Businesses know that their most successful and profitable ideas are already in the company. They reside in your employees. Knowing that is easy, being able to create and encourage an environment where innovation flows is the hard part.
While institutional knowledge has always resided in organizations, never has that knowledge been broader with more potential at every level of the company than it is now, in the Information Age we live in. Think about the technology intellect and cutting edge comprehension even the youngest members of your business have today. You think concepts like singularity, RFIDs and Qwerty is coming from the Boss’s corner office or from the Senior Management Meeting?
Forces like technology, globalization and the rise of free agency and the virtual work place are bringing another form of hidden capital to the forefront. That resource is ¡°social capital.¡: Whether you are a large or small business, your future will depend on how you learn to build trust, networks and a sense of community within your organization.
Social capital is being defined as ¡°the stock of active connections among people: the trust, mutual understanding and shared values and behaviors that bind the members of human networks and communities and makes cooperative action possible.
Huh? Sounds like something that would be written on the wall at a retreat for bureaucrats. I like my definition better. Social capital is the ability of business to allow everyone in their company to be empowered and innovative¡ and¡ to be recognized and compensated for it.
You don’t have to memorize either definition but you better embrace the concept of ¡°social capital¡: or you are throwing away one of your most important assets.
Fortune Magazine’s recent cover story was on Generation Y (yes, Generation X is old school now). The story’s headline was ¡°Manage Us? Puh-leeze¡.. Today’s twentysomethings have their own rules. You just don’t understand them.¡: The story dealt with the significant impact this generation might have on business NOW!
I came into the business world in the 70’s, looking for a business to teach me. Today’s “twentysomethings” come into the business world possibly possessing your company’s next great idea.
Only the most innovative and progressive businesses being lead by open-minded thinkers will be able to fully embrace this concept and create the right culture.
A big part of the reason we hear so much about ¡°free agency¡: and see resumes where young professionals have already worked for more companies than you have, is due to these Gen Yers looking for the right culture. Sure Gen Yers can be difficult, outspoken, abrasive and think they know it all. We were exactly the same way in our 20’s. The difference is they are a heck of a lot smarter than we were and some of their thoughts and ideas will grow your business.
Individuals (including Gen Yers) will always have a need for the satisfaction gained from recognition and appreciation by peers and elders and from the pleasure of giving as well as getting help.
So how do you build a business, a culture, where just like a capital investment in a tangible asset produces a return, so will a °social capital¡: investment produce a return. In many cases, a return significantly higher.
To start with, here are the benefits of investing in ¡°social capital:
An environment is created where knowledge sharing happens because relationships are built on trust, common frames of reference and shared goals;
Operating expenses are reduced thanks to trust and a cooperative spirit;
Turnover rates plummet, resulting in reduced severance costs and hiring and training expenses;
Greater coherence is established due to a culture of stability.
Before I discuss further the value of “social capital” let me digress, to tell you that °social capital¡: is not about everyone in an organization liking and accepting one another; it is not about being nice. ¡°Social capital¡: is not about employees sharing details of their personal lives, erasing the line between work and home. That kind of coerced intimacy will damage trust.
Nor is social capital enhanced by paying lip service to equity and respect. Calling everyone in the organization an ¡°associate¡: while the decision-making remains at the top merely breeds cynicism. Since ¡°social capital¡: is about trust, relationship and commitment, it thrives on authenticity. Hypocrisy kills it.
OK, enough on what ¡°social capital¡: is not and back to the value of it. The starting point of any investment in ¡°social capital¡: is building trust. Today’s workers need to be responsive, inventive and cooperative. Trust is one essential lubricant that allows workers to be all of that and much more.
Low-trust organizations are characterized by manipulation, secrecy and the triumph of shrewd calculation over hard work. High-trust organizations, on the other hand, are rewarded with a culture that supports creativity and collaboration among its members.
Trust is not a uniform, invisible quality. It is largely situational. Many people experience trust in another person after a series of observations or trust-measuring experiments. Essentially, a person is judged trustworthy
A powerful sense of higher organizational purpose can sometimes foster trust. A sense of duty, patriotism or idealism can help generate trust as well as commitment. People tend to trust organizations that have a calling beyond pure profitability, and they are more likely to trust colleagues who share their commitment to an important goal.
Building and maintaining trust as a fundamental part of your operating culture is difficult. Most businesses don’t even come close. But the most respected and successful business, or for that matter the best organizations (it could be one department within a company, or a non-profit, a team, a service organization) all have trust as a common trait.
You can encourage trust by:
– Being trustworthy. Leaders set the tone, establishing the values and norms through their own conduct and actions.
– Being open and encouraging openness. Knowing people, what their responsibilities are and even what their personal professional goals are, builds connections and trust. Transparent and open promotion and compensation policies help build trust by reducing suspicion.
– Empowering everyone. Individuals who know their opinion matters, that they can make a difference, will perform at their highest possible levels.
– Communicating openly and candidly. Tell everyone, everything you can about what is going on in the company- the good, bad and ugly. Answer questions and be accessible.
By the end of this decade some 64 million skilled workers, possessing a significant amount of institutional knowledge and experience, will be able to retire. So how you do business and who you do it with is going to change significantly, whether you like it or not. You can be proactive and embrace your investment in ¡°social capital¡: now, which is actually in the company’s best interest anyway, or you can wait and risk it all.