We’ve all heard that old saying, “It’s not what you know, it’s who you know.”

Although these words of wisdom are usually applied to individuals, a recent study suggests that organizational success is also tied to the relationships that employees have with management, co-workers, customers, partners, and vendors. Specifically, high degrees of human and relational capital have been shown to be strong predictors of organizational performance. Or, “know-who” trumps “know-how.”

The study referenced above was undertaken with World Business Forum executives and mid-managers and was conducted by Adecco North America, a staffing firm, along with the University of Michigan’s Ross School of Business, and eePulse.

The survey asked participants to rate 25 different sources of capital on their impact on performance. Traditional sources of capital, such as tangible assets and products, were included in the mix, but did not come out on top.

Clearly, it has become obvious that people really do make the difference in organizations. While buying more equipment or getting products to market faster are certainly important, having the right people doing the right things at the right time is essential to long-term competitive advantage.

The phrase made popular by business author, Jim Collins, “The right people on the right bus at the right time,” has become such common workplace vernacular that many employees roll their eyes when management repeats it—yet again.

However, the reason that it is so overused is that it rings true. It also provides a nice easy visual that everyone from top to bottom of an organization can understand and relate to.

The importance of human resources (i.e., employees) and the relationships they have with others no longer just applies to those in the executive suite. Employees at every level need to build alliances and nurture communication with critical stakeholders. As employers strive to build a cohesive brand and drive employee engagement, relationships throughout the organization are essential.

Morale, productivity and retention are all affected by the relationships that exist or fail to exist. Developing a culture that promotes human and relational capital is more of an art than a science, but more and more CEOs are deciding that the effort is well worth it.

Many organizations are actively looking for ways to ensure that their employees understand the importance of building relationships, have the skills necessary to nurture strong bonds and are rewarded for their performance in this area.

Staff training programs on topics such as communication skills, conflict resolution, business etiquette and effective use of e-mail are one way to provide people with requisite skills. Coaching employees on the job and leading by example are also important throughout the year.

Discussing these topics during annual reviews and eventually tying pay to performance in terms of relationships is where many organizations aspire to be in the long run.

Think for a moment of the vendors that you do business with. I am guessing that those who treat you well and maybe even first as a person, then as a business partner, are your favorites. Those who are cold, standoffish or difficult to work with probably don’t last long or get the bulk of your business or your trust.

Now, consider your employees. I am guessing there are those who instantly come to mind when you think of assigning someone to a critical project. Again, those who know how to work with others, have developed effective relationships, communicate well, handle difficult situations, and accept responsibility probably get the plum assignments. Why? It is because they have relational capital.

So, who do your employees know? Do they have strong connections both in and outside their own department? How are they perceived by your customers? Do they know the competition and understand your marketplace?

Perhaps they don’t know that your organization values relationships on any number of levels. If that is the case, it may take some time to ensure that your employees understand the value of relational capital and what that means for them specifically given their unique role within your organization.

In the end, the resources expended will more than justify the effort. So, the sooner you begin, the quicker the dividends. Good luck!

Mary Lynn Fayoumi, CAE, SPHR, is president & CEO of The Management Association of Illinois. Contact her at mfayoumi@hrsource.org.