November 26, 2014

Is it time for HR to acknowledge Social Capital?

In IBM I get to work with some super smart folks, and none smarter than my long term friend and collaborator Kate Ehrlich (@KateEhrlich). Kate works out of the IBM Research Lab in Cambridge Massachusetts and is that interesting (and hard to find) breed of social scientist, computer scientist, and data scientist, all wrapped up with lots of industry and hands-on customer experience. I’ve just completed a Social Network Analytics project with Kate where the topic of Social Capital was front and center. Following on from that I asked if she would write a guest post on the subject and she very kindly said Yes! So here it is… Thanks Kate :-)

The growth of social networking services in companies is bringing attention to the social dimensions of work. But beyond the use of the tools is an important principal of social capital which locates value in the many and varied relationships between people. This relational perspective is often missing in human resources. Traditionally, Human Resources (HR) emphasizes the set of knowledge, skills and experience to characterize the “human capital” that an employee brings to an organization. Understanding human capital is important to determine strategies for talent acquisition and skills development amongst other things.

However, the relationships that develop between people over time may be as important for the well being of individuals and the companies they work for as their skills. Sociologists refer to these relationships as social capital. Robert Putnam, the Harvard sociologist who penned Bowling Alone about the impact of the demise of social institutions on health and welfare wrote: “Whereas physical capital refers to physical objects and human capital refers to the properties of individuals, social capital refers to connections among individuals – social networks and the norms of reciprocity and trustworthiness that arise from them. … A society of many virtuous but isolated individuals is not necessarily rich in social capital.” (Putnam 2000:19).

So what does this have to do with HR? Social capital is key to understanding how information flows in an organization, why some teams work better than others, how attrition can have unintended consequences, why some people are more successful in managing their careers and who are the influential people in an organization. A deeper understanding of social capital and the important informal roles that people play within the social ecosystem of the workplace can help HR better structure the organization, manage career progression, design work and staffing around tasks and people, and anticipate effects of attrition. Sociologists and others who study social relationships do so by analyzing the pattern of connections between people, often called social network analysis (SNA).

There are many examples in the academic literature and in publications such as Harvard Business Review and Sloan Management Review, of the effect of relationships (social capital) on performance in organizations. Here is one example from Management Science that I like a lot because it highlights the difference between having expertise (human capital) and applying that expertise (social capital). Several years ago, researchers at Boston University studied software engineering teams in a large firm. Not surprisingly, they found that some teams were doing measurably better than others in meeting their project goals, keeping down costs and maintaining efficiency. They looked at the skills in the high and low performing teams and to their surprise found no difference between the teams in their level of expertise. But when they looked more closely they found that the high performing teams were better at accessing and applying the knowledge that existed within the team. The high performing teams had a better idea of who were the experts, knew what kind of expertise was needed for a particular task, and team members readily shared their knowledge with others. In other words, relational factors, such as awareness of other people in the team and a level of trust necessary to share information, made the difference in a team’s performance. Human capital is still important, but human capital alone is not enough to realize the kind of performance that businesses require.

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