Social capital is a classic example of a clear, intuitive idea that is muddled by a confusing label. Once you grasp the concept, you can measure and grow social capital at your company.
Trust: The Foundation of Social Capital
Social capital is the idea that social relations have productive benefits. Sound a lot like trust? We think so. Most people agree that trust has a financial impact on their company’s long-term profitability. So why does social capital get left out of the equation?
It’s easy to see “capital” in the form of a tool or factory. You invest money in a tangible good in order to make more money. While concrete investments, like widgets, are easy to count and quantify, that doesn’t lessen the value of intangible forms of capital. Like plant, property or equipment, social capital is essential to growing your wealth.
Integrating Social Capital in Your Business
Sustainable business practices offer one of the most efficient frameworks to grow social capital. As a socially and environmentally responsible business, you’ll find more opportunities to focus on the three key activities behind social capital: bonding, bridging and linking:
- Bonding – Strengthen your “strong ties”
- Strengthen your strong ties by nurturing a company culture based on openness, trust and transparency. For example, empower employees to develop the framework for a sustainability strategy in collaborative, cross-functional teams. Recognize their work and act on their suggestions
- Bridging – Connect your “weak ties”
- Introduce people and ideas outside of your company, industry and specialty. Connecting “weak ties” often results in the cross-pollination of ideas and a spring well of innovation. For example, create regular sessions where experts from diverse fields speak to your employees. Encourage your employees to return the favor and speak to others about their work.
- Linking – Leverage partnerships for greater change.
- Join forces with institutions and organizations that have a mutual interest in the success of your social and environmental initiatives. You’ll likely find that you can be more effective together than apart. For example, Patagonia, a leader in environmental stewardship, is helping Walmart green its supply chain.
Build it Before you Need It
You can’t buy social capital when you need it most. It takes time to grow and dedication to nurture. But taking the first steps toward sustainability, from a recycling initiative to volunteer days for employees, you’ll start building the kind of social capital that benefits all parties.
Can you think of any other areas where you could develop social capital? Where have you seen it used most effectively? Have you seen any cases of its failure?