Last year I stumbled upon an article in Institutional Investor with the following subtitle: “Have friends, will travel: an argument for the Social Capital Manager.” The general premise of the article by Ashby Monk is that relationships have real economic value, and so our financial and investment models should take those relationships into account. Because we haven’t yet realized this future, Monk argues, we should be investing in a Social Capital Manager as a C-level role that focuses on external relationships and networking.
Before we get into analyzing Monk’s argument for not just a full-time position but – cough — a C-level position to manage corporate relationships, let’s establish a bit of theoretical groundwork.
What is social capital?
Social capital is a relatively ambiguous concept that can take on a variety of meanings. I define social capital as the resources embedded in relationships. Social capital is primarily found in relationships characterized by trust, and the act of using social capital typically fosters reciprocity in a relationship. When you find a candidate for a critical position because of a recommendation from a friend, that reference is your social capital. When an employee is working on a challenging project and seeks expertise from an industry veteran he knows, that advice is his social capital. When an executive scores a meeting with a coveted customer because she used to work with someone who sits on their board, that introduction is her social capital.
In all of these examples, you can see how relationships produced resources with clear economic value (or potential economic value) for the company. I know what you’re thinking; this is soft stuff that certainly can’t be measured and even more certainly doesn’t justify a position. But let me challenge that thinking through the lens of my previous examples:
- We invest in recruiting because the value of quickly filling an open position with a quality candidate far outweighs the cost, yet in my example, your relationship with your friend was able to produce an equally good result at no financial cost.
- We invest in technology for knowledge sharing and internal communication because the increased productivity, accuracy and efficiency it supports far outweighs the cost, yet in my example, the employee’s relationship with the mentor produced an equally good result at no financial cost.
- We invest in marketing and lead generation programs because the lifetime value of the customers they produce far outweighs the cost, yet in my example, the executive’s relationship with the board member produced an equally good result at no financial cost.
In theory, all of these things that we value enough to invest in and hire leadership for could also be accomplished through relationships alone. So why aren’t we hiring a C-suite position — or anyone for that matter — to oversee relationships?
Measuring social capital
If you’re still with me on my logic so far, you’re wondering how exactly we might structure a Social Capital Manager position or even just a set of concrete responsibilities for one of your current leaders. To answer this question, I think we can find a useful analogy in the realm of customer experience and the Net Promoter Score (NPS) metric.
NPS is a widely-used metric for measuring customer satisfaction with the purpose of predicting business growth. A single score for the company or a specific brand is constructed by aggregating customer responses to one survey question: On a scale of 1 – 10, how likely are you to recommend [brand name] to a friend or colleague? While NPS doesn’t directly measure customer satisfaction, it is a helpful indicator that informs decisions on where to invest in customer relationships, product development or risk mitigation. Many companies invest resources — sometimes full-time positions — in regularly measuring NPS and benchmarking themselves against their competitors.
What if we approached understanding our employees’ relationships with the same level of discipline? We would need a metric to give us an indication of the overall social capital embedded in the relationships between coworkers and their connections. We would also need to understand our employees’ willingness to put that social capital to work for the company. And we would need to gather this information with just a few simple questions, similar to the NPS format, that are easy to administer and compile on a regular basis.
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Survey your employees
Here are a few starter questions that might fit the bill for surveying your employees:
- How likely are you to call in a favor from your professional network to help the company?
- Do you have a mentor outside the company that you trust enough to call and ask for perspective on a project?
- Are there any customers or prospective customers with whom you’ve built a significant amount of reciprocity?
So, is a C-suite position warranted to manage social capital for your company? Maybe not yet, but at the very least you would be wise to establish relationship-centric metrics that align with your strategic goals and incorporate measurement into an existing process like your annual employee survey. NPS is frequently discussed in earnings calls, and social capital metrics will follow suit. Make sure your company is ready when it’s time to report social capital as an asset on your balance sheet.