The Power of Social Capital in organisational success

The Silver Generation can play a critical role in shaping organisational success, namely by leveraging their social capital to inspire younger workers, and prepare them for leadership transitions. There are lessons for both, governments and firms to adopt.

At a macro level, it is estimated that a 10% increase in trust is associated with a 1.3% to 1.5% rise in economic productivity. At a firm level, employees who feel more connected with their colleagues are 1.5x more engaged with their workplace.

What is social capital, and how does it tie into organisational culture?

But what does culture really mean in this context? It’s not only about workers interacting with each other or with external partners and clients, but also the nature of these interactions and the terms and principles in which these interactions take place. Younger workers often follow cues from experienced colleagues, whose influence shapes organisational culture and behavior. While individuals might have varying styles of working and cultural embrace, influence is rarely distributed equally; some workers shape the behavior and attitudes of others more profoundly.

This interaction is where social capital comes into play– the notion that there is positive value derived from connections between individuals or groups. Social capital manifests in different ways, especially in trust-building acts, such as delegating client relationships to subordinates, publicly acknowledging colleagues’ hard work and efforts, or extending payment terms for old clients.

The Silver Generation’s Importance

The silver generation typically tend to be holders of social capital, and can implicitly shape the future of firms and the careers of younger workers; they must be leveraged to be effective. A host of studies show a strong link between social capital and trust, and in the firm context, in worker retention, and client management. There are various ways to retain knowledge in a firm, from transition and succession planning, detailed and easily accessible archival systems, training and retraining initiates and cross-functional teams. But knowledge is different from the intangible aspect of social capital, and individual behaviour and relationships are key to transforming knowledge into actions that continue to build social capital and value for companies and other organisations alike.

In essence, younger workers will be required to build social capital with experienced employees to progress, but in the right enabling environment, younger workers would also be incentivised to invest in the firm. For example, BNP Paribas piloted such an initiative in its Italian offices through an internal cross-generational coaching program. It created a Learning Expert community with several senior employees aged 45 and over to deliver courses and training modules to younger staff, which resulted in better retention and also an expansion in the learning expert community.

For example, experienced workers in a services industry like law or accounting have a large client roster, which upon retiring they have to stop advising. A host of factors can shape the decision for a client to retain a firm, but the relationship shared between client and service provider is key. A retiring employee could pass a relationship to a subordinate, and in turn, build and retain theirs and the firm’s social capital; but the decision to do this also requires a subordinate to prove themselves, both through quantitative and formal evaluation methods, but also qualitative assessments on character and behaviour. Such acts of recognition and trust have a positive impact on worker loyalty and retention. A study shows that 55 percent are less likely to look for external job opportunities and 68 percent are less likely to feel burned out on the job when they are properly credited by their superiors.

The Silver Generation can play an important role in demonstrating trust in younger colleagues and in turn shape career prospects. Successfully building avenues to enhance social capital can better engage workers and improve firm performance; the macro economic implications of such activity are immense.

Question fo readers: how have you thought about building social capital in your various organisational structures? What works, what doesn't?