Social Capital: The Next Frontier for HR

In today’s rapidly changing world, it is essential that organization’s hire the smartest, most capable people possible. There should be little doubt that human capital is a firm’s greatest asset. However, this isn’t enough. Organizations must also ensure that individuals are relationally positioned for optimal success. In other words, bringing in the best people is only part of the solution.

Human capital can be thought of as the knowledge, skills, and abilities possessed by an individual. In contrast, social capital has more to do with how well an individual is positioned to leverage these abilities. Think about it for a moment. If someone is tremendously bright but no one listens to them, what value do they actually bring to the organization? We all know a person who needs to make themselves known as the smartest person in the room and consequently gets themselves marginalized by their own network. Sadly, their intellectual resources are left largely untapped as a result.

By definition, social capital is the competitive advantage that is created based on the way an individual is connected to others. And, recent research suggests we need to more strongly consider social capital to enable innovation and application[i]. As a result, HR needs to simultaneously focus on both human capital and social capital practices. Advancements in organizational network analysis have enabled us to take our day-to-day interactions that were once invisible,  and make them visible so that they can be objectively evaluated. The network diagram below represents the daily interactions between three different teams inside of a technology group.

By evaluating these connections, we can determine how well positioned an individual is to leverage what they know. For example, some of the people on the outer edges of the diagram are limited to sharing what they know with two or three other people on a regular basis, while those in the center of each of the three teams interact with many other individuals. As a result, those in the center are much better positioned to share knowledge with their teams. By examining the social capital of any given individual, we can determine if latent potential exists in the network. Indeed, research has found that only 50 percent of these individuals are identified by the more traditional human capital systems

Read the full article by Michael Arena here: Social Capital: The Next Frontier for HR