Never before in the history of work have we had more opportunity to design and improve how work gets done. And in the extremely competitive area of investment organisations where the assets are the people, we should not let this opportunity pass us by.
The early stages of this great work reset have been a mixed picture. There have been some wins with improved flexibility and digital connectivity but where work relationships, social capital and trust are central to good outcomes, we are not yet in the shape we need to be.
In investment organisations – which are quintessentially people businesses – social capital lies alongside human capital, intellectual capital (knowledge, process, edge) and financial capital as a key enabler of value creation.
Through the pandemic, social capital got squeezed with professionals turning towards maintaining connections with team members rather than building or maintaining relationships with newer colleagues or other indirect associates.
Coming out of the pandemic into the hybrid world professionals are still connecting with others less frequently, have smaller networks, and spend less time and effort on relationship building relative to before the pandemic. And with these lighter relationships we have shrunk the trust levels with associated costs to innovation and creativity.
To help reverse these trends, people and organizations will need to pay more attention to workplace interactions.
How social capital works
Social capital is a secret sauce that very subtly leaves its mark – when someone outside your team pitches in to get you past a dead end, when mentoring produces a critical aha moment in your understanding of something important, when someone goes above beyond with kindness when you needed it. All these are made possible when you’ve built a base of familiarity and goodwill through the previous serendipitous interactions of your work.
Social capital is the presence of networks, relationships and shared norms and how that is felt in terms of belonging, collaboration and camaraderie.
This produces the trust, goodwill and familiarity that when present gets more work done and does it better and faster. When professionals can trust colleagues, they tend to be more engaged, more willing to give extra energy, and more likely to stick around. Two data points from McKinsey[i] quantify that – those that are socially connected are one and a half times more likely to report a sense of belonging at work, and one and a half times more likely to report being engaged at work.
And then Great Place to Work research[ii] clearly supports how the value created by trust translates into bottom line benefits – 2 to 3 per cent per annum higher returns to shareholders over a 26 year study.
The research suggests that relationships matter both in our closer inner ring ties and in our outer rings too.
In teams we have the close relationships that can be turned into social capital bonds – ties that make our work both better and more fun.
And outside our teams there are relationships in the outer reaches of our networks that are social capital bridges – that can bring special connections into our thinking. The challenge is both knowing where these bridges take us and making sure we make the trip.
Managing social capital
But the soft-to-measure and the slow-to-emerge aspects of social capital mean that these lessons are not easily learned. When we are wired to take most seriously those subjects that have the clearest data and quickest feedback loops, social capital with its soft data is too often neglected.
So, there is a twin challenge here – rebuilding social capital within a limited data environment and adapting the action plans to the hybrid model where organisations overwhelmingly see this as the way forward but are universally challenged by its novel features.
The baseline answer to these problems is for leaders to manage social capital in the same way they manage other forms of corporate capital: systematically and intentionally. While recognising this requires change and change is hard.
Leaders need to start by pinpointing the incentives and enablers that make social capital flourish. How are employees motivated to build and maintain relationships? Are they in a culture that encourages such relationship building and the trust and inclusion implied? Have they the time to spend on this and the knowledge of and the access to the networks they need?
Ideas to generate greater social capital cover a spectrum. First, the existing inner tie relationships can be tapped for more. Like spending more time in management check-ins on a more diverse agenda; more time with colleagues in coaching conversations; more time in mentoring situations. Those organisations that are committed to mentoring and see leaders as needing to be coaches have a very powerful employer edge.
Second, the existing organisational structures can be tapped for more social capital from the wider ties. We start with how group meetings can play their part in cross-fertilising ideas from different teams, so that the bridges across the organisation are stronger and more likely to carry traffic. For good teamwork, we need teams to come together to exchange their narrative and stories. We can also schedule time for lateral learning without hanging around water coolers by taking these conversations to more structured levels – through senior people – internal and external – sharing insights and experiences.
Third, we may need to develop fresh organisational design features. Two ideas come to mind. Creating fast-response agile teams to take on particular tasks – by getting a wider cross-section of people involved in these teams new relationships are developed. And adopting innovation hubs – ensuring ideation and creativity are given a better chance than in conventional structures.
Fourth, incentives always matter. So, making network quality part of the performance conversation is important and checking on an individual’s progress with networks is part of that conversation about accomplishments and accountabilities. Leadership KPIs also can be used – making social capital a measure on the organisational dashboard you raise the bar naturally.
Finally, social capital can also be driven by developing your organisation’s digital mind-set and skills in cognitive diversity – think of how trust can be secured by the influence of data and information on top of in-person inter-action. And social capital will respond well when individuals have the T-shaped skills that connect dots well.
These change activities are more likely to stick when leaders clearly and frequently communicate why changes are needed; ensure processes and systems reflect the changes; and most critically walk the talk themselves and model the changes.
Investment organisations face growing challenges on several fronts: attrition and hiring challenges, loss of inclusiveness and trust, difficulties from fatigue, and belonging. Improving social capital offers some clear off-sets to these issues for individuals and organizations
Paying more attention to this form of corporate capital can help organizations bring people back to the office, cultivate distinctive workplaces, and improve productivity—and ultimately create better overall organizational performance.
[i] Network Effects | McKinsey August 2022
[ii] Great Place to Work Trust Index. | The business case for a high trust culture