The importance of social capital in the workplace

Sameeha Joshi, Workplace Consultant Workplace strategy

When we think about the term social capital, it’s usually discussed in the context of neighbourhood communities and within society as a whole. While research on social capital inside the workplace is minimal, the events of the past year suggest that it is a powerful force that contributes to business success. When organisations function as a community, focusing on building social capital between employees, it can be used to develop skills and capabilities of people on both a personal and a professional level, to increase business output.

What is social capital?


‘the networks of relationships among people who live and work in a particular society that enable the society to exist and be successful’

This term has been around since the first half of the 19th century. The beginnings of the idea formed when de Tocqueville observed that Americans who attended higher levels of social events, had higher levels of participation in the community and democracy, enabling it to function better. Social capital ‘facilitates co-operation and mutually supportive relations in communities’. In economics, capital is depleted with use. However, with social capital the opposite is true. The more we use social capital, the bigger our supply becomes. It’s an intangible supply that has the power to enable societies to work better together.

When you walk into a party where you know everyone in the room, you’re rich in social capital which leads to a feeling of belonging. By contrast, when you walk into a networking scenario you’re completely alone, the fearful or anxious feelings we experience stem from the absence of social capital.

High levels of social capital have been credited with enhancing the functionality of groups across all areas of business, such as improving supply-chain relations, speeding up entrepreneurial growth of firms and encouraging community volunteering.

A global pandemic and the decline of social capital

A series of national and regional lockdowns and subsequent social distancing measures with restrictions limiting social interaction in 2020 and the early part of this year, has highlighted the importance of social capital in many ways.

Discussion around this subject will become increasingly relevant as we continue to work from home. While many consider the return to the office inevitable, some firms are already making decisions on how hybrid or remote working can work for them in the long-term.

The role of social capital in businesses

Increasingly, a strong sense of culture within the workplace is being linked with the success of businesses. In fact, a study found that as much as 33% variance in sales performance is attributed to an individual’s social capital.

Social capital is formed through our trust of others, their cooperation, and their identity as an individual within a network. Hazleton and Kennan (2000) added a third angle, that of communication. Communication is needed to access and use social capital through the exchange of information, the identification of problems and solutions, and conflict management.

Social presence theory suggests that CMC (Computer Mediated Communication) deprives users of the sense that another person is involved in the interaction which can lead to workers feeling isolated without a sense of community. With many workplaces operating entirely virtually for the past year, we haven’t been able to read co-workers body language through video calls or assess intonation through a chat function.

Building back better

Pierre Bourdieu viewed social capital as a property of the individual, noting that people use their existing networks to maintain advantages for themselves - but what about graduates entering the workplace, or new starters entering a new industry? If remote working is to be the new norm, businesses will need to find new ways to connect these new recruits to their professional networks in order to benefit from the social capital they can generate.

The question now is, in the world of business, how can we reinstate our dwindling social capital and use learnings from the past year to maximise its potential? We can’t expect to go back to pre-pandemic norms until the latter half of 2021 at the earliest, so now we have an exciting opportunity to plan for when we do so.

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