Social capital in the workplace

Miro's 'Personages in the presence of a metamorphosis'

So, following on from my last post, if we accept that social capital is a real form of capital (even if it is hard to measure), then why do we invest so little in creating it?

Joseph Kessels and Rosemary Harrison distinguish between human capital and social capital – describing human capital as “the knowledge, skills, competencies and attributes embodied in individuals that facilitate the creation of personal, social and economic well-being” and social capital as comprising “networks together with shared norms, values and understandings that facilitate cooperation within or among groups” (Harrison, R. & Kessels, J. 2004. Human resource development in a knowledge economy. Hampshire: Palgrave Macmillan).

In South Africa we invest significant resources in human capital development – a whole bureaucracy (SETAs, SAQAs, national qualifications frameworks, unit standards and so on) exists to skill and train our people, even beyond the formal schooling and tertiary level education sectors. And yet, by comparison, almost no resources are directly allocated to promoting social capital.

Three years ago the Macro-Social report produced by the Presidency recognised the apparent low levels of social capital in South Africa – reporting that over half of all South Africans claim to have no close friends, with almost another 30% claiming to have only one or two close friends. The Report indicates that membership of voluntary groups (churches, youth groups etc) has fluctuated since 1994, with no clear trends emerging, suggesting that the value of belonging to such groups is not obvious to all. Somehow I found these figures quite disturbing – I had imagined that communities in South Africa contain vibrant networks and that people have strong support networks and friendships, but maybe many relationships are more casual, occasional and temporary than appears on the surface…

Social capital can bring significant advantages to individuals, communities and society at large. So much so that the World Bank supports social capital development projects around the world. The advantages are many and varied – for individuals a strong social capital network can bring support in times of crisis, new business contacts, support in bringing up children etc. Communities benefit from a stronger sense of identity and cohesion, and society at large benefits from the harnessing of new ideas, higher levels of innovation and productivity and a stronger sense of shared values.

And there is an increasing interest on the relationship between social capital and learning in the workplace. My colleagues Tjip de Jong and Joseph Kessels have argued that whereas the returns on investing in human capital development (through more traditional training interventions) can be measured in terms of improved performance within the confines of existing job descriptions and linear performance management systems, investing in social capital in the workplace can contribute to higher levels of productivity, innovation and creativity (see their paper.

Investing in social capital then is different from training and ‘capacity building’, and is more concerned with building lifelong learning and supporting a learning perspective to how we work. This could involve, for example, building communities of practice, action learning sets and ‘brown bag’ events, as mechanisms for connecting professionals both within their own working environment and connecting them with their broader professional community.

Social Capital – a trendy concept, or a real form of capital?

The popular debate about the value or usefulness of social capital is a relatively recent one – popularised by Robert Putnam, who wrote a book called Bowling Alone, in which he looks at the decline in popularity of bowling clubs in the US, as people stay at home to watch TV, and how this is symptomatic of a decline in social capital in that country. Putnam sees social capital as consisting of features of social organisation that depend on trusting relationships and networks that facilitate business and cooperative activity in society.

One of the challenges in building an understanding of social capital is that it appears to be very intangible and is hard to pin down and measure. How can we put an objective measure on the value of our relationship with our next-door neighbour? While we may instinctively understand and appreciate the importance of that relationship, it may only provide real or significant returns in times of crisis or when we need each other, and the importance of that relational social capital is not given a value by society.

While it may not be easily visible, we instinctively create and invest in these social relationships, knowing that they may also be useful for us and provide returns at some point, as with other forms of capital. The ‘returns’ may simply be the value we gain from having social contact (friendship), but may also be more (practical assistance in times of hardship, business engagement etc).

It is useful to think of the trust and networks that constitute social capital as constituting a real form of capital, similar to human, physical and financial capital – even if it is less easy to measure.

Paul Adler and Seok-Woo Kwon, writing in the prestigious Academy of Management Review (Adler, P.S. & Kwon, S. 2002. ‘Social capital: Prospects for a new concept’, Academy of Management Review, 22(1): 17-40) examine whether social capital is actually a real form of capital, and they argue that social capital is similar to other types of capital in that it represents an asset that one can invest in with expectations of future returns, that it can be used for a range of different purposes and that it can substitute for other resources, and that it requires maintenance (similar to human and physical capital, but unlike financial capital).

As such, social capital can be understood as a real form of capital with meaningful value that can be exploited in similar ways to other forms of capital, even if it cannot be seen and measured easily.

If it is a real form of capital, then it is perhaps surprising that we as a society do not invest more in creating and stimulating social capital. I will explore this question further in future blog posts.

Low Trust Globalisation

I have indulged myself somewhat in recent posts with my thoughts on the Open Doors and Flags scenarios developed by the Shell scenarios team in 2005, in which they explore possible future worlds in 2025.

To complete the picture, the third scenario they imagine is ‘Low Trust Globalisation’. This scenario is perhaps closer to a representation of the world as it is today, and less idealistic than ‘Open Doors’ and less fatalistic than ‘Flags’.

These 3 Shell scenarios were developed through a process of exploring the results of trade-offs and choices that can be made in managing the interplay between powerful forces that exist in the global business environment. The forces derive from a drive for efficiency and the power of the market, the need for security (in the broadest sense) and the consequent push for coercion and regulation, and the push for social cohesion that arises from the human need for community.

So, while the Shell team emphasises that these three forces will continue to shape our world for the next number of years, it is the business choices and political trade-offs that will impact on the balance of these forces and lead to the scenario alternatives. So ‘Flags’ represents a world where the balance is found between the needs of security and community, with free markets playing a less significant (but not absent) role. ‘Open Doors’ emphasises the balance between community (social cohesion) and the market, with less concern about security and higher levels of regulation. And the ‘Low Trust Globalisation’ scenario is a world that finds itself concerned primarily with market efficiency and security, and in which community power and the drive for social cohesion struggle to make as big an impact.

The current global economic ‘crisis’ has had interesting consequences, with western ‘capitalist’ governments effectively nationalising banks and propping up the motor industry. It was Karl Marx of course who in the Communist Party Manifesto called for the nationalisation of the commanding heights of the economy. Come back you Reds – all is forgiven!

And it seems to be agreed, amongst economic commentators in the Western media, that much tighter regulation is needed of the banking system and the behaviour of senior banking, auditing and other financial directors and CEOs.

If this represents a fundamental shift away from the values of the market, it could lead us towards the ‘Flags' scenario, in which national interests take precedence over the globalisation trends of the last 30 years. My sense, however, especially after following what has been happening in Davos, is that the leading economic powers will seek to re-establish the power of the markets as drivers of economic growth and that Western governments will have little appetite for running banks for very long, even if new regulatory systems are negotiated and put in place.

The prime challenge facing those who see the need for a more environmentally and ecologically sustainable world system at peace with itself then remains. As the forces of globalisation reassert themselves, how can companies, organisations, communities and governments, especially those in the developing world, create innovative, practical and dynamic products, services and initiatives that stimulate more sustainable ways of living and lift people out of poverty?

We certainly live in interesting times, and the world and South Africa seem to change markedly even in the time between my blogposts! But these times are times of great opportunity and optimism, even as we face deep and sustained crises of one kind or another. Seamus Heaney, one of Ireland’s leading poets, wrote of the time when ‘hope and history rhyme’:

from The Cure at Troy

Human beings suffer,
they torture one another,
they get hurt and get hard.
No poem or play or song
can fully right a wrong
inflicted or endured.

The innocent in gaols
beat on their bars together.
A hunger-striker's father
stands in the graveyard dumb.
The police widow in veils
faints at the funeral home.

History says, Don't hope
on this side of the grave.
But then, once in a lifetime
the longed for tidal wave
of justice can rise up,
and hope and history rhyme.

So hope for a great sea-change
on the far side of revenge.
Believe that a further shore
is reachable from here.
Believe in miracles
and cures and healing wells.

Call the miracle self-healing:
The utter self-revealing
double-take of feeling.
If there's fire on the mountain
Or lightning and storm
And a god speaks from the sky

That means someone is hearing
the outcry and the birth-cry
of new life at its term.

~ Seamus Heaney ~