation – the attempt to use punishment as a means of turning the offender into a productive citizen. All these frameworks treat the offender as an individual unit of criminality, to be apprehended, tried, punished and rehabilitated by society at large through a collection of specialist agencies.

The impact of relationships
In reality, a large number of crimes are committed against other individuals, and represent a trauma within a particular relationship – even if the offender and the victim have not previously interacted. Further, criminality itself is often associated with problems in offenders’ past relationships, including, typically, a dysfunctional family background or a sense of exclusion from social groups. In other words, it is hard to understand or rehabilitate an offender except with reference to his or her relational context. Also, it is hard to see that one can incarcerate offenders together without the risk of forging closer relationships inside the criminal community.

The exclusion of victims
An almost inevitable result of the state acting on behalf of victims is that victims tend to feel marginalized and disempowered by the court process. Yet relational damage is often most effectively tackled in the context of relationships – hence the widespread success of restorative justice, where offenders are required to put right the damage they have caused in the relationship with the victim. Not all crimes can be handled this way – but many can.

POLICY

Crime is primarily a relational event between the offender and the victim – not between the offender and the state.  So  the goal of criminal justice should be to address damage to specific relationships as well as to uphold what society defines as the moral order.

Where justice is served
This applies to the ethos and working practices of the police, the courts, the prisons and the probation services. CCTV cameras work as a deterrent to crime precisely because an adjustment has been made to the directness and continuity of the potential offender’s connection to the police. But this is more effective when backed up by the presence of actual officers on the street, and more effective still when those officers can build relationships with the communities they patrol.

Shortening Relational Distance
Courts should not be concentrated in large urban centres as a means of cost-saving, because the need to travel far from home often discourages potential witnesses from attending and thus contributes to poor judicial decisions. Similarly, a much wider range of petty criminal cases could be dealt with at local level, given adequate, trained professional support. Participation in the processes of criminal and social justice is a powerful way for the public to engage with the community values and interests, and also has the effect of strengthening bonds among community members.

Alternatives to courts
An example would be Family Group Conferences, where the extended families of the offender and the victim meet to resolve the issues brought about by the crime and to agree an appropriate punishment. While only applicable in relatively minor crimes, this method has been shown to achieve a marked reduction in re-offending rates, as offenders are forced to face up to the relational consequences of their actions. A more familiar variation of the same idea is Alternative Dispute Resolution.

Relational Prison Management
Issues in the prison system include whether prisoners are enabled to eat together rather than in isolation in their cells, whether prison officers share the same tables, and how much time prisoners are allowed out of their cells each day for work, exercise and socializing. Another crucial issue is the quality of the visiting facilities, and whether offenders are located close to where their relatives live to make it easier for them to visit. When prisoners are released, effective probation may be less about control and more about providing relational support as the offender re-enters civilian life.

FINANCE: MONEY HAS A PURPOSE

Finance is a means, not an end. A better society is not, in the first instance, just one with more resources, but one in which relationships work well.

TRENDS

The financial system creates a set of powerful connections between people, between organisations, and between nations. It controls the percolation of monetary value through society in the form of earning, investing and borrowing. Using its labyrinthine channels, governments and central banks attempt to stimulate or rein in economic growth by manipulating interest rates and money supply. Individuals, families, companies and governments need money like they need oxygen: if earnings fall, they are forced to reduce costs, seek injections of capital in the form of loans or, in effect, beg.  These processes are constantly visible in the working of the economy. Lending has become a key financial issue, with the widespread acceptance of borrowing in the form of consumer credit and national debt, and an increasing nervous dependence on current prosperity and hoped-for future growth. The financial crisis of 2008 was precipitated by the realization that yesterday’s borrowers in many cases were unlikely to be able to pay their debts.

ISSUES

Structural Injustice
The relationship between lenders and borrowers, at any level, is inherently unequal.  When unexpected events leave the borrower unable to service the loan, calamity often ensues.  Homes put up as mortgage security are lost.  Companies unable to repay loans may wind up in administration and have their assets seized (in fact a number of company takeovers occur in precisely this situation).  Nations are subjected to austerity regimes that all too easily slide into political instability and the emergence of violent extremism.

Externalities
The role of money in securing individual and family wellbeing makes financial difficulty a major cause of stress.  A Barclays survey showed that money was the most frequently cited reason for arguments between partners.  The psychological pressure resulting from personal debt is linked directly with child abuse and physical violence between adults in households.

Slack lending practice
Debt finance also does little to reduce relational distance between corporate borrowers and corporate lenders. It is seldom associated with close involvement by the lender in the affairs of the borrowing company because the security provided for the loan acts as a convenient substitute for close monitoring.  The lack of transparency associated with derivatives trading and packaging and selling on of debt has exacerbated this trend.

Disempowerment
It is significant that an individualized economy removes financial responsibility from the lower levels of social organisation. In most cases, families and small communities, as entities in their own right, are held together more by choice or custom than by finance;  they are merely collections of individuals who are financially connected to forces that operate at a much higher level.  This loss of financial overlap in relationships means that money weakens rather than strengthens social cohesion.

Living off future generations
Financial decisions by Government can also impact on relationships between generations. Increases in national debt in effect constitute a promise that future generations will meet the cost of the interest payments and eventually repay the debt.  What would be considered a grossly unfair transaction between contemporaries is waved through because future generations have no voice.

POLICY

The massive impact of finance on society means we should pay attention to the kinds of connections created by financial institutions.

Finance with participation
The potential of finance to build relational capital suggests that a private sector based on equity rather than debt would be stronger and more accountable. Investors are motivated to take an interest in company affairs – which could benefit stakeholders. Similarly, companies can build relationships with clients by extending payment terms, and foreign direct investment can build relationships across national boundaries.

Re-evaluating debt
It is worth asking whether debt finance is a sustainable way to run either national or household budgets. When Western societies are having to make painful decisions on public expenditure, and where a global economic crisis could be triggered by large scale debt default, it makes good sense to undertake wide ranging reforms that disincentivize further borrowing, whether by governments, by companies, or by individuals.

Shared equity
Shared equity as a form of home ownership would reduce household debt. In this financial arrangement, ownership of the house is transferred gradually between the bank and buyer. Government can promote and incentivize shared equity forms of home ownership debt by changing the accounting rules governing banks, building societies and pension funds.

Promoting SMEs
SMEs are small and medium-sized enterprises (under 200 employees). Government can incentivize investment into these through FDI (Foreign Direct Investment), by removing Capital Gains Tax for investors who show that they attend company AGMs, and by establishing regional information hubs to make investment opportunities known at a regional level.

Family Syndicates
Giving more financial powers and responsibilities to families provides a way both to strengthen family relationships and to reduce national welfare budgets. Government would support Family Welfare Syndicates through tax incentives for shared saving schemes and relocating closer to elderly relatives. Funds could be used to cover medical bills, care, and higher education.

ENVIRONMENT: ONLY RELATIONAL SYSTEMS CAN DELIVER SUSTAINABILITY

Environmental risks are a product of economic and political relationships: address the relationship structures in business, markets and government, and progress toward environmental goals will be faster. is a means, not an end. A better society is not, in the first instance, just one with more resources, but one in which relationships work well.

TRENDS

Global population growth – expected to plateau at around 9 billion by the mid-21st century – increases pressure on space and resources. As diets improve, food production will need to increase by some 70-100% to meet demand. Food, water and energy are connected. Energy production currently accounts for 15% of global water use. Food production, including agriculture, takes a 70% slice of water consumption globally, and 30% of energy consumption. In the oil industry, fracking yields more energy, but at the cost of more water use and prolonged dependence on carbon-emitting oil. Climate change – whether natural or anthopogenic – raises questions about how a global population interacts to keep the planet inhabitable, with nation states engaged in an urgent process of negotiation to establish a new multilateral framework for ameliorating planetary climatic impact. Deforestation is estimated to be claiming between 12 and 15 million hectares per year – 36 football pitches every minute.  Some 80% of known species live in forests. Among the benefits of maintaining biodiversity is the current progress in developing antibiotics from soils.

ISSUES

Environmental damage is a by-product of relationships
The 2010 Deepwater Horizon oil spill in the Gulf of Mexico is considered the largest in the history of the petroleum industry. Subsequent investigations pointed to defective materials and procedures, implicating BP’s relationship with rig operators and regulators. But the ultimate causes of what a US District Court finally judged in 2014 to be “gross negligence and reckless conduct” on the part of BP can be traced back to plc structures and world oil markets in which relationships to investors and buyers are reduced to economic connections that largely bypass the stakeholders living closest to the rig.

Regulation is only half the answer
Unregulated felling of the Amazon rain forest is widely condemned, but is motivated by global demand for hardwoods which is defined and transmitted through the economy. Similarly the campaign to reduce carbon emissions is conducted in the context of a continuing global dependence on oil.  These are not systemic evils: they are simply the result of the way Western societies formalize the relationships connecting consumers, producers, company managers and investors. It’s usually assumed that the necessary restrains can be achieved by means of government regulation, with the result that incentivization pulls two ways – in the direction of increasing environmental risk for the sake of returning profit to investors, and simultaneously in the direction of reducing environmental risk in order to avoid penalties or improve company reputation. Across many parts of the economy, the result has been for Western companies and nations to “outsource” the environmentally dirty jobs to countries like China, where the regulatory environment remains more lax.  Western consciences are kept clean without a significant net global gain in environmental quality.

Scale, control and motivation
Environment is always a shared asset. But smaller scales of organisation have the advantage that stakeholders will more easily cooperate to their mutual advantage.  It’s not usually difficult to get the family to spend Saturday afternoon clearing up the yard. At a global scale, however, the relational distance separating stakeholders, including the sheer diversity of interests they represent, can make progress painfully slow. Relational distance not only weakens the motivation to cooperate; it also increases the suspicion that some players are turning an environmental crisis to their own advantage – for example via a carbon tax. In few places is transparency more important, or harder to achieve.

POLICY

Effective action on the environment depends on creating the right relationships in the right places.

Deal with the real issues

Abuse of the environment is often seen as an ethical failure – the short-sighted greed of the few abetted by the ignorance and apathy of the many.  In reality, though, behaviours that lead to oil spills and the build-up of greenhouse gases are driven by the kinds of relationships our economic and political systems create between us as stakeholder groups. So there is an urgent need to address active systemic causes rather than simply to call for greater regulation.

Participate in every level

The global nature of the environmental debate makes it hard for individuals to participate except through diffuse social media discussions or supporting the personalities or groups who champion environmental causes. Exerting pressure as an investor, voter or consumer is important. But many key environmental goals – avoiding waste, energy efficiency, environmental quality – can also be addressed by engaging locally, where, in relational terms, people are most likely to feel direct shared interest, and cooperate to make improvements happen.

Promote the small city

Greater economic organisation at city and regional levels – including companies supported by investors who live in the vicinity – tends to create synergies and promote a focus on the shared interests of all stakeholder groups. City size also impacts on transportation. Individual use of cars (in Europe, and more especially North America) comes at a cost in terms of congestion and higher emissions – and the effect is worsened where cities and hinterlands are too large to navigate by foot or bicycle or where homes and workplaces are separated with a lengthy commute.

Empower the family

Families are crucial units in resource use. How they spend money, and how they dispose of waste, are decisions with far-reaching environmental impacts. The widespread use of processed and manufactured foods, for example, provides convenience, but also signals a way in which families have lost their independence, with a concomitant increase in energy requirements for manufacture, in disposable packaging, and in food wastage. So one small way to benefit the environment – with health, educational, and relational benefits – is to bring more food preparation into the kitchen and make it a social focus.

POVERTY: IT’S NOT JUST ABOUT THE MONEY

Relational Poverty is a pervasive feature of Western societies, affecting both the affluent classes and the economically deprived.

TRENDS

Birth rates in almost all high income countries – and notably in Singapore and Hong Kong – are below the replacement rate, representing a weakening both of the future tax base and also of the relational infrastructure. In 2009, 39 million prescriptions for anti-depressants were dispensed in the UK – more than four times higher than in 1989. One in ten American women takes an antidepressant drug. The number of 15 year olds suffering from anxiety and depression has increased by 70% since the mid-1980s. Thirty-five percent of American adults older than 45 are chronically lonely, as opposed to 20% of a similar group only a decade earlier, according to a 2010 American Association of Retired Persons (AARP) survey. The number of elderly is growing. By 2050, over-80s in the UK will number 5.5 million.

ISSUES

How we measure wealth
It is a truism that money can’t buy you love. And yet the goal of lifting the poor above a certain income level, and thus “out of poverty”, has eclipsed the equally urgent need to maintain society’s relational infrastructure – the network of supportive relationships that human beings at every economic level rely on for their identity, education and wellbeing. The result is a decline of relational capital in developed societies as Relational Distance has increased through the operation of the economic system.

Relational poverty among the affluent
Although close communities remain a cultural ideal in the West, the sheer scale of the churning produced by today’s global capital and labour markets has made Relational Poverty a familiar experience. Families, widely “dehydrated” into nuclear units, are often dispersed further through job mobility or divorce. There is an epidemic of loneliness, particularly among the elderly, whose children may be too far away to provide personal support. Long-term communities of place have given way to shifting communities of shared interest. And advances in communication technology, with their massive potential for making connections, can neither keep pace with, nor fully compensate, the increasing levels of Relational Distance across most of society.

Relational poverty among the poor
The same capital movements that drive jobs and people to new centres of growth also create areas of deprivation, typically with high levels of unemployment and personal debt. Financial difficulties place relationships under stress, and stressed relationships frequently cause depression and loss of self-esteem with a negative impact on employability. In the UK, particularly, the breakup of older communities through rehousing during the latter half of the 20th century has created neighbourhoods plagued by low social contact and levels of relational deprivation that impact on the skills and behaviours of younger generations.

POLICY

Relational poverty can be alleviated by policies that build local relational infrastructure.

Civic identity and welfare

Welfare is more efficient when administered at a scale where those funding and benefiting from payments share a sense of common identity. This sense of shared interest and belonging, as well as the personal awareness of need, is often stronger at city level than national level, so there is a case for creating national standards within which cities have more control over how welfare money is spent

Re-imagine self-reliance

A similar argument applies at family level. At the same time as individuals have become better educated, supported and resourced, families (which after all contain most people’s closest and most enduring relationships) have largely been stripped of economic functions. Consequently, one way to increase society’s Relational Wealth is to take measures that build relational capital in extended families, encourage durability in family partnerships, and help people to be mutually-reliant as well as self-reliant.

Back co-location

At a point where national welfare and healthcare budgets are under pressure it makes sense to put in place tax incentives encouraging co-location of family members, shortening Relational Distance to make it easier for people to provide support and care for vulnerable members. Similar effects can be produced by prioritizing job creation at city level so that graduates and job seekers have more options of employment close to where their family and support networks already are.

EDUCATION: SO CHILDREN CAN BUILD A SOCIETY, NOT JUST HOLD DOWN A JOB

Excellence in education is a product of good relationships – and the ability to contribute to family and society is one of the most powerful impacts education can have.

TRENDS

Across most of the world, successive governments look at what an economy requires and then adapt the education system to its needs, rather than beginning with relational infrastructure and developing the individual’s capacity to relate to different people in different roles and situations. Changing economic and cultural imperatives mean that every education system internationally is in a state of continual and systematic reform, with successive governments sometimes intervening and reversing previous changes. A meta-analysis of 52,637 studies of education published by John Hattie in 2009 concluded that the factor most likely to impact educational outcomes was the quality of a teacher.

ISSUES

Revising the goals
Primary and Secondary models of schooling increasingly reflect the end-use to which they will be put. We think of students as an input to an economic system. An education system founded on Relational principles considers the purpose of education as less about personal development and more about empowering the individual to contribute to the political, organisational and social worlds of which he or she will be a part.

Relationships as educational content
Relational Education places in the foreground three relationships – with family, with community (local, national, international) and with the natural world. Education therefore addresses the question of how students relate to what is around them. Learning to relate to others is where a person’s sense of identity and belonging begins. In other words, relationships dominate not just the mechanism of education but the content.

Relational context
The correlation between relational breakdown and poor educational outcomes is well documented. The problems created by poor or dysfunctional home relationships lead to low levels of motivation and achievement of pupils in schools, and conflict and/or loneli­ness among communities, families and individuals across society. Moreover, those achieving low educational outcomes are also more likely to then experience poverty themselves. 

POLICY

Relationships matter not just in the classroom, but in the support that children receive at home, and in the liaison between professionals in the teaching profession.

Support parent involvement

This means implementing intervention programmes designed to help children improve core skills whilst encouraging stronger bonds between: parents and their child; parents and their child’s school and between parents and the wider community.

Help schools connect

Schools that improve, and sustain improvement, engage the community and build strong links with parents. Where schools build positive relationships with parents and work actively to embrace racial, religious, and ethnic and language differences, evidence of sustained school improvement can be found.

Emphasise Relational teaching

Students who develop positive relationships with teachers achieve stronger academic outcomes. Where relationships are strong in the classroom, they can surmount social inequality; where they are poor or dysfunctional, evidence suggests they reinforce educational disadvantage.

Repair broken links

The existence of positive peer-to-peer relationships in schools correlates well with student motivation, student engagement and academic outcomes. Schools have noted significant reductions in the frequency of reported racism where efforts have been made to gather students and teachers around a table and conduct mediated sessions to repair and strengthen relationships.

SECURITY: PROTECTING RELATIONAL NETWORKS

Unlike military law enforcement, policing is a relational activity whose success relies on preserving trust at local and national levels.

TRENDS

Global comparisons on policing and crime are hard to find – because offences are defined in different ways and not always reliably recorded. Violence used by police varies by country and culture. FBI data for 2012 showed that 410 Americans were killed while committing a crime. There were around 9,000 gun-related murders. In the same year, British police officers fatally shot only one person. In the UK, in response to the economic crisis, police numbers have been reduced. Home Office Statistics show a fall from 244,497 to 209,362 between 2010 and 2014. The number of police constables in England and Wales fell by more than 16,000 (11.5%), while police community support officers (PCSOs) fell by more than 4,000 (almost 25%). In many Western nations, including the UK, overall crime rates have been falling in the 21st century. Various factors may have contributed to this. Police are targeting resources more efficiently (using “CompStat” or “Hotspot” policing). The advent of mobile phones increased personal theft, but car theft and burglary have simply become more difficult.

ISSUES

Crime is a breach of relationship
A common feature of most recorded crime is a breakdown in a relationship between people. This is clear in crimes such as assault or theft. But it is also the case in less targeted offences – for example, poor driving, anti-social behaviour, tax fraud or shoplifting – which indicate a breakdown in relationship between one individual and the wider community, and which demonstrate disregard for the well-being of others in society, however remote that relationship might seem.

Money
The role of money in securing individual and family wellbeing makes financial difficulty a major cause of stress. A Barclays survey showed that money was the most frequently cited reason for arguments between partners. The psychological pressure resulting from personal debt is linked directly with child abuse and physical violence between adults in households.

Policing has positive goals
The greater goal of policing is to enable communities to flourish, building community well-being, enhancing safety, security and confidence. Policing exists to enable people to live together in healthy relationship. Doing this successfully requires the police to relate not just to citizens but to government, communities, non-profits, medical services, schools, social services and businesses.

Prevention is better than cure
“The primary object of an efficient police is the prevention of crime” wrote Sir Richard Mayne Metropolitan Police Commissioner in 1829. The focus of modern policing is on the prevention of harm – preventing the breakdown of relationships and reducing crime and disorder in communities. Much of the prevention work of policing goes unrecorded. While crimes and offences make substantial demands on policing, over half of calls for assistance do not result in a crime being identified or reported.

Intervention in relationships can be crucial
Fractured relationships contribute heavily to most calls for police assistance. Disputes between neighbours, a child missing from home, local disturbances, civil disputes – all have relational causes and require relational responses. The preventive presence of police officers can be a powerful influence in calming down volatile situations, intervening in disputes before they escalate, stopping fights and disorder, restoring peace and order. Police officers intervene as people. Their success depends on forging effective relationships, based on the authority of their office and their interpersonal skills.

Relational causes matter
The underlying causes of crime are often associated with difficulties of education, housing, addictions, mental health and unemployment. While it is not the role of the police to solve these alone, they have a key role to play in contributing to the solution, particularly as they will often have unique information through their role at the point of crisis. A compelling argument can be made for intervention as early and appropriately as possible to solve problems before they escalate. This is usually done in conjunction with other agencies or organisations. Tackling the problems of drug misuse, anti-social behaviour or youth disorder are delivered most successfully by agencies working together, and investing in solutions to tackle underlying problems over the longer term. Such approaches are also effective in tackling major crime, serious organised crime and terrorism.

Protection for, not just protection from
Safety is a basic human need and we expect the criminal law to protect us from harm. Living in fear for one’s own safety undermines the ability to build strong community links and contributes to personal isolation, loneliness, vulnerability, poor health and a lack of well-being. But the police also have a role in safeguarding democratic processes and many other aspects of social life – upholding human rights, encouraging free speech and facilitating marches and demonstrations. This role underpins not only personal relationships but also the individual’s relationship with society and the nature of society itself.

Investigation relies on relational networks
When prevention and protection fail and a crime is committed, then investigation and the due process of law are necessary. In response to a reported crime, the police act on behalf of both wider society and the victim of the crime. Their responsibilities are to investigate, to gather evidence, with a view to identifying offenders and bringing them to justice, through arrest, and report to the relevant prosecuting authority. Successful investigation depends on information from the public and their willingness to cooperate with the police enquiry. The cooperation of victims, witnesses and the general public in providing vital information will reflect the quality of the relationship between the police and the public, including the extent to which the public trust the police, and whether they believe that the exercise of police power is legitimate and subject to the rule of law. Such trust and confidence will be informed by the behaviour of individual officers and by the reputation and perception of the institutions of policing.

POLICY

Zero tolerance of corruption

Much more harmful is where policing activity actually abuses relationships. Examples include abuse of power and a lack of legitimacy, where the power and authority of police officers is misused for personal gain or gratification and corruption. There are many countries across the world where the police are wholly distrusted by the population because they abuse their positions, and cannot be trusted to act with legitimacy on behalf of the citizen.

Technology to facilitate relationship

CCTV and cars (and I would add computers, internet/social media) – concern the methods, rather than the core, of policing. Relational policing does include responding rapidly to incidents, and by doing so, increasing public confidence and trust in the police. If used properly, CCTV can be very effective in enhancing safety and preventing crime (as well as an effective investigative facility). Most young people today would expect to be able to contact the police on-line and would expect a speedy response. The police need an on-line presence to prevent and to investigate internet crime, which can be very harmful and damaging. From a relational policing perspective, all technology should be used as a tool to support relation-ships with the public, and not as a substitute for good relationships.

Elite skills, not elite attitude

Armed policing is a necessary aspect of modern policing. We would expect the police to be trained and equipped to deal with a terrorist attack, or a more ‘ordinary’ armed criminal gang. The principles of relational policing apply equally to armed officers; they still need legitimacy in their exercise of force, they need to act with integrity on behalf of society in a way which enhances trust and confidence. The harm comes when they somehow think they are elite and above the citizen.

Societally shared values

The quality of the relationship between the public and the police is built on the public’s trust in the police. Do they believe that, on the whole, the police act with integrity, irrespective of the pressure individual officers are under? Do they feel that the police are “on their side”, acting on their behalf – and not as “the enemy” or an army of occupation? In many nations, where police work is marred by corruption, the relationship between police and population needs to be addressed as an urgent priority.

RISK: ALMOST EVERY RISK IS RELATIONAL

While some adverse events have purely natural causes, most are a product of human interaction, and in every case the impact is absorbed, transmitted and mitigated through relational networks. For organisations, relational risk can be measured, assessed, and managed.

TRENDS

Formal mechanisms for transferring risk – like insurance, hedging and securitization – are recent developments, and risk management as an academic discipline and corporate function is still emerging. In current usage, a risk is defined as a probability or threat of damage, injury, liability, loss or other adverse event caused by internal or external vulnerabilities and, at least theoretically, avoidable through pre-emptive action. There is a difference between pure risks, which are unavoidable and can only result in loss (earthquakes, pandemics, identity theft), and speculative risks, which are accepted by a risk-taker on the basis of a cost-benefit calculation (advertising campaigns, military ventures, any purposive action). For large organisations, risk is complex and normally – and with some difficulty – reduced to a common measurement of financial exposure. Companies and other organisations are starting to take seriously the measurement and management of Relational Risk, externally in relation to investors, suppliers, staff, customers, environment, community, and government, and internally in relation to Boards, staff and divisions. 

ISSUES

Relationships create networks of risk exposure
There is a sense in which all risk beyond natural disaster is relational risk – because nearly all processes depend on cooperation. Any decision to associate yourself with another person or organisation comprises an extension of risk exposure. Partners entering marriage or civil union are formally combining not just their strengths but their vulnerabilities. Taking on a new employee requires active trust in that person’s competence, operational ability, and willingness to comply with health and safety regulations. Similarly, no relationship fails in isolation. The impact of a separation, resignation or betrayal ripples through families, friendship networks, workplaces and sometimes whole organisations.

Relationships are the channels of moral hazard
Moral hazard – the tendency to be lax about risk-taking if the cost is borne by others – is a familiar term in insurance, but is actually a relational risk set up in any situation where one party to some degree guarantees the wellbeing of another. Failures to tackle current environmental problems or to pay off national debt are, in effect, decisions to load risk onto the next generation. The principle of caveat emptor addresses the risk taken on by giving currency in exchange for goods that might or might not justify the valuation. Moral hazard arises in all kinds of relational settings, from company expense accounts to bailouts, tax evasion, price-fixing and the abuse of NHS services.

Relationships as role definitions generate systemic risk
At the same time, exposure to moral hazard is unavoidable in the sense that the inability to spread risk leads to risk aversion and stagnation. A good example is limited liability, which institutionalizes moral hazard by shielding investors from risks undertaken by the company they invest in. This stimulates growth – but it also creates obvious injustices and sometimes staggering economic reversals. Behind these problems lie weak relationships. Regulation is often patchy, insufficient, or applied after the fact. And the scale and pace of the modern economy tends to connect people as classes, relying on dealings transacted over distance by people whose lives otherwise barely intersect.

Relationships as a fundamental asset are subject to depreciation
There is a risk from relationships – to organisational goals like profitability. But there is also a risk to relationships. The way in which people and organisations relate to one another add up to a form of capital that can appreciate or depreciate in value and utility. Relational capital can be damaged by catastrophic events like wars and natural disasters. But it is also – and far more relentlessly – subject to systemic relational risks, including both the rules of engagement set by organisational practice and the wider political-economy, and the cultural attitudes governing the way relationships themselves are conducted and valued.

POLICY

The way to achieve greater trust in business and government is not to make ethical appeals, but to restructure the kinds of relationship that connect stakeholders together.

Take pre-emptive action on relationships

Relationship problems multiply when unaddressed. Poor communication up the chain of command can mean that employees’ grievances build up unnoticed by management, and are likely to become contagious, becoming visible in sick days and diminished productivity. Sometimes success and sustainability rest on apparently simple adjustments to relational proximity, including prioritizing regular face-to-face meetings, willingness to accommodate, keeping adequate records, and holding information in one location where different parties can get access to them.

Know your crucial relationships

In organisations, some relationships are more crucial than others. They may be internal or external. They may reference specific pairings of individuals, or – typically in larger organisations – roles between office bearers or between stakeholder groups. With developments in IT and social media, many important connections are now discovered and maintained online. Search engines have produced something of a relational opportunity dividend, exponentially increasing the ease with which like-minded people can find one another and associate. By contrast, connections with key stakeholders or collaborators may be underused, unmanned, never created, or degraded or lost in the process of staff turnover.

Know how likely relationships are to fail

The obsession with trust in modern business signals a relational problem – but misses a relational solution. It’s possible to assess the chance of a relationship failing by using relational risk mapping based on the relational proximity criteria of touch, time, breadth, overlap and balance. These provide a reading of a relationship’s “bandwidth”. Touch, time and breadth deal with the nature and frequency of interactions. Overlap and balance indicate how far the parties pursue the same goals and the steepness of the power gradients that separate them.

Don’t just trust

Much of the discussion of trust in business makes a weak appeal for morality. But organisations can substantially increase the amount of trustworthiness in relationships simply by paying attention to the way the organisation defines and cultivates relationships. Greater relational proximity creates greater alignment, greater loyalty, greater understanding, and greater motivation. It also helps to eliminate vulnerabilities of the kind that have led to abuse of the disabled, elderly or children in care or mission drift of the kind that led to the recent resignation of Tesco’s CEO Sir Terry Leahy for “eroding customers’ trust.”

Protect your company/organisation

Think of using Relational Analytics as a way of measuring and managing Relational Risk in your organisation. For more details please visit the Relational Analytics website.

PENSIONS: ALL IT COSTS YOU IS A LITTLE TIME

A relational pension stores up “relational capital” – relationships with family and friends that will give crucial support after retirement.

TRENDS

A 2006 UK study estimated that “among those aged over 65, between 5 and 16 per cent report loneliness and 12 per cent feel isolated. These figures are likely to increase due to demographic developments including family dispersal and the ageing of the population.” In the UK, the number of people aged more than 80 is expected to treble in the next 20 years, while those aged over 90 will double. In 2006, 7.2% of Europeans met friends or relatives less than once a year. Mediterranean countries tended to be among the most ‘social’ – especially Cyprus, Greece and Portugal, where about 40% or more met friends or relatives on a daily basis. Between 1950 and 2010, the number of single-person households in the USA rose from 10% to nearly 27%. By 2033 it is expected that 41 per cent of all households in England will be single-person. This compares with 12 per cent in 1961. Australian Facebook users (roughly half the total population) were recently shown to feel slightly more bonded with friends but to experience “significantly higher levels of family loneliness.”

ISSUES

The need crisis
Particularly as life-expectancy increases, retirement presents challenges. At some point it is likely to involve failing health, including reduced eyesight, hearing and mobility, and decreased energy levels. Also, over a third of cancers are now diagnosed in people aged 75 and over. These are not simply technical or biomedical problems. More than ever, we need family and friends to be there for us, providing physical and emotional support. But whether that happens depends a lot on decisions we have made much earlier in our lives – decisions that affect investment in relationships.

Relationships affect outcomes
The evidence shows that family and friends are fundamental to our health and not just bonuses or “nice extras.” Close relationships can help to keep depression away and help you live longer. They can even be integral to overcoming cancer, with studies connecting social isolation to higher mortality rates. At a purely practical level, when healthcare professionals in hospitals are at full stretch, friends and family provide emotional support and ensure that we are properly looked after.

Relational Pensions cannot be state-provided
One effect of our finance-centred culture is that many see their financial pension as the only major issue: if they have enough money, everything else will fall into place. But the evidence shows the contrary. Every year, many elderly people die alone, and increasing numbers of elderly people complain of having little human contact. And this is happening at a time when both NHS and social work departments are operating on tight budgets, and fewer people are giving time to volunteer.

POLICY

Relational Pensions accrue through personal effort – but government policy plays a role in how easily people can invest time in relationships.

Family as a foundation

One simple way to build your relational pension is to prioritize your close relationships, and to create a family with the goal and expectation of permanence. There is a critical balance to be struck between maintaining individual wellbeing and recognizing that long-term benefits can only be obtained on the basis of meaningful long-term commitment. Staying with your partner and assigning quality time (and lots of it) to your children will give your closest relationships durability and resilience.

The non-financial purposes of work

Work is a key source of relationships. But in most organisations the workplace is also subject to pressures that put relationships in second place. The felt need to stay on at the office, or work unsocial hours, usually involves a cost in terms of your relational pension, because you may not be there at relationally important times – like family meals or your children’s one-off school events. Your time is as much a currency as your money. You can progress up the pay scale, but you will still have exactly 24 hours a day. Investing that time in relationships should be a priority. It’s not complicated stuff – but it has a powerful effect.

The value of rootedness

Mobility in society brings many opportunities, but it also stretches our relationships in a way that we cannot fully compensate for with digital media. Moving house or making a long-distance career move will have multiple relational consequences, and engaging in a cycle of regular mobility can prevent you from building up meaningful relationships. So it is useful to ask the right questions when opportunities to move come up. Rootedness may involve a financial penalty, but this has to be weighed against the losses you will take in your “relational pension fund.”

BUSINESS

Approaching business from the point of view of connectivity would transform the way in which companies operate and their impact on society.

TRENDS

Short-termism
Quarterly reporting and pressure to maximise shareholder returns drives the push for consistently increasing dividends and continued growth in capital value. This short-term approach can stifle long-term planning and funding of research and development and hinder long-term growth.

Excessive renumeration
Lack of engagement by shareholders has been one reason for the growth of the so-called ‘bonus culture’ and the excessive remuneration of directors loosely based on the financial success of the company.  This has recently begun to receive more media attention, with some large investment groups now putting pressure on boards to rebalance their priorities. 

Employee treatment
Employees are often subject to demanding terms of employment, work long hours with attendant pressure and stress,  receive the minimum wage, and have to plan their work around the uncertainties of  zero hours contracts.

Debt
High levels of debt can cause instability in a company.  Downturns in the market, as occurred in the 2020 lockdown, can limit revenues and make debt unserviceable, resulting in restructuring, refinancing, or formal insolvency proceedings.

Tax
Multinational groups paying little or no tax on profits earned in a particular country, often by sheltering tax liability through other companies and in other countries, has generated widespread concern and condemnation from government, media and the public generally.

ISSUES

Loss of connectivity between providers and users of capital
Given the structure of listed companies and the development of the share trading markets, many capital providers, who usually invest in companies through intermediaries, have little or no knowledge of where their funds are invested, and no knowledge or interest in the operations of the company and its impact on other stakeholders. Shareholders as a body have an ownership interest in the company and they benefit financially from it, yet they often have little responsibility for its operation and  its impact on society.

The impact on director motivation
The directors who manage a listed company on behalf of the shareholders are driven by what they believe is the requirement of shareholders to produce short-term and ever increasing profits, dividend payments and capital growth. Achieving this can lead to pressure on employees in the form of wage restraint and long working hours, reducing incentive and commitment. It can also mean suppliers are not treated fairly – typically through late payment. 

The wider consequences
Ever increasing pay differentials between the highest and lowest paid in companies show scant respect or appreciation for the hard work and commitment of the lower paid. It is no surprise that many companies on which we rely for day to day living are held in low esteem for their wider business practices.

POLICY

It is possible to change from a narrow financially-driven shareholder focus towards a broader social capital approach, which embraces the interests of all stakeholders.

Build relational companies

A relational company is one where the interests of all those who have a stake or interest in the company are put at the heart of the decision-making, management and operations of the company. These stakeholders include those who rely on the success of the company as an investment, a job and career, a livelihood (as a supplier), a customer (who buys goods or services), the local community where the company operates, and society more generally. If the interests of stakeholders are aligned with the company so the business is run with a sense of a community of interest for the benefit of all stakeholders, it should become more competitive, productive, stable, sustainable and successful.

Measure stakeholder relationships

Although the value of stakeholder relationships is increasingly recognised, there has been no effective way to measure the quality of those relationships nor how to introduce the relational ethos in a practical way into company decision-making and operations. However, companies can now test the quality of their relationships with particular stakeholders by carrying out an assessment based on the connectivity, in the form of the Relational Proximity Framework.

The relational business charter

An independent review of published company information can show how it measures up to the ten principles of a Relational Business Charter. These principles provide a benchmark for a relational approach and address matters such as the extent of dialogue with stakeholders, encouraging long-term holdings of shares, recognition of the value of and rewarding of all employees, fair treatment of suppliers and customers and responsibility to the local community and society generally.

The virtuous circle

Companies which embrace and promote the interests of all stakeholder groups rather than focus on the short-term requirements of shareholders will be likely to attract investors, employees, suppliers and customers and lead to the restoration of trust and confidence of society at large in the corporate world. 

HEALTHCARE: THERE’S MORE TO MEDICINE THAN FIXING PEOPLE

Healthcare highlights the crucial role played by high quality relationships within care systems and as a contributor to health and recovery.

TRENDS

High income countries now face significant demand pressures from an ageing population, technological advancements that enable more conditions to be treated, and growing pressures from obesity, alcohol abuse and mental health. As systems of health and social care become more complex, more specialised, more expensive, and subject to ever more intense political scrutiny, the risks of weak organisational and inter-professional relationships become more acute. Health is a major contributor to wellbeing. Where people cannot access healthcare, or the care is poor, there are avoidable deaths and impaired quality of life. Conversely the prevention and treatment of disease means that fewer parents see their children die, pain is relieved, and the ability to participate in society enhanced. While healthcare is still often seen in terms of the treatment of disease through technological innovation, there is now greater awareness of the contribution to public health of, for example, improved sanitation and nutrition, as well as the benefits of strong social support. A recent meta-analysis concluded that the influence of social relationships on the risk of death is greater than that of physical inactivity and obesity and comparable with well-established risk factors for mortality such as smoking and alcohol.

ISSUES

Care quality and risk
Reviews of major service failures consistently highlight the role of weak relationships. Knowledge is not shared, communication is misunderstood, poor practice or decisions are not challenged and personal and organisational goals are misaligned. Alongside this the relational essence of caring and therapeutic relationships have been compromised by service design, staffing pressures and organisational cultures. Among the results are neglect and abuse of service users, particularly older people and those with disabilities.

Partnership and collaboration
The knowledge, skills and resources to make a difference are rarely located in one profession or organisation. Organisational silos, differing funding streams and accountability processes, as well as different professional cultures and training consistently impair the integration of services around the needs of patients and service users. Professionalism is no longer confined to knowledge and technical skills, but must also be reflected in the development and conduct of relationships with patients and communities, own and other professions, partner organisations, and regulators and policymakers.

Delivery and partnership
Where the funding of health services is the subject of intense political debate, there is great pressure to show that spending translates into improvements, often linked to pledges and targets. The pressure to meet targets easily causes long term damage to trust in relationships and distorts outcomes.

Reform and modernisation
Reform leads to changes in organisations, in care pathways, and in the ways services are purchased or commissioned. Failure to consider adequately the impact on relationships compromises the effectiveness of such programmes. After a significant re-organisation it can take months – and usually years – to regain the same levels of understanding and trust that are necessary to manage a complex system effectively, with an overall loss of effectiveness and efficiency.

ACTION

Treatment and care are delivered through relationships, and relationships represent a large part of the support system through which patients recover health.

Public health and relationships

Local public health bodies (such as Health and Wellbeing Boards in the UK) should have good data about the state of relationships in their area, should seek to foster high levels of social support, and promote access to relationships support and counselling.

Consider the relational impact of reform

Changes to both national policy and local services should be informed by better understanding of the state of the relationships that are essential to these programmes, and how those relationships might be affected by the changes.

Integration of services

These should be driven by a focus on patient needs and health outcomes. Barriers to effective relationships should be systematically identified and addressed.

Relational risk assessment

Health professions, service managers and regulators should all act with greater relational literacy to ensure that relationships that might give rise to service failures or impact patient safety and care quality are identified and addressed.