Measures of relationship capital for the Value Scorecard

J. Stephen Town10th Northumbria International Conference

Tuesday 23rd July 2013

Summary

• Concepts of relational capital• Some foundation theories– Transaction costs– Trust (as a component of social capital)

• Cases: Academic & Special Library history– Embedded librarians– The fall and rise of academic liaison– CRM in libraries

• Conclusions– A framework for relationship value measurement

The Value Scorecard

Value & Balanced Scorecards

Rationale for relationship measurement

• The Library is still “a growing organism” (Ranganathan Law 5)

• Engagement and understanding of stakeholder requirements and context is essential for service design in changing times– The role of relationships in innovation and new

service creation is therefore critical– “Success is a function of healthy relationships”

• Value measurement of all activity is crucial in constrained or customer-oriented contexts

RELATIONSHIP CAPITAL VALUEFoundation concepts from economics and management

Relationship capital (RC)

Definitions

“the sum of all of the relationships of all the people within an organisation”(relatedvision.com, 2013)

“the value of relationships that an organisation maintains with different agencies of its environment”(Euroforum, 1998)

“the intentional building of a system-wide understanding and capacity to act, which becomes the asset or ‘glue’ for creating the context for achieving goals ”(Darling & Russ, 2000)

RC attributes and consequences

– Individual and personal– internal as well as external– markets, power, and cooperation– knowledge sharing and problem solving– creation of brand & reputation through

connections– creates or destroys value– dependent on behaviour and character

Calculating RC

• In accounting terms, RC is about the effect of goodwill as an intangible asset which increases market value

• Factors for calculating RC– position power and personal influence– types of relationship– strength of relationship– number of touch points– as a source of innovation– measured outside the institution

Fukuyama, Trust (1995)

“if people who have to work together in an enterprise trust one another because they are all operating according to a common set of ethical norms, doing business costs less”

“by contrast … legal apparatus serving as a substitute for trust, entails what economists call ‘transaction costs’”

Transaction cost theory

• Coase The nature of the firm (1937)• “Trust lubricates co-operation” Putnam (2004)• “focuses on those costs associated with

human interaction” Fussell et al (2006)– if social capital exists, then transaction costs can

be managed [down], providing a tangible benefit to outcomes

Social capital and relationships

• Social capital and trust are in inverse relation to Transaction costs

• Social capital cannot be built on your own!

• Effective relationships add value and save cost where they build trust; so human interaction measures are a key indicator of value

“There are intelligent [libraries] and stupid [libraries] … intelligent groups gather information better and adapt better to reality… thus we find ‘social intelligence’

Anglada (2007) quoting Marina (2004)

McHale (2006)

The “strength of relationship index”

• 15 relationship dimensions– Includes satisfaction, trust, commitment,

advocacy, goodwill, repeat business• StoRI• Provides a numerical relationship capital

“dashboard”

Relationship marketing

The commitment-trust theory of relationship marketing (Morgan & Hunt, 1994)

“the turn is towards relationship marketing, a concept that encompasses … relational marketing …working partnerships … strategic alliances and internal marketing [this last idea from Berry & Parasuraman]”

Total relationship marketing

Gummeson’s list of 30Rs (2002)

• Classic market relationships (1-3)• Special market relationships (4-17)• Mega relationships (18-23)• Nano relationships (24-30)

Many relevant to libraries within parent organisations and complex relationships with various stakeholder groups

Other possibilities

Sussan, F. Consumer interaction as intellectual capital (2012)

– C2C interaction as subcomponent of relational capital; could be considered in relation to social media activity in libraries

Peck & Payne Six market model (1998)

DANGEROUS LIAISONSApplication cases in libraries: people, markets, relationships

The embedded librarian

Gertrude Lamb Clinical Librarianship (1971-)

• “the clinical librarian as a member of the patient care team”• “a valuable interface … the key to better patient care”• “ … must observe the ways in which health professionals are

currently seeking information”• “a working member – not just an observer – of the team”• “I can measure my acceptance”• In 1984, described the application of the Rothenberg Model

for effectiveness and efficiency

The measure of academic liaison

The effective academic library (1995)

Integration

Indicator P1.4 Liaison“evidence of formal and informal communications between the library service, the senior management of the institution, academics and students … to assess the degree of effective and dynamic communication to inform service provision”

The measure of academic liaison

Johnson, 1st Northumbria Conference (1995)

• Two broad headings: activities and relationships– Academic liaison primarily about the latter

• Seven relationships [markets]• Effectiveness measure: relationship quality– ‘Warmth’ variation?– ‘Trouble free’ but is smooth good?

The nadir of academic liaison

• Bangor University (2005)– reduce 6 subject librarians to 1 user support officer– “the support … from the qualified subject librarians is hard to

justify in value-for-money terms at a time when the process of literature searches is substantially de-skilled by online bibliographical resources”

– East (2007) a literature review on “The future role” mentions neither ‘marketing’ nor ‘relationships’ but does allude to ‘traveling’ staff models

• SOAS (2005)– Redundancy notices to 4 subject librarians– Posts saved because of relationships with academic staff

Library CR initiatives

• Broady-Preston et al (2006)– CR case studies from Malta and the UK

• Wang (2006)– CRM into Hsuan Chuang U Library

• Anglada (2007)– Typology of alliances and social intelligence; six types

• British Library (2009) – CRM initiative to reduce 37 CR databases

• Sharma et al (2009)– Singapore National Library System and RC

• Daniels & Killick (2013) Cranfield– Creating and using the Barrington Liaison Tool for recording and analysing

customer communications

The transformed role (2013)

• The concept of “brokering”• The concept of “engagement”• The concept of “selling” against a “service

catalogue”• Two-way voice; department-library; “insight”• Functional elements becoming stronger, but a

necessary relationship retention• Research support through “internal

partnership”

A FRAMEWORK FOR RC VALUE MEASUREMENT FOR LIBRARIES

Conclusions

Niels Ole Pors, 7th Northumbria Conference (2007)

‘Social capital, trust and organisational effectiveness’

– Trust is probably a relevant concept in relation to information behaviour

– Trust is probably related to fulfilment of information needs– Trust is probably related to institution’s degree of

effectiveness, efficiency, perception of competencies and positive personal interaction

– And finally, trust and social capital are concepts that will be more fashionable in the coming years

Other ideas

Huotari & Iivonen Knowledge processes: a strategic foundation for partnership between the university and its library (2004)

• The library’s role in productive knowledge processes

• Relationship of the intellectual capital of the library to the University’s intellectual capital

Kostagiolis & Asonitis, Intangible assets (2009)

Relational capital intangible assets

– Users training– Collaboration between academics and subject specialists– Participation in information networks– Trust and cooperation within staffs– Lists of users– Agreements with authorities– Reputation– Brand name

Kostagiolis Managing IC in Libraries (2012)

Kostagiolis Managing IC in Libraries (2012)

Seven market model for academic libraries

Components of relationship measurement

• Consciousness & Congruence• Communities & Communication• Causality & Comeback

partly inspired by Darling & Russ 5 ‘Cs’ (2000)

Awareness & Fit measures

Consciousness

Measures based on a general audit of the relational space(using the 7 markets model)

Congruence

The degree of fit of relationship activity to the parent institution

Gaps may then be deduced when this is set against the audit

Strength & process measures

Communities

Data, potentially from a CRM system, used to assess a level of strength of relationship across all relations

Communication

The measures of the process of communication which develop relationships within each sphere

Could be down to the level of individuals

Return on relationships

Causality

The specific outcomes and impact of positive relationships on academic process, innovation, finance, quality and staff development

Comeback

The specific ensuing returns to the library of repeat benefits of relationships

Acknowledgments

• Ruth MacMullen, Research Assistant• Rachel Daniels & Selena Lock, Cranfield

Michelle Blake, Relationship Manager, York• UK academic library colleagues engaged in the

White Rose and “Relationship management for the 21st Century Library” activity