how to invest in social capital
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How To Invest in Social Capital
Authored by:Laurence Prusak
Don Cohen
Presented by:Asit Agarwal
Kanti Prakash BrahmaRabindra Kumar Jena
Suchismita Gupta
Outline
What is Social Capital
Enemies of Social Capital
How to Invest in Social Capital
Demerits of too much Social Capital
Conclusion
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What is Social Capital
Business runs better when people within an organization know and trust one another
Trust is a very important factor to move faster and be productive
Social Capital: the relationships that make organizations work effectively
Social Capital Under Assault
Rising Volatility and Overreliance Virtuality
-Building relationships in turbulent times is tough
Reasons
Lack of Knowledge on how to invest on it-There is a difference between theory and practical implementation
Enemies of Social Capital: Volatility and Virtuality
Capital Offences
Companies thrive when they have dense social networks, high levels of trust and norms of cooperation but management theory and practices undercut them
Investment in Social Capital
Making Connection
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What is Connection?
How Connection is Facilitated
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Workplace that spills over in a positive sense to non-work areas of employees life by availability of fringe benefits. (ex- SAS, food coupon of M&M)
By promoting from within (ex- UPS)
Giving people time and space to bond in person(telecommuting, virtual teams, face-to-face interaction)
Fostering Knowledge Sharing
How Connection is Facilitated
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Providing Ice-breakers by open and attractive environment (ex- Grand Rapids)
Fostering Durable Networks (ex-UPS)
Investment in community-building activitiesBut investment should not be heavy-handed
Enabling Trust
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No one can manufacture trust or mandate it into existence
Trust building can backfire if management is too heavy-handed
Conditions and connection people experience day after day is more important than trust building exercises
Enabling Trust
Give Employees No Reasons to Distrust Transparency Rule of the Law
Show Trust Yourself Trust is self-reinforcing Trust employee’s judgment(Nordstom’s two rule: 1. Use you judgement, 2. There is no second rule)
Send Signals that Trust is Valued
Trust Responds to Rewards
“Free Agent” Nation
Each Worker can be a company of one, porting his expertise, on a project-by-project basis, to wherever in the world it is needed
Claims: Free agency is becoming model of work and employment
Claims are counter to how people understand shared task and come together to work
Silicon Valley: Ability to work “Independently” is dependent on their being socially tied to a physical community through durable networks
Fostering Cooperation
Adversity or opportunity-impulse is to pull together
Ex-Malden Mills Give people a common sense of purpose
Ex-Johnson & Johnson Adverse situations-
Noble goals & inspirational leadership can draw people together
Give their work meaning beyond the need to earn a living Financial stake in the outcome-”all in this together” feel
Ex-UPS
Fostering Cooperation
Sharing ownership Reward teamwork & signal its importance Bonuses-more importance to group & corporate
performance and less on individual importance
Ex-IBM Establish some rules
increase the efficiency of the recruiters’ efforts force the consultants to get to know one another in ways
they wouldn’t in self-reliant searches“Hire for it”Ex-South West Airlines
The problem of plenty-too much social capital ?
Social capital is not a Business strategyMarketing planA substitute for either Not always even a good thingCompanies-damaged by high social capitalBreeds “groupthink”-a tendency not to question
shared beliefsSupport ideas that are narrow or wrongPrevent people from challenging one another with
tough questions
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The problem of plenty-too much social capital ?
Discourage “Creative abrasion”-a source of innovation
Ex-Digital Equipment , Polaroid In general effects of social capital are positive Engagement, collaboration,loyalty,persistence &
dedication are important benefits
Ex- UPS, HP, Russell Reynolds, SAS
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Authenticity in Management
“The key for an actor is sincerity because if you can fake that you can fake everything”-Samuel Goldwyn
Invest in social capital only to the extent that you believe in it
Lasting social capital cannot be built merely by going through the motions of team building
Trust is built over time It represents organic growth of trust, understanding,&
loyalty-takes time to develop
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Conclusion
The social capital that used to be given in organizations is now rare and endangered
We can build social capital to capitalize on the volatile, virtual possibilities of today’s business environment
Building social capital can’t be “legislated” or “managed” It occurs through natural development that orients rather
than orders, that provides nourishment rather than blueprints
“Everything in this firm works because of social capital”
-Hobson Brown, President & CEO, Russell Reynolds
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