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

July 22, 2021 - 16 min read


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What is social capital?

Why is building social capital important?

3 types of social capital

Social capital examples in the workplace

Ready to boost your company’s 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 some examples of how you can embrace social capital at work, let’s review what social capital means.

We’ll also share how social capital helps teams function. And we’ll show you how to spot signs of low social capital between your employees.

What is social capital?


"Social capital" has no definitive definition, but it generally has to do with the value that comes from relationships and social networks. 

To understand social capital, we need to understand social capital theory and human capital first.

Social capital theory states that social relationships are resources. And these "resources" can become human capital.

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 for your company. This type of asset is called human capital.

Closely related, 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.

In other words, your social capital is your network.

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.  

How does social capital help companies function?


Social capital helps social groups function through:

  • Shared norms and values (i.e., honesty, respect, equality)
  • Interpersonal relationships
  • Social trust
  • A shared understanding
  • Cooperation and collaboration
  • Reciprocity
  • A shared sense of identity  
  • 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?
  • Is there teamwork?
  • Is there mutual respect and trust?

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.

In the next section, we’ll explain why it’s important to have high social capital in the workplace.

Why is building social capital important?


High social capital at the organizational level is important because it:

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.

Bill wants to do it one way. Julie wants to do it another way. And there’s no sense of trust between them. These negotiations can make projects drag.

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 for 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


Here are the three main types of social capital:

1. Linking social capital

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

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 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 non-profit 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.

Social capital examples in the workplace


In this section, we’ll share three social capital examples in the workplace.

Example 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.

One way to do this is to organize frequent meetings between teams. Meetings can be in the form of workshops, mixers, games, or events.

For instance, let’s say you own a remote software company. Since your employees live all over the world, you find creative ways to meet.

Every quarter you organize workshops where the whole team goes to spend time together. On the first day of the workshop, your team gets together to discuss the company’s future. The next day, your team strategizes, shares ideas, and leads cross-team activities.

On the third day, you invite every employee to give a work presentation. Afterward, employees engage in various team-building games.

In addition to team workshops, you:

  • 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

Example 2: collaboration

Boosting 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.

For instance, let’s say you own a publishing company. Your employees are editors, writers, photographers, designers, and account managers.

Your account managers collaborate with the writers to see which assignments they want. Your editors help your writers improve their work. And your designers and photographers work together to make sure their images are on-brand.

In addition to giving each employee different responsibilities, you:

  • Invite groups of writers to work on large projects together
  • Set aside five hours a week so employees can come up with new ideas together

Example 3: shared 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. This also gives you the chance to adopt new company values that align with your employees.

For instance, let’s say you run a non-profit. Your organization provides food and clothes for local families who need them. But lately, you’ve been wanting to do more. So you decide to hold a meeting to see what your team thinks.

At the meeting, you ask your employees the following questions:

  • What do you think of our non-profit’s values?
  • What do you think we’re doing right?
  • How can we improve what we’re doing wrong?

At the meeting, you learn a lot.

Stacy says she’d like to see the organization help families find jobs. Matthew says he’d like to see the organization help families learn how to manage money. And Kim says she’d like the organization to appeal to more diverse families.

By the end of the following week, you initiate:

  • Diversity programs
  • Money management programs
  • Job scouting programs

You also start meeting with your team every month to discuss values and new ideas.

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.

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Published July 22, 2021

Shonna Waters, PhD

Vice President of Alliance Solutions

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