Relationship Management Theory

Cite this article as:"Relationship Management Theory," in The Business Professor, updated April 2, 2020, last accessed October 23, 2020,

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Tom Peters and Robert Waterman introduced the Relationship Management concept in their text, In Search of Excellence (1982).

The book introduced nine principles of management that are embodied in excellent organizations:

  • Managing Ambiguity and Paradox – Managers must be able to entertain multiple ideas or situations at the same time while carrying out managerial functions. Further, the manager must be able to reconcile opposing ideas simultaneously.
  • A Bias for Action – An organization must be responsive and proactive. The culture must avoid complacency, inactivity, lethargy, or inertia.
  • Close to the Customer – The customer is the center of the organization. It must continually focus on the individual wants and needs of its customers. This requires being proactive and anticipating their wants and needs.
  • Autonomy and Entrepreneurship – Organizations must promote creative thinking and a willingness to innovate.
  • Productivity through People – Employees are the source of the company’s productivity. The organization must invest in the quality and increased productivity of these individuals.
  • Hands-On, Value-Driven – Managers must be committed to the organization and its people. The organization must be value-driven in its mission and vision. Managers must be present and demonstrate this philosophy each day.
  • Stick to the Knitting – Companies must focus on their areas of understanding and core competencies.
  • Simple Form, Lean Staff – Companies should organize with a lean and minimalistic structure. Fewer layers in the organizational hierarchy is optimal. This creates unity of command, breaks down barriers to vertical communication, and reduces role ambiguity.
  • Simultaneous – Loose-Tight Properties – Employees must be dedicated to the organization and its mission. The company must foster this dedication and a respect and acceptance of others who maintain this level of dedication.

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