Working in the Connected World -
Managing Connected Assets  by Valdis Krebs

 

Social Capital - Improving Individual Effectiveness

Is it who you know (social capital) or what you know (human capital) that leads to success? This has been often debated with good arguments on both sides. With its focus on education, training and job experience, HR has usually sided with the "what you know" crowd. In the old economy this strategy worked more often than not.

In the late 1980s and early 1990s management researchers were starting to notice that effective managers were better at accomplishing objectives through their relationships than less effective managers. John Kotter discovered that effective general managers spend more than 80% of their time interacting with others. Other management scholars were also starting to see the importance of conversations and relationships in managerial work. Individual mastery was no longer the key -- what you knew actually depended on who you knew! Relationships were the key for general managers in accomplishing their goals -- they did not own the knowledge to get things done, they kept it in their network! Ron Burt, a leading researcher on the social capital of managers has found, through numerous studies, that certain patterns of connections that individuals build with others brings them higher pay, earlier promotions, greater influence and overall greater career success. Burt believes that good social capital provides a much higher return on investment in human capital -- the two work together.

Arent Greve, a researcher at the Norwegian School of Economics, is also interested in the contribution of human and social capital on organizational outcomes and individual productivity. He studied project managers in a knowledge-based services company in Europe. He viewed human capital as the knowledge and skills attained by the individual over his/her career. Social capital was defined as a property of personal networks -- the ability to reach others, inside and outside the organization, for information, advice and problem-solving. He found something very interesting. Both individual competency and social capital had a positive effect on productivity, but the effect of social capital was noticeably stronger! Project managers with better personal networks were more productive -- they were better able to coordinate tasks and find the knowledge necessary to accomplish the goals of the project.

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