Social Capital - The most valuable management currency

You can’t buy, trade, or be given social capital, all you can do is earn it. What is it, how do you earn it and what can you spend it on?

Social capital enables leaders to enact changes in their organization.  It is a specific form of trust.  It is the trust that you are acting in the best interests of those involved.

The only way to earn social capital is through helping others.  In my previous post, Leadership Has No Title, I spoke about how to become a leader.  That post gives you the framework to become a leader through helping people solve problems.  I’m sure you’re already a step ahead of me here, but by being a successful and supportive leader, you will naturally gain social capital.

Simply hoarding social capital does you no good. Strategically expending that resource is key to your success as a leader. As a leader of engineers, it is not uncommon that I need to ask my team members to make personal sacrifice in support of the company. Broadly speaking, the person that I am asking to go above and beyond can choose to get angry and stay angry about it, or they can deal with it and get the job done. I find the more social capital I have, the more likely the person will gravitate towards the latter. I cannot stress how important this is. As a manager and leader it is expected that you will be able to deliver your team out of difficult situations. Those difficult situations are a near inevitability in your life. By building social capital, you are dramatically increasing the likelihood of your team emerging successfully.

A common place where I see the immense need for social capital is during structural changes to the makeup of the team. You might need to let a team member go due to lack of performance, or you might need to split a team up to engage with a new business opportunity. In both of those cases, you are going to need to sit your team down and explain to them why you are changing things. If you have enough social capital, the vision that you sell during that difficult meeting will be met with trust and understanding. If you don’t have enough, then it will be met with skepticism and mistrust.

At the end of the day, you might simply be able to call social capital trust. And, effectively, that’s what it is. Thinking about it like capital puts you in a position to understand it’s fluid nature. You can build it and you can spend it. You can be bankrupt in trust. How you interact with your organization depends tremendously on your ability to properly assess the amount of social capital that you hold.

Written by Jonathan Hemnes who lives and works in Denver building useful things and serving great teams.