Social capital has proven to be key to economic success in countries and companies.
Can you imagine a country in which every citizen born in that country was born into a well-functioning family – a family in which there was security, unconditional love and affection, and one in which parents and children were continually learning, exploring and seeking excellence in themselves and each other? This family would have a strong value system, a positive faith in the future, and would be well-connected to other families in their community.
Without knowing anything else you would be well justified in assuming that this country will have a very low crime rate, children will succeed academically, it will be competitive in creativity and commerce, and will have nearly eliminated the costs of crime and other social ills. If you can imagine this you might wonder why this isn’t a national goal.
Strong Families = Strong Social Capital = Strong Performance
Now imagine a corporation and replace the word “family” with the word “team.” Both represent the single most important structure, the source of social capital that leads to high performance. Most senior executives are more concerned with the structures of senior management than they are with the structure of people at work at the front line. Changing structures at the top does little to impact organization performance. The quality of life, the way people behave toward each other, at the first level is very likely to determine organization performance. The experience of customers is most likely determined by the commitment and behavior of first level team members.
In the United States there has long been a tension between a reliance on groups and a belief in individualism. At first they might seem in conflict – the communal versus the self. However, like many false dichotomies, they may be more mutually reinforcing than in competition. The Pilgrims came in family groups and survived as a communal entity as did the Quakers, Puritans and other immigrants. We moved West in wagon trains of families supporting one another, not by the mythical Lone Ranger saving the day.
I have long argued the power of high performing teams. Where teams are strong performance is likely to be strong. Where employees have close bonds to their teams they are most likely to derive satisfaction from their work. It is here where continuous improvement is most critical and becomes embedded in the culture. One of the first books describing lean management or the Toyota Production System clearly identified the critical social element of its success:
What are the truly important organizational features of a lean plant – the specific aspects of plant operations that account for up to half of the overall performance differences among plants across the world? The truly lean plant has two key organizational features: It transfers the maximum number of tasks and responsibilities to those workers actually adding value to the car on the line, and it has in place a system for detecting defects that quickly traces every problem, once discovered, to its ultimate cause….So in the end, it is the dynamic work team that emerges as the heart of the lean factory. (Womack, J.P., Jones, D. T., and Roos D. The Machine That Changed the World. New York: Rawson Associates, 1990, P. 99.)
Family Social Capital and Academic Success
A great deal of research has pointed to the relationship between strong family bonds, trust and communication, or what some have called family social capital and academic success. This study compared the importance of social capital in the school versus in the family:
The researchers evaluated data from a national representative study that collected information from more than 10,000 students, as well as their parents, teachers and school administrators.
“Specifically, the researchers looked at how “family social capital” and “school social capital” pertained to academic achievement. Family social capital can essentially be described as the bonds between parents and children, such as trust, open lines of communication and active engagement in a child’s academic life. School social capital captures a school’s ability to serve as a positive environment for learning, including measures such as student involvement in extracurricular activities, teacher morale and the ability of teachers to address the needs of individual students.
“The researchers found that students with high levels of family social capital and low levels of school social capital performed better academically than students with high levels of school social capital but low family social capital. “In other words, while both school and family involvement are important, the role of family involvement is stronger when it comes to academic success,” Parcel says.
Workplace Social Capital
Similarly, there is social capital in the workplace and it has most of the same characteristics as social capital in the family. The pursuit of happiness or life satisfaction that determines job choice and job retention is increasingly recognized as being determined by social capital in the workplace. John F. Heliwell and Haifang Huang conducted research that found that…
The well-being results show strikingly large values for non-financial job characteristics, especially workplace trust and other measures of the quality of workplace social capital. The compensating differentials estimated for the quality of workplace social capital are so large as to suggest that they do not reflect a full equilibrium. Thus the current situation probably reflects the existence of unrecognized opportunities for managers and employees to alter workplace environments, or for workers to change jobs, so as to increase both life satisfaction and workplace efficiency.
High performing teams create this social capital when they have the following characteristics:
- They have clear responsibility and ownership of a process and its performance.
- They have the tools to measure their own performance.
- They are empowered to make decisions regarding their performance -in other words, to engage in continuous improvement.
- They have strong social bonds or trust within the team.
- They communicate openly, honestly and frequently.
- They celebrate success together and work to improve together.
- They are in close proximity and share space, time, and work.
- The best teams are multi-skilled and can rotate functions within the team.
Social Connections and Happiness
Why are close, loving relationships so crucial to our well-being and happiness? Evolutionary psychology (aka socio-biology) will point to the fact that we survived in caves and hunting antelope on the Serengeti Plains as family units, not alone. Hunt an antelope alone and you starve. The need to work in groups, rather than in isolation, goes back to our genetic beginning.
Relationships create psychological space and safety so that we can explore and learn. When we feel safe and supported, we don’t have to narrow in on survival tasks like responding to danger or finding our next meal. When we are secure we are happier, or have greater job satisfaction. The following are from Happiness, by Ed Diener and Robert Biswas-Diener:
Close personal relationships, whether in the family or at work, have proven to result in psychological well-being.
- The ability to love and be loved
- Mutual understanding
- A source of direct help in times of trouble
- Celebration of good times
- Validation of self-worth
- A diversity of ideas and influences to help us grow and learn
Belonging to a group or community gives us a sense of identity. It helps us understand who we are and feel part of something larger than ourselves. Researchers also find that people with strong social connections have less stress-related health problems, lower risk of mental illness, and faster recovery from trauma or illness. Friends and family can also encourage and support us in healthy lifestyle habits, such as exercise and moderation.
Researchers have found that people are happier when they are with other people than when they are alone—and the “boost” is the same for introverts and extroverts. They also are finding that happy people are more pleasant, helpful, and sociable. So being around people makes us feel happier, and when we are happier we are more fun to be around, creating an “upward spiral” of happiness.
Happiness may be surprisingly contagious. Psychologist James H. Fowler studied the data of 5,000 people over 20 years and found that happiness benefits other people through three degrees of connection, and that the effects last for a year. He says: “We found a statistical relationship not just between your happiness and your friends’ happiness, but between your happiness and your friends’ friends’ friends’ happiness.”
In short, everyone wins when we build strong teams at work. Too often organizations see teams as something you form only when there is a “problem” and not as the foundational structure of the organization.
Thanks Lawrence. As always you articulate and validate things that I believe I intuitively know but can’t begin to frame them so eloquently or back them up with research. Happy New Year.
Thank you, Bob. Much appreciated.
Thank you for sharing Larry. All of us at Optima look forward to your “meditations” and insight, Hope you have a great 2014!
Thank you,Steve. I hope everyone at Optima also has a great year.
I listened to a program on NPR today which hit a nerve and as I was reading this wonderful article I kept flashing back to the word team
They say the armed forces are trying to figure out the high rate of suicide and they have tied it to “toxic bosses”. Now that says a lot about what a dysfunctional team can cause in pain and suffering to one individual on a team
I thank you for your articles as they always broaden my perspectives
Appreciate your experience and wisdom. My background is in education and I started a home-based business years ago that grew beyond my imaginings because of amazing team. I have much to learn about the business world. This inspired me.
Larry – thanks for your post on social capital. I really like the way you link and compare the value of small, natural groups in different settings. What struck me strongest though is the actual concept of social capital. I haven’t used it much. It get’s me thinking, why use it? Must be to provide language and tools to measure the value of social interactions i.e. relationships. Why is that important? I suppose a major reason would be to convince those who don’t value social relationships, teams etc. “enough” or “in the right way,” who therefore are missing opportunities to “use” social relationships to achieve worthwhile goals, e.g. happiness, productivity, learning, profits, etc. But then I think, is this the best way to approach social relationships – primarily as means to ends? If our paradigm is that social relationships are primarily instrumental, are we distracted from valuing them in and of themselves? And might putting too much attention on “social capital” even diminish attention to the intrinsic value of social relationships? As I ask these questions I find myself thinking, “probably this is both/and, not either/or.” Providing good ways to measure the comparative value of social relationships can be a good thing, as long as we balance that attention with remembering that as human beings, as homo sapiens, we are born into this world hard-wired to collaborate and be empathetic as well as to struggle to survive; and paying attention to strengthening our groups is good to do in and of itself as well as a very important class of means-to-ends. Does that make sense to you? Do you agree?
Dave, yes it does make sense and I don’t think there is any mutual exclusivity between valuing social capital as a means to and end (economic performance); and for its intrinsic value. We value trust and communications within our families for the intrinsic value of healthy family relationships. But, at the same time that family social capital is also a multiplier in terms of how children will do academically and in life in general.
One of the best books on social capital is Francis Fukuyama’s “Trust” in which he correlates social capital factors with national economic development. I found it very compelling. And, of course, Robert Putnum’s “Bowling Alone” is a great book on the subject. The World Bank and UN have done studies on social capital as well. The value of understanding social capital is simply understanding that this is a reliable predictor of future performance for both businesses and nation’s. As you know, I have a model (and an unpublished book) that redefines capital in terms of five forms: spiritual capital, social capital, human capital, innovation and financial capital. My theory is that each of these leads to another, not necessarily in a linear fashion, but at least as some causal factor. I find it all very interesting stuff.
Thanks for this great article. It hit the bull’s-eye.