Social Skills and Relationship Skills

Our world is mesmerized by appearance: the handsome movie star, the glamorous actress, the one-liner politician, and all of the trendy and beautiful people – they look out at us from every magazine and from every screen. When we meet them occasionally in real life we are tempted to accept them at face value.

In business, social skills seem to mark the highly successful person. We envy someone who can walk into a room, figure out who is important, and is able to make just the right comments instinctively. They can tell stories and jokes with aplomb, they go to the right restaurants and resorts, and they are usually in the know about most popular topics.

But in my long business experience, social skills are often not enough to go the full distance. Obviously, social skills are a real asset in sales and in management. They can facilitate effective presentations for technical experts. But entertainment skills without real substance in building long term relationships don’t work for very long.

Those with the best social skills often burn out early. They often go from one position to another and change employers frequently. They may promise too much and deliver too little. They don’t always wear well. People with social skills alone lose their credibility over time.

The missing ingredient for successfully working with people in the long term is relationship skills: the ability to build and maintain important relationships for many years with the people who matter most, whether inside or outside of an organization. I have worked with highly successful people who were deficient in their social skills, but nonetheless had remarkable relationship skills.

Obviously, having strong technical, financial or other specialized business skills also makes a big difference in building business relationships. But apart from knowledge and expertise, there are other ingredients to building effective relationships:

• Commitment to building relationships People are the most important ingredient in any business, so they must always have first priority. People are more important even than projects or profits, since there are no major accomplishments possible without developing effective relationships. Commitment means spending time with people and regularly calling or visiting key people that you don’t see in the normal course.
  
  
• Integrity In the long run, if you are not trustworthy, your relationships will fail. And if you waste your time developing relationships with others who lack any integrity, you will be disappointed!
  
  
• A long term focus Relationships take lots of time to develop. A powerful presentation without much follow up will never suffice to gain a really important relationship. Tending relationships is like growing plants – they require constant care and attention to flourish. (However, too much attention is invasive and will be unwelcome.)
  
  
• Selectivity You need to choose carefully with whom to invest yourself in relationships, since they require much continuing effort. Obviously, you can have numerous light relationships with a low level of activity and commitment, but key relationships need more focused involvement.
  
  
• Empathic listening Listening attentively to others is the key to understanding them and to ultimately delivering to them what they seek. We all gravitate to those who are sympathetic and understanding of our own needs.
  
  
• Reciprocity Relationships ultimately need to be based on mutual satisfaction, although at times, one party may be delivering much more than the other. If you invest in a relationship, you can eventually make legitimate requests from that person.
  
  
• Focus on others more than self Those with social skills alone usually fail: they are so impressed with themselves that they are not truly impressed with other people; before long this becomes all too apparent.
  
  
• Loyalty People can not be fooled about whether you are loyal and reliable, or just opportunistic and fickle. Maximising short term profits in a business relationship often prevents you from developing a more valuable longer term relationship.
  
  
• Offering value We offer value on both a personal and on a business level. Few customers or associates are fooled about those who manipulate and exploit, rather than delivering solid value.
  
  
• Sincerity and candor Social skills often depend on adopting a persona or image that is not authentic. Real relationships require honesty, vulnerability and self-disclosure.
  
  

Relationship skills obviously apply to other dimensions of our lives beyond business. Strong relationships help develop family and community. The best business environments are those which seem like family or community, where all can share in the success of the enterprise.

A leader with high relationship skills creates powerful morale which ensures the success of their enterprise. A glamorous personality is far less important for long term success. Social skills are only valuable in business when they are employed as a tool for developing lasting relationships.

Finding Sound Economic Advice

One of the hazards of managing your money and planning your career is that finding good economic advice is almost impossible.

You can’t trust economic forecasts. Economists are good at providing data and charts, but their forecasts should not be taken seriously for two reasons:

• Economists are typically employed by governments or commercial organizations, which have agendas quite different from neutral economic analysis. In particular, overly optimistic forecasts are used by financial institutions to get you to invest money where they will be able to collect high fees.
  
  
• Furthermore, economic models are fundamentally incapable of predicting the future, because economics is not a science; at best, economists might be able to tell you approximately where the economy is now and to predict a continuation of recent trends.

Even worse, you can’t trust the governments who collect and interpret the raw economic data which economists use in their models. Governments believe that their job is to keep the population happy and optimistic, so they continuously revise their data systems to make the statistics seem more pleasant.

Check out John Williams’ Shadow Government Statistics (http://www.shadowstats.com/cgi-bin/sgs?) He says:

Have you ever wondered why the CPI, GDP and employment numbers run counter to your personal and business experiences? The problem lies in biased and often-manipulated government reporting. We offer an exposé of the problems within the reporting system, and an assessment of underlying economic reality.

I do not endorse this newsletter (nor do I endorse any other source), but it is a sobering contrast to official data. Most likely, John Williams overstates his points somewhat, but his fundamental conclusions are absolutely in the right direction. He believes that inflation is much worse than reported; that government deficits are worse; that economic growth is lower, if not negative; and, that money supply growth is far higher than claimed.

The recent euphoria in the global stock markets seems mostly a result of low interest rates and rapid growth in the supply of money. The American Government has been pouring out cheap money at rock bottom interest rates in order to prevent an economic meltdown. However other governments around the world are now tightening credit to tame inflation, but I wonder if global inflation isn’t already beyond control by such modest tightening.

So my outlook is much darker than that of official forecasts. I am gradually selling all the stock I plan to dispose during this boom cycle. Not that I am predicting all gloom and doom, like some soothsayers. But the immediate future is clouded by the spectre of rising inflation which will likely drive up interest rates and bring down stocks, real estate and economic growth.

I am not trying to set my self up as a new financial forecast guru; I assure you that I have no crystal ball at my desk. However, my lifetime experiences of studying at Harvard, working as a banker on Wall Street, and later as a corporate executive, cause me to doubt governments and economists. Their motives are rarely just to provide objective advice, but rather to soothe and to encourage.

Not everything is dark and gloomy in the economy, but there are major warning signs. Inflation scares me. Just look at how drastically prices have jumped for gasoline, houses, commodities, and for many other products in recent years.

Sound financial management pays off in the long run. Do not get further into debt. Do not buy real estate with little money down. Do not buy stocks with borrowed money. Do not assume that your income will always rise faster than your expenses.

And be careful of following the crowd in economic matters – they could be quite wrong. I hardly know where you can find sound economic advice in a field of so many commercial and political motives. Maybe you might just have to think for yourself!

(As a footnote, several points in my December 7, 2006 blog Investment 102: Stocks have now been confirmed by a major financial study at the University of Toronto. After analyzing the performance of a broad spectrum of mutual funds, they found that they generally perform noticeably worse than the general stock market, because of the exorbitant fees charged by the mutual fund industry; this is exacerbated when investors switch from one mutual fund to another, vainly trying to find the best mutual fund. These professors found that investing in stock market indexes with very minimal fees would have served most investors far better. They have confirmed what I told you in December. Thank God, there are a few objective souls out there providing helpful economic information in a sea of financial misinformation!)