Wednesday, July 01, 2009

IT'S NOT WHAT YOU KNOW, BUT WHO YOU KNOW???

It has been an adage for as long as I can remember: who you know is more important than what you know. It is relationships, the adage suggests, that really get you somewhere … in fact, relationships trump wisdom or any systemic knowledge central to your organization.

It is clear to me that knowledge and relationships have equal weight and both make important contributions to the success of every company. Nevertheless, the reality is that, sometimes, the "I know X" phenomenon carries such weight that it can indeed supplant a systemic approach which, in the long run, might be better for the organization by fostering healthier operations and a better communications platform.

Nevertheless, it can be challenging to persuade some people that knowledge has equal weight, since we’ve all been brought up to believe in this adage. Here is a case in point: the National Committee for Responsive Philanthropy (NCRP) recently conducted a study — reported in The New York Times — which showed that more than 100 foundations that lost 30 to 100 percent of their assets in the Madoff scandal had four or fewer board members. Now what is wrong with that?

Aaron Dorfman, executive director of the NCRP, notes that one or more people on a small homogenous board either knew — or knew someone who knew — Madoff and were aware of the fact that he paid great returns for a sustained period of time. But, Dorfman points out, “it's not enough to allow Uncle George or Grandpa to say Bernie Madoff is a great guy and (then) make an investment." Dorfman believes, and I concur, that a larger, diversified board would not have accepted this casual approach and would have instituted a system whereby criteria were established for an investment policy. According to the NYT article, the median size of the boards of foundations that are members of the Council of Foundations is 11.

If there is a system in place that reflects the size board needed for a particular organization and enables the knowledge and facts to meet the entity’s goals, then the entire board can take responsibility for decisions regarding investments or any other matter. The end result might be the same, but the solution will be arrived at because of agreed-upon criteria, rather than someone’s general impression that so-and-so is a great guy and performs well.

This appreciation for systems, regardless of what needs to be achieved in business, is not to be confused with the very fact that public relations is all about building relationships with an organization's constituencies who can make or break a business. How well you get to know the people in these constituencies is fundamental to the success of that organization. But public relations, indeed, is a system in and of itself.

Technorati Tags: National Committee for Responsive Philanthropy, The New York Times, Bernie Madoff , Aaron Dorfman, organization, Makovsky + Company, communications, public relations

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