Social Capital: What It Is & Why Your Employees Need It

January 13, 2015 Darcy Jacobsen

Would it surprise you if I told you your company will fail without social networking?

It’s absolutely true though. It will.

Of course, when I am talking about social networking I’m not referring to Facebook or LinkedIn. I’m talking about interpersonal connections and relationships. Social networks are as old as human society. Even older, really. They are what create community and culture and what enable us to function in groups and companies.

The measure of your success in building productive social networks comes down to your level of social capital. According to social psychologist Robert Putnam, (who is the pioneer of this field) social capital “refers to the collective value of all ‘social networks’ and the inclinations that arise from these networks to do things for each other.”

A company culture in which expertise and ideas can easily be shared is crucial to fostering inventive and resourceful employees. And understanding and leveraging social capital is invaluable in creating it.

Why? Check out the diagram below. Social capital impacts our sense of belonging, proactivity, feelings of trust and safety, participation and more. Higher social capital also usually results in more access to the resources we need to feel supported, be productive and to have better flow in our work lives. In fact, many scholars believe that social capital is a strong predictor for work performance. Studies have shown that it helps with job searching, pay scales, promotion potential, and organizational influence.

Social capital can also have a profound influence on relationships between workers and managers. In one study of agricultural workers, social capital corresponded with an up to 17% increase in worker productivity, when managed by someone they are socially connected to.

And finally, the build up of organizational social capital creates a more pleasant place to work. Studies have shown that socially tied workers have higher levels of trust, are less likely to be opportunistic, and are more likely to cooperate and share information.

Social capital has become even more important as we try to understand and manage today’s technology-infused work cultures. In fact, the advent of technology—and in particular of social technologies—has changed fundamentally how we interact at work. —making work at once more fluid and more complex. Companies who understand the principles of social capital and social collaboration are thriving in the digital age, because they know can use those principles to leverage technology and build stronger human networks—resulting in more productive, more profitable, and happier workforces.

There are two important dimensions of social capital to consider:

  • Structural embeddedness – Who you know. This describes the quantity of relationships.
  • Relational embeddedness – How well you know them. This describes the quality of those relationships.

Any individual’s social capital in an organization can usually be measured in these two ways. And both are necessary. According to a study conducted by Peter Moran from the London Business School, both elements contribute in different ways to an employee’s performance. “Structural embeddedness,” he writes, “plays a stronger role in explaining execution-oriented tasks, while relational embeddedness plays a stronger role in explaining innovation-oriented tasks.”

So how can you use technology to build structural and relational embeddedness, and empower your employees?

Social collaboration and recognition platforms are a great way to build structural embeddedness in an organization. Social recognition platforms like Globoforce and even social enterprise tools such as Yammer and Chatter are a great way for employees to keep up with one another, grow circles of acquaintance, see where areas of influence are within the organization and learn about one another. They encourage employee voice, and they increase employees’ exposure to one another—and therefore the size of their potential social circles.

Likewise, these solutions are great ways to build relational embeddedness in an organization. In particular, recognition is a fantastic way to grow mere acquaintances into genuine friendships. That’s because it encourages the exchange of social capital through appreciation, congratulation, and reward—all of which increase our individual status, but which we also associate with the person who is presenting it, increasing our trust and emotional ties with them.

Plus, when you have social collaboration platforms that encourage storytelling and relationship building, you create a shared history for your organization that forms a basis for shared social capital. You also create a map for workers and leaders alike to better visualize the structure and strength of the social ties within the organization.

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