Building human into social capital

Citation

Ingham, J. (2009), "Building human into social capital", Strategic HR Review, Vol. 8 No. 6. https://doi.org/10.1108/shr.2009.37208fab.001

Building human into social capital

Article Type: Strategic commentary From: Strategic HR Review, Volume 8, Issue 6

Thought leaders share their views on the HR profession and its direction for the future

Jon InghamExecutive Consultant at Strategic Dynamics Consultancy Services.

One of the fundamental principles of strategic HR is that we need to focus on outcomes, or deliverables, not activities. This need to focus on outcomes supports one of the reasons why human capital management, the management of people for the accumulation of human capital, has proven to be a beneficial approach.

Human capital consists of things like the engagement, capability and diversity of people working in an organization. The critical requirement is that these things provide value to the organization; that is, that they will have a sizeable impact on future earnings (or, in the public sector, on quality of services). This is the reason that investors are prepared to invest in private sector businesses with high amounts of human capital at premiums to their book values (subject to concerns about bad debts, access to financial capital and so on).

Human capital provides value to employers by enabling them to do things they could not do without it. Whereas managing people as human resources can help achieve existing business objectives, the right sort of human capital can help an organization set new and more challenging business goals. Over the last few years, HR has started to develop a better understanding of how human capital can be measured and developed. We also understand how to design and develop our organizations for the accumulation of organization capital (the right organization structure, business and management processes, etc).

Building social capital

But what about social capital? This is another outcome and refers to the connections, relationships and conversations between people working in an organization. The differences between this and both human and organizational capital are important, as each need developing in different ways.

Social capital is developed by paying attention to how people are relating to each other – to the spaces between people on the organization chart. However, social capital is highly intangible and the links between it and the activities that develop it are complex and distant in time and space. It is not something that is easy to measure or develop and, because of this, it tends to get ignored.

However, the point of performance in most organizations is the team, not the individual. So it is social capital, rather than human capital, that is the greatest enabler for competitive success. Consider these two examples to illustrate its role:

1. 1.

   Developing a culture of innovation. Changing culture depends on having a big idea and aligning everyone in an organization around it. However, this is not just about behavioral and attitudinal change. Encouraging people to be more innovative is also about helping them create new types of meaning about their work – and meaning is established through conversations with other people. So if you change the conversations (part of the social capital), you change the meanings and, therefore, the culture too.

2. 2.

   Knowledge management. Many businesses have tried to manage the explicit knowledge residing in their databases but a lot of these organizations are now realizing that much more important is the tacit knowledge in their peoples’ heads. Knowledge management in this paradigm is about connecting the right people and enabling them to participate in effective conversations (social capital again) to share and build on the knowledge that exists.

So how do you develop social capital? Here are some ideas:

• •

  You can recruit and develop people whose abilities and motivations are likely to make them behave more collaboratively.

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  You can structure opportunities for people to meet and build relationships. Team meetings are fine as far as they go, but you also need to enable people to create weak ties through various forums, such as communities of practice.

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  Web 2.0 and social networking tools (blogs, podcasts, wikis, etc) also have an increasingly important role to play. However, they are only means to an end, and it is the outcome, the social capital, not the activity that counts.

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  Measurement can help create a better understanding of intangibles like social capital. Techniques, such as social network analysis, can provide employers with a much better appreciation of the networks and the potential for social capital creation that exist within their organizations.

Managing people for social capital is going to be an increasingly important aspect of good HR management. It is particularly critical during and after a recession as businesses are trying to do the same, or more, organizational work (planning for the upturn while dealing with the down) with less people. Employers need all their people to be performing at their best but they need to maximize the synergies between them.

About the author

Jon Ingham has worked as an HR practitioner for 20 years. Most of this time has been spent in consulting but he also has experience acting as an HR director in the UK and Europe. He now works on a global basis as a researcher, writer, speaker and consultant. He focuses on helping organizations that already have well developed approaches to HR management gain further increases in the engagement of their people and the effectiveness of their organizations. Jon Ingham can be contacted at: jon.ingham@strategic-hcm.com