A recent survey of 60 executives conducted by Finity, found 62 per cent believed their organisations were “a long way behind” best practice and a further 21 per cent said they were “doing nothing effective in this area.”
Almost all of those surveyed agreed, however, that social capital – the state of a company’s relationships with shareholders, customers, staff and other stakeholders – was as important as financial capital.
The failure of large organisations to measure and manage their social condition was one of the key findings to emerge from the Hayne Royal Commission. Finity Principal, Hadyn Bernau, believes many organisations are grappling with how to improve their internal and external relationships and identify social risks before they manifest.
“The organisations I’m talking with are increasingly dis-satisfied with their current approaches and measurement tools, and are looking for new frameworks that better identify relationship weaknesses and blind spots, and provide leading indicators.”
Relational Analytics is a methodology designed to help companies build a clearer picture of their social condition though the lens of their stakeholder relationships. Mr Bernau believes that Relational Analytics could have predicted, and potentially prevented, much of the recent public loss of trust in the financial sector.
“Communication is increasingly mediated by technology, relationships are more transactional and lack continuity with specific company representatives, leaving customers feeling unheard and less connected to the typical large organisation. These are some of the aspects measured by Relational Analytics.”
Developed in the UK and introduced to Australia by Finity, Relational Analytics can be used to measure relationships vertically – up and down the hierarchy – and horizontally across different business units, testing for “pockets of collaboration” and “silos”. It is also used to assess the state of relationships with customers and other external stakeholders.
Mr Bernau said actuaries were uniquely placed to address issues affecting a company’s social condition. “As actuaries, our skills are in understanding, measuring and protecting financial capital. We are applying these skills to the world of relational capital, which we estimate makes up around 40 per cent of the value of a typical company, or more than $5 billion for each of Australia’s largest insurers”.
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