Improve Teamwork Success by Applying the Principle of Transactional and Relational Exchanges
I developed the following model to communicate the essence of partnering between any two entities, whether people or groups, and whether external or internal to an organization:
Partnering = Exchange + Expansion + Integrity
Let’s look at collaborating across boundaries — or what is frequently called partnering — and the first of three keys to sustainable partnering across any boundary: exchange.
We’ll take up expansion and integrity in future posts.
Teams are increasingly called on to partner with the business, with external suppliers, or with the offshore provider. But what does partnering mean? Usually, partnering refers to a sustained business relationship of increasing credible commitment and trust — as opposed to credible threat and distrust — between two or more entities, each governed separately.
Supply chains in many industries, notably high-tech, have pursued partnering to
- reduce costs
- improve quality
- accelerate pace
- improve forecasting
- manage technology roadmaps
- and more
And more and more software development teams are being called on to partner with the business to deliver more valuable solutions as — and where — needed in the business.
Two Types of Exchange: Transactional and Relational
Transactional Exchange
You would not continue doing business with an entity that took unfair advantage just because they could get away with it. If you are a provider, you would walk away from a customer that would not pay you a price that would allow you to remain in business and grow. And if you are a customer, you would walk away from a provider that charged you more than the value you received from the product or service. This type of exchange is generally called “transaction exchange” and partners tend to repeat the same or similar transaction over and over again.
In order to remain partners, entities who enjoy a world-class reputation for being great partners insist that they make the exchange fair or more than fair. They take responsibility for fully understanding and making equitable both sides of the deal. They do not begrudge their partner a profit — or at least don’t begrudge their partner the desire to remain within budget constraints.
In fact, the essence of collaborative leadership in a partnership is wanting your partner to survive and thrive. That’s a wildly different point of view than the “cut ’em and leave ’em bleeding” perspective of many bargainers in business.
Relational Exchange
The second type of exchange is vitally important but less well understood. Some call it “psychological exchange” or “relational exchange,” and it refers to the quality of the interaction in the relationship. An example: a situation where you decided to not return to a store, restaurant, gas station, airline, or other provider because the transaction was overly frustrating or distasteful. You felt “out of exchange” in the relationship — you did not deserve to be treated that way.
Partners measure the success of their relationship on the satisfaction of the other partner and constantly innovate in relationship management processes and procedures to improve the relationship satisfaction. Think of the airline, hotel, or car rental loyalty program in which you are a member. They provide special processes only available to your membership level that make it more convenient, trusting, and satisfying to do business with them.
A not-so-shining example of being out of relational exchange
Last week I read a fascinating New York Times expose about the owner on an online business who reveled in customer complaints. Why? The worse he treated customers the more they complained. The more they complained the higher his search engine ranking soared. Thus his website was at the top of the list when you and I searched online for prescription eyeglasses.
He was intentionally trashing relational exchange in order to earn ratings that would drive more transactional exchanges. Suffice to say he was not very interested in repeat business.
He’s since been arrested.
Transactional and relational exchange are the ground floor of sustainable partnering — and teamwork
If you don’t take as your responsibility the creation of an exchange relationship that feels good and fair to both sides, then you’ll never get off the ground in building a collaboration. Learn from these principles and apply them to your everyday teamwork. Think about what you have to offer toward the transactional and psychological/relational exchange and what kind of partnership you’re trying to establish with your team members. How do you rate?
Be honest with yourself and make changes accordingly — it will predict much about your success. Make sure your other team members know that you want them to be satisfied with what you have to offer and that they are satisfied, and make sure that they feel treated well and heard — before they walk off not wanting to do “business” with you anymore and hurting both of you and the whole team in the end.
