June 24, 2018

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Social Capital, Measurement and Intuition

Social Capital in Society

Anyone who has a car knows that drivers have gotten worse over the past decade. This is not your imagination. Drivers really are more discourteous and it's one indication of the decline in social capital in America. To risk my own definition, social capital is all about how much time and effort people are willing to invest in their societies.

This includes everything from joining the PTA, to inviting friends over for dinner, to writing a letter to your senator. This is all carefully documented in Robert Putnam's "Bowling Alone". Social capital is important in society. It is correlated with health, wealth and happiness. It is a good example of a valuable intangible.

Social Capital in Organizations

Social capital is important in organizations too. If social capital is high then staff members will help each other, serve on social committees and just generally do more-understanding that everyone else is pitching in too.

Jeffrey Pfeffer has done a lot of work on how "people friendly" practices lead to organizational success. I think "people friendly" organizations are, to a large extent, simply organizations that build social capital.

Enhancing Social Capital and Measurement

Having recognized that social capital is important in organizations, it is natural, and not altogether unwise, to attempt to measure it. Many consulting firms will be able to put together surveys that assess social capital. Sociologists would no doubt think of additional approaches. Who knows, Dr. Putnam himself might not be averse to some consulting work (he's at Harvard.)

I stretch my expertise (and the length of this editorial) in trying to explain how to enhance social capital. Suffice to say that actions that increase collegiality will enhance social capital. Thus everything from recruiting nice people, to not placing undue reward on individual performance, to allowing people time to chat could be part of your "social capital program."

Knowing What We Don't Know

So are we wiser now? Our company has belatedly realized that this particular intangible is important and has rushed out to measure it. It has stopped punishing staff for talking to each other; it treats staff with respect putting extra attention on retention knowing it takes time to build trust.

But what about other intangibles we haven't discovered? Is it not likely we are doing other stupid, counterproductive things, destroying intangible value?

What I think is that most people have a pretty good feel for what is "right" and "wrong." They may not be able to articulate why a certain policy is a bad idea or why they think that taking their whole team bowling is the best thing for the organization. However, these intuitions should not be dismissed. "Hard nosed" managers may just be "hard headed". Our intelligence extends far beyond what we are able to articulate and measure. We should use that intelligence.

Wrapping Up

I fear I've raced across half a dozen important concepts in just one short editorial. Let me summarize.

It's important for us as people that social capital is declining in society at large. It's important for us as managers to recognize that social capital is an intangible that is important to our organizations. Having recognized the importance of social capital it is important to try to do something to enhance it and measurement can help.

However, the lesson I'm most interested in is the broadest one of all-that there are always big, important intangibles that we may have a hard time measuring or describing or even being really sure just what it is that our gut is telling us. If we take an overly "rational" approach to management we will ignore those things that are difficult to see.

Pascal remarked, "The heart has reasons that reason does not know." If we listen to our heart, to our gut, to our intuition, we will make smarter decisions than if we put our faith in the few things we happen to have the ability (and foresight) to measure.

-David Creelman