Request a demo
Back to Blog

Why social capital might be the most valuable asset you aren't using

July 19, 2022 - 24 min read

group-of-people-gathered-around-a-table-social-capital

Jump to section

What is social capital?

Where did the concept of social capital come from?

Why is building social capital at work important?

Key benefits of social capital for organizations

3 types of social capital

How to invest in social capital

Is your organization thriving? Do your employees work together and have meaningful relationships?

If so, chances are, your business has high social capital.

High social capital is important for any company that wants to achieve its goals.

It fosters trust between colleagues. It helps organizations run smoothly. And it helps companies improve employee retention.  

But before we share how you can embrace social capital at work, let’s review what social capital means and how it helps teams function and thrive.

What is social capital?

graphic-social-capital

"Social capital" is defined as the capital or resources we gain from existing within a social network. It’s a concept from social science that’s centered on our ability to leverage social connections in order to solve problems, improve well-being, pursue shared objectives, and take collective action. 

Higher levels of social capital mean you can achieve more, as a team, company, or individual. Lower levels, or fewer social connections, will make it much harder to achieve the same goals.  

At the most basic level, social capital is the network of relationships among people who live and work in a community. These social networks enable societies and businesses to function effectively. 

At work, your network is the colleagues and managers you have relationships with. Outside of work, it’s anyone you have a business or potential business relationship with.  

All of these different social ties, personal relationships, and professional connections are examples of social capital. Have you ever gotten a job from a friend that referred you to a company? Has a neighbor ever checked your mail for you while you were out of town? That’s you, utilizing your social capital.

How is social capital theory related to human capital?

Let’s make it simple:

  • Social capital theory states that social relationships are resources. 
  • These "resources" can (but don’t always) become human capital (or human resources). 
  • Human capital is the economic value of a worker’s abilities and output.

For instance, let's say you’re a digital marketer. As a marketer, your ability to market your company’s business makes you a valuable asset. Without your efforts, your company might not attract as much business. 

Your skills, knowledge, and expertise become an asset to your company, so you are part of your company’s human capital. Your skills can also be your own human capital if you’re an entrepreneur or work for yourself. 

Your social capital can also be an asset for your company or your own business. For example, if you have strong relationships with your coworkers and are great at teamwork, you have great social capital. That’s good for your company since it likely means you produce high-quality work and encourage your colleagues to do the same.

Where did the concept of social capital come from? 

Let’s have a quick history lesson so you can get a better idea of social capital and why it matters for your business. There are 3 influential figures who helped develop our modern understanding of social capital: 

  1. Pierre Bourdieu was the first to define social capital theory in 1985. He was seeking to understand how the upper classes maintained their statuses — he didn’t believe economic capital could be the only reason. Instead, he argued that it was a lack of social capital that prevented social mobility and reinforced social inequalities. 
  2. Not too long after, sociologist James Coleman was also writing about social capital. He discussed how social capital was just one tool that humans had available to them as a resource, alongside tools (physical capital), their own skills or inventions (human or intellectual capital), and money (economic capital). 
  3. Finally, Robert Putnam, a professor of public policy at Harvard University, is now known as the modern face of social capital theory. He wrote the article “Bowling Alone: America’s declining social capital” for an American journal in 1995. After its publication, he became nationally acclaimed and even wrote a book on the same topic. Putnam argued that changing behavior in America was leading to disintegrating social bonds. He said this is damaging to civic engagement and economic development. More social capital, or stronger relationships, have the power to build a safer, happier, and healthier civil society. 

It’s really Putnam’s understanding of social capital that shows us how this kind of capital can benefit companies. With more social capital, comes more economic growth and business success. Now let’s see how exactly social capital helps companies function smoothly. 

How does social capital help companies function?

graphic-how-social-capital-helps-companies-social-capital

You might be wondering what all this has to do with building a successful business. We promise that social capital isn’t just a political science theory. 

Think about a company where there are weak ties between groups of people that need to work together. This makes it difficult to communicate, complete projects on time, and collaborate — there needs to be trust (which comes from social bonding) so that people feel comfortable sharing ideas and speaking up about problems. 

When companies have high social capital, they can function better through:

  • The norms of reciprocity (I give, you give) 
  • Shared values (i.e., honesty, respect, equality)
  • Interpersonal relationships
  • Social trust
  • A shared understanding
  • Cooperation and collaboration
  • Reciprocity
  • A shared sense of identity  
  • A sense of belonging
  • Strong social support

An important characteristic of corporate social capital is that it’s not depleted by use. It builds on itself as an organization grows. It will, however, deplete if it’s not used. In other words, nurturing your relationships increases your social capital.

How do you know if your company has high social capital?

Taking a look at your employees’ behavior will help you see if your business has low or high social capital.

Examine the level of trust and reciprocity between your employees:

  • Do they eat together?
  • Do they cooperate?
  • Do they collaborate?
  • Do they spend time together outside of the office?
  • Do they complain about colleagues? 
  • Are office politics rampant? 
  • Is there teamwork?
  • Is there mutual respect?
  • Do you retain employees or are they always quitting?

If you see no desire for communication or social interaction outside of work, you may notice poor cooperation at work. If you hear them complaining about colleagues, you may notice there’s a lack of mutual respect. Overall, this contributes to a negative employee experience, which is bad for productivity, engagement, and retention. 

Why is building social capital at work important?

Why-is-social-capital-important-social-capital

Imagine walking into the office and not a single person says hello. People go on coffee runs alone, sit at their desks for lunch, and don’t make eye contact during the whole day. 

When you log into a Zoom call, there’s no “how was your weekend?” You have no idea if your manager is married or if they have a dog. Every conversation is purely practical and professional. 

Now imagine you need a day off to take care of your sick child. Or you need a deadline extension. Or you just need help figuring out a tough work problem. How much harder are those conversations when you don’t have at least some level of personal connection? 

Most people don’t love small talk at work. But it’s an essential part of building the human connections that help businesses — and individuals — thrive.  

Here are a few more reasons why social capital is so important: 

How social capital benefits teams in volatile times

Most of us saw the benefits of social capital firsthand during the COVID-19 pandemic. For some people, weekly Zoom calls were one of the only social interactions available. Social capital is one of the most important assets a company can have during tough times, whether it’s a global pandemic, a recession, or a team restructuring. 

Here are a few more ways social capital benefits teams in volatile periods: 

  • Teams members support each other by sharing workloads and giving advice 
  • Employees are more likely to stay with a company through a tough time if they have friends at work 
  • Teams are more likely to collaborate and remain creative if they have social connections with each other, even times are hard 
  • Employees can simply help each other laugh, remain positive, and enjoy work more when they have some form of social relationship

Overall, employees who feel socially connected at work will have higher levels of job satisfaction and engagement.

Key benefits of social capital for organizations 

Did you know social capital can also have an impact on your bottom line? It’s just as important as any other asset your company possesses. Whether you’re a health care provider that needs to have good relationships with your patients or a nonprofit that needs to connect with donors, social capital is necessary.  

 Here’s why social capital at the organizational level is important: 

1. Helps companies achieve goals

Building social capital helps businesses achieve ambitious goals.

When employees have meaningful relationships at work, they have a greater willingness to collaborate with other employees. When an employee stumbles or faces an unexpected challenge, others automatically step in to help. 

They’re more present and engaged with their responsibilities. And they enjoy working hard toward common goals as part of a team.

2. Saves time

When organizations have weak social networks and low social capital, it’s hard for employees to agree. It's also hard for them to disagree productively or recognize common ground.

When a team has high social capital, they have baseline levels of trust. They appreciate each individual employee’s strengths and contributions. And they work together to honor those strengths.

As a result, they’re able to get more projects done in a shorter amount of time.

3. Prevents information silos

An information silo means not sharing information and knowledge with other employees.

When an organization doesn’t encourage employees to share information, information silos grow. This divides employees and creates unnecessary barriers to social cohesion.

But teams with high social capital share knowledge. This helps them make fewer mistakes and learn how to do their job even better.

3 types of social capital

graphic-types-of-social-capital

Not every social connection is created equal. Your relationship with your best friend is much different than your relationship with someone you follow on social media. Just like there are different kinds of relationships, there are different types of social capital. 

Here are the three main forms of social capital:

1. Linking social capital

Linking social capital refers to relationships between people at different hierarchical levels.   

For example, people can be friends with anyone at an organization. It doesn't matter what position or level of authority they have. CEOs can have strong connections with frontline employees. And middle-level managers can have strong connections with top-level managers.

Benefits of linking social capital:

  • Everyone is treated equally and fairly
  • Authority levels don't get in the way of friendship
  • Employees from a variety of levels can learn things from each other
  • Employees can witness a variety of work styles

Challenges of linking social capital:

  • Employees must have shared interests and goals
  • Employees may not have time to nurture relationships with employees from other departments or areas of the business

2. Bridging social capital

Bridging is when two teams create social capital. Successful bridging happens when employees from two groups achieve goals together.

For instance, a loan officer and an underwriter work together to process home loans. They work in two different departments. One is in retail, and one is in the back office. But together, as a social unit, they take care of their company’s customers.

Benefits of bridging social capital:

  • Since employees share interests and goals, it's easier for them to nurture relationships
  • When two departments come together, they have the power to achieve more goals as a group
  • Collaboration helps teams complete projects faster
  • Teams thrive from an infusion of ideas

Challenges of bridging social capital:

  • Authority levels may get in the way of friendship
  • Employees may stop nurturing relationships with employees from their own departments

3. Bonding social capital

Bonding is when a team creates social capital within the team, between its members.

For instance, a graphic design team might work on a client print campaign together. Or frontline retail employees work together to take care of walk-in customers. Everyone on the team is working toward a common, clear goal.  

Benefits of bonding social capital:

  • Employees have strong relationships with their teammates
  • Working together in the same department makes teams more efficient
  • Employees bond over shared experiences and common goals
  • Teams become specialists in their work

Challenges of bonding social capital:

  • Employees don’t nurture relationships with employees from other departments
  • If employee personalities don’t mesh well, it negatively affects team morale

Which type of social capital should my organization have?

Every organization has its own company culture and objectives. The type of social capital you create will depend on your company’s unique needs.

For instance, if you run a small roofing business, you’d benefit most from bonding social capital. Since your team works closely together, they’ll learn to be more efficient.

Your team may even thrive from a combination of types.

For instance, if you run a nonprofit organization, you’d benefit from all social capital types. Bonding can help your individual teams run like a well-oiled machine. Bridging can help you create partnerships with potential donors. And linking can help you leverage strengths from several departments.

How to invest in social capital

graphic-three-examples-social-capital

If you don’t have social capital, your employees will suffer. Even more, your company will suffer from low retention and engagement. You won’t be able to make progress towards your goals or build a positive work environment.

The good news? Social capital can be built. You just need to invest in the right places. Here are 3 ways you can start today: 

1. Team building 

One of the main pillars of social capital is team building. Team building helps employees get to know each other in a low-pressure environment. Organizing frequent meetings between teams can help with this. 

Here are a few ways to invest in team-building exercises at your company: 

  • Organize quarterly workshops for the team to meet in person where you play team-building games and strategize together 
  • Host weekly video meetings between different departments
  • Host monthly video coffee chats with all team members
  • Encourage employees to have interpersonal relationships with their colleagues 
  • Start meetings with a light personal question for each of your coworkers, like “what did you do this weekend?” 
  • Host or ask someone on the team to plan an optional after-work happy hour

2. Assign responsibilities that boost collaboration 

Increasing collaboration between team members is essential to building social capital.

Collaboration helps teams get more work done in a shorter period of time. It also fosters innovation and creativity in a group setting.

One way to do this is to give each team member different responsibilities. This way, they’ll have to work together to complete a project. Here are some tips to help you with this: 

  • Set aside a few dedicated brainstorming hours each week so employees can come up with new ideas together
  • Assign co-owners to projects, so that people from different teams can experience leading an initiative together 
  • Encourage a culture of feedback, for example, telling your social media coordinator to ask your head of design for feedback on a new campaign (even if they don’t technically need their approval) 
  • Bring in unique perspectives from other departments, for example, getting a software engineer’s thoughts on a blog post could give you a valuable non-marketing perspective on your content 

3. Align individual, team, and company values 

Social capital is built on shared values. If team members don’t align with company values, they’ll struggle to nurture work relationships. They’ll also be on the lookout for another company they do align with.

One way to ensure your employees align with your company is to ask them what their values are. You can ask them in a formal meeting or send out a survey. Here are some questions you could use:  

  • What do you think of our existing company values?
  • Do you feel like we accurately reflect them in our current work? 
  • Which of our values do you resonate most with?
  • Do you think we’re missing any important values? 
  • What are your own personal work values

Always make sure you connect your projects and daily work back to the company values and the impact you’re making. Being reminded of shared values can create more social capital for everyone. 

Ready to boost your company’s social capital?

Thriving organizations take their social capital seriously.

Their teams work together. Their employees share a purpose and work toward common goals. And their company functions smoothly.

Need help boosting your company’s social capital? At BetterUp, we specialize in coaching teams. Request a demo to find out more.

New call-to-action

Published July 19, 2022

Shonna Waters, PhD

Vice President of Alliance Solutions

Read Next

Well-being
12 min read | January 25, 2021

How to stay socially connected: Your life depends on it

Learn how to stay socially connected and why your life depends on it. Social connection is our lifeline for resilience, belonging, and inclusion at work. Read More
Employee Experience
14 min read | June 10, 2021

How to implement peer to peer learning in the workplace

Peer to peer learning is a valuable tool for any company looking to upskill workers and support continuous learning. Organizations can improve social connection and employee... Read More
Professional Development
16 min read | March 10, 2021

Has social conditioning been holding women back from leadership roles?

Social conditioning creates biases that hold women back from leadership roles. Learn how to overcome and create a work environment that empowers all people. Read More
Productivity
14 min read | August 17, 2021

What’s at your disposal? Understanding your capital resources

Understand the types of capital resources in your organization. Learn about their characteristics, including: intellectual, social, and human capital. Read More
Leadership & Management
15 min read | March 17, 2022

The new free rider: How to keep social loafing from ruining your teams

Social loafing is the psychological phenomenon where people are less productive when they’re working as a team. Use this guide to identify and reduce it. Read More
Well-being
14 min read | April 13, 2022

Look to your social health if you want to improve your well-being

What is social health and how can you maximize it? We’ll explain it all in this handy guide to social health, examples of it, and how to improve it. Read More
Well-being
17 min read | June 15, 2022

Set social goals: 8 tips to get out there and make connections

Wondering how to create social goals? Find out how these eight goal-setting tips can help you flourish in any social environment. Read More
Culture
12 min read | June 21, 2022

43% of us don’t feel connected at work. Here's what to do about it.

Employees everywhere aren't getting the type of social connection they want or need. Learn why that matters and what you can do to boost your own. Read More
Well-being
12 min read | July 27, 2022

8 social skills examples: How socializing can take you to the top

We rely on our social skills everywhere. Learn how strengthening your social skills can benefit your personal and professional life. Read More

Stay connected with BetterUp

Get our newsletter, event invites, plus product insights and research.