In today’s digital era, organisations are recognising that their employees are not just mere workers, but also valuable assets in terms of their social capital. Social capital refers to the network of relationships that individuals have within and outside their organisations, which can be leveraged to achieve organisational goals.
How does employees’ social capital benefit organisations?
There are several reasons why employers should try and gain from their employees’ social capital.
Knowledge sharing
To begin with, an employee’s social capital can be instrumental in facilitating knowledge sharing within an organisation. Knowledge sharing is an essential element of organisational learning, which is critical for firms seeking to adapt to changing market conditions. Employees who have strong social networks within an organisation can act as bridges between different departments, helping to facilitate the transfer of knowledge and expertise.
Business opportunities
An employee’s social capital can also contribute to the development of new business opportunities. Employees who have strong external social networks can act as ambassadors for their organisations, connecting with potential customers, suppliers and partners. This can help to enhance the organisation’s reputation, attract new clients and suppliers and open up new markets.
Innovation
Organisations can utilise their employees’ social capital to promote innovation and enhance organisational innovativeness. Innovation requires collaboration and exchange of ideas. Employees with strong social networks can provide a valuable source of creativity and new ideas. By leveraging the diverse perspectives and experiences of employees, organisations can generate innovative solutions to complex problems.
Engagement & retention
An employee’s social capital can be leveraged to improve employee engagement and retention. After all, employees who feel connected to their colleagues and have a sense of belonging are more likely to be engaged in their work and committed to their organisation.
“Building a good network and maintaining friendly relationships within the community can aid in gaining people’s support and facilitating the implementation of policies or initiatives.”
Sumal Abraham Varghese, director and CHRO, Transys Global
By creating an environment that fosters strong social networks, organisations can improve employee morale and job satisfaction, and ultimately, retention.
According to Sumal Abraham Varghese, director and CHRO, Transys Global, social capital refers to an individual’s networking skills and connections — both within and outside the organisation — that contribute to their performance.
“Having a strong social capital is vital when evaluating an employee’s performance, as it enhances their ability to work effectively through networks and get things done quickly. Building a good network and maintaining friendly relationships within the community can aid in gaining people’s support and facilitating the implementation of policies or initiatives,” points out Varghese.
Hence, Varghese suggests that while evaluating employee performance, it is crucial to consider their social capital and network connections, as it plays a significant role in their productivity and overall success within the organisation.
Resilience
Finally, an employee’s social capital can be used to enhance organisational resilience. That is, the organisation’s ability to adapt to unexpected challenges and disruptions. Employees who have strong social networks can help to cushion the organisation from the negative impacts of unexpected events, by providing support, sharing knowledge and facilitating the development of new solutions.
Weighing an employee’s social capital is an essential element of evaluating performance. Employees who have strong social networks can contribute to knowledge sharing, business development, innovation, employee engagement and retention, as well as organisational resilience. By recognising the value of employees’ social capital, organisations can create a culture that fosters collaboration, creativity, and adaptability, and ultimately achieve sustainable success.
“Social capital becomes more important as an employee moves up the corporate ladder and deals with a larger number of stakeholders, including clients, vendors, suppliers, government agencies and other organisations.”
Sunil Ranjhan, Sr. VP and director – HR and MS, LG Electronics
Sunil Ranjhan, Sr. VP and director – HR and MS, LG Electronics, emphasises on how crucial a skill social capital is while assessing the performance of employees, particularly those in leadership roles. He says, “Social capital becomes more important as an employee moves up the corporate ladder and deals with a larger number of stakeholders, including clients, vendors, suppliers, government agencies and other organisations.”
Ranjhan shares that historically, social capital has been evaluated under different names, such as networking skills, collaboration, and building relationships with stakeholders. However, organisations now recognise it as a distinct and critical competency that is evaluated alongside intelligence and emotions quotient, that is, IQ and EQ.
Varghese, however, cautions that there is a downside to social capital too. Political power and personal agendas can sometimes override logical decision-making.
How can social capital be evaluated?
To evaluate social capital, organisations use various methodologies, such as a 360-degree assessment, which involve all the stakeholders an employee deals with, including peers, subordinates, superiors, and external stakeholders.
“The 360-degree assessment provides a comprehensive evaluation of an employee’s social capital and helps identify areas for improvement,” believes Ranjhan.
According to him, while evaluating employees’ social capital, organisations typically look for four or five distinct subcompetencies, as follows:
· The ability to engage efficiently with stakeholders. This includes the ability to communicate effectively, build trust and maintain positive relationships with stakeholders.
· The ability to network across the organisation. This involves the ability to interact comfortably with people at all levels of the organisation, from workers to the president. Effective networkers can build relationships with a wide range of people, regardless of their job title or position within the organisation.
· The ability to adapt to and interact effectively in ambiguous situations. This involves the skill of interacting with stakeholders in unfamiliar or challenging settings, such as when dealing with different cultures or unfamiliar business environments.
· The ability to collaborate effectively, that is, work well with others and put the team’s goals ahead of personal goals. Effective collaborators are willing to work towards a common goal, even if it means compromising or sacrificing their own interests.
· The ability to project the company’s brand externally and internally. This requires employees to possess the skill to represent the company in a positive light and ensure that it is perceived as a competent and effective leader. Effective social capital can help employees build a strong brand and improve the company’s reputation, which can lead to increased success and profitability.
