Does the Future of Business Depend on Social Capital?
From the schoolyard to the office or on the sports field, belongingness refers to a human emotional yearning to belong to a group and be accepted by its members.
Research indicates that a sense of belonging is an essential element for generating social capital. Why is this important?
All highly successful companies likely have a strong level of social capital. It promotes cooperation among coworkers. It aids the smooth operation of businesses and also aids employers in increasing staff retention.
Social capital enables a group of individuals to collaborate effectively in order to achieve a common goal or purpose. Through trust and common identity, conventions, values, and reciprocal relationships, it enables a community or organisation, like a corporation or a nonprofit, to function as a whole.
But What Is Social Capital?
Opening a door for someone, returning a lost item to a stranger, giving directions, lending anything without a contract, and any other good interaction between individuals, even if they don’t know one other, are all examples of social capital at the societal level.
Societal capital is the network of relationships among people who live and work in a community on a business level. These social networks make it possible for societies and enterprises to operate efficiently.
In other words, your network is your social capital. Your network consists of your coworkers and managers with whom you have established contacts at work. It’s anyone with whom you have a business or potential business relationship outside of work.
Why Is A High Level Of Social Capital Significant?
It Makes Goals Easier To Achieve
Building social capital aids organisations in achieving their objectives.
Employees are more inclined to collaborate with coworkers when they have meaningful relationships at work. Others immediately come in to assist when an employee fails or meets an unexpected difficulty.
Social capital also makes employees more willing to invest in the well-being, survival and success of the company – going out of their way or the extra mile is rewarding within itself and is done out of sheer “team spirit”.
Social Capital Is A Real Time-Saver
They say that time is money, and a working environment with little to no social capital could be costing your business. How, you ask?
Employees find it difficult to agree in organisations with poor social networks and low social capital. It’s also difficult for them to have productive disagreements or find common ground.
Employee 1 wants to solve a problem one way, but employee 2 prefers another solution. If there is this kind of lack of trust between staff, projects may be slowed down due to these conversations or disagreements.
When a team has a lot of social capital, they trust one another and value each employee’s unique abilities and contributions. Collaboration in this kind of working environment is made more accessible, and completing tasks, reaching deadlines and achieving goals is less time-consuming.
It Breaks Outdated Silo Styles Of Working
An information silo can be incredibly detrimental to any modern-day company. Silos ensure that information and knowledge are not shared with other personnel, making room for miscommunication, error and immense resource and time-wastage. Employees are divided as a result, and unwanted hurdles to social cohesion are created.
Information silos may develop when an organisation does not encourage employees to share data and resources or touch base on workflow, current projects, or goals.
Teams with high social capital, on the other hand, exchange knowledge, and this allows them to make fewer mistakes and improve their performance, making processes more fluid across the company.
Why Should I Build Social Capital?
According to research conducted by the Journal of Finance, businesses with higher social capital have higher profitability and gross margins and experience higher sales growth than firms with lower social capital. They also have higher sales per employee and are able to raise more debt.
This indicates that organisations need to pay close attention to their internal social capital to have significant effects on financial and non-financial aspects of business performance.
Would You Like To Learn How To Boost Social Capital In Your Business?
Boosting company culture, encouraging team building, and fostering open communication or problem-solving is a great way to begin building social capital.
We recommend that you enrol in one of our PhD Futures Studies at Stellenbosch Business School to learn more about the intricacies of social capital and how they apply to various business sectors. This program will provide you with key insight to apply to your business or utilise in government, public and private corporations, financial institutions, and academic institutions.
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