Many would agree with (Jones, 2013), that “An organization is a tool people use to coordinate their actions to obtain something they either desire or value.” Having said that, then how does an organization create value? “Value takes place in three stages: input, conversion and output and each step is affected by the environment in which the organization operates” (Jones, 2013, p. 3). Research has shown that both the organizational environment and its effectiveness are strongly influenced by social capital.
It would be fair to say that an effective organization balances the needs and interests of its stakeholders so that all groups of stakeholders are at least minimally satisfied (Jones, 2013). However, competing goals often place the needs and interests of one group of stakeholders at odd with another group often resulting in conflict (Saul, 2011, p. 3). Social capital is the informal exchange between individuals or groups and is more efficient than more formal methods such as contracts, hierarchies, and bureaucratic rules (Fukuyama, 1999). It is perhaps the informal exchange between individuals and groups(social capital)that often minimizes such conflicts.
Research has shown that when individuals come together as a group, they tend to develop a hierarchical structure (Crosier, Webster, & Dillion, 2012). How effective this hierarchical structure depends on the working relationship of the group (Graen & Taylor, 2006). The higher the quality of leader-member exchange, during the role making process, the more effective the group will become (Graen & Taylor, 2006). Role-making occurs in three stages moving from the initial stage of a stranger to acquaintances and finally to leadership sharing (Graen & Taylor, 2006). As this evolution occurs the relationship moves from economic in nature to more social and trusting in nature spurring the development of social capital.
As stated earlier, organizations create value by converting inputs into outputs (Jones, 2013). So, the goal of ultimately achieving outputs is a predictable outcome regardless of the organization's structure. How efficiently an organization converts inputs into outputs largely depends on management's commitment to developing an environment where informal communications can occur (Saul, 2011). In order to develop long-lasting trusting relationships, an essential element for the development of social capital, organizations must be willing to provide the time and space for employees to gather socially (Fukuyama, 1999). Efficient well run organizations foster an environment that promotes trust, the type of trust that allows individuals to interact and freely exchange information, knowledge, and resources in a way that benefits the organization with measurable results (Prusak & Cohen, 2001).
Crosier, B. S., Webster, G. D., & Dillion, H. M. (2012, June). Wired to connect: evolutionary psychology and social networks. Review of General Psychology, 16(2), 230-239. Retrieved August 20, 2015, from http://dx.doi.org.proxy-campuslibrary.rockies.edu/10.1037/a0027919
Fukuyama, F. (1999, October 1). Social capital and civil society. Retrieved August 14, 2015, from International Monetary Fund: http://www.imf.org/external/pubs/ft/seminar/1999/reforms/fukuyama.htm
Graen, G. B., & Taylor, E. A. (2006, December). Experienced-based learning about LMX leadership and fairness in project teams. Academy of Management Learning & Education, 5(4), 448-460. doi:10.5465/AMLE.2006.23473205
Jones, G. R. (2013). Organizational Theory, Design, and Change (7th ed.). Upper Saddle River, New Jersey: Pearson.
Prusak, L., & Cohen, D. (2001). How to invest in social capital. Harvard Business Review.
Saul, J. (2011). Social innovations, inc. San Francisco: Jossey-Bass.
As managers, we are only as good as our team. When we are short staffed, when we are always in training mode and when we are working more hours than necessary, we never reach the level of efficiency it takes to excel. Most would agree that developing social capital within an organization is key to operational efficiency. However, the development of social capital requires a level of interaction that never happens with short-term employees. It takes a considerable amount of time and training before an individual can achieve a high level of efficiency. Unfortunately, many individuals become frustrated and leave long before that happens. Why? It is my contention that our passive approach to recruitment, recruits individuals that are not truly invested in our organizations. I believe that we must take a proactive approach to recruiting. A proactive approach will bring “prequalified” individuals through the door and significantly improve our retention rate.
One can hardly drive down the road today without being bombarded by “Help Wanted” signs. It would appear that help wanted signs have gone from little signs in the window to signage that seems to overshadow the monthly promotion at many retail establishments. Many retailers today have yard signs, reader boards, flyers, and have allocated some floor space to recruitment efforts. I have spent most of my life in the Pittsburgh, PA. area and the saying here was “If you can’t find a job in Pittsburgh then you can’t find a job anywhere”. According to the Department of Labor and Industry, in Allegheny County, based on information through June of 2015, there are approximately two jobs available for every job seeker. Well based on that information, it would appear that old adage may still holds true, but something has changed.
Most would agree that Obama Care has impacted our industry and affected our recruitment efforts. But, that is not the whole story. Recent articles published in 2015 indicated that the attitude of the available employee pool nationwide has changed. Research has shown that a large segment of available employees is walking away from retail jobs, fast food jobs and cleaning service jobs. According to research gathered by Retail-Drive, no consistency in scheduling has left employees in a position where they cannot plan family events, attend school functions for their children, attend school themselves, adequately plan for child care, or even plan doctors’ visits. The research further indicates that employees are tired of being scheduled different hour’s day-to-day, different days week-to-week, being short shifted, no lunch breaks and more recently not working enough hours to support themselves nor their families. For most retailers the result is usually a higher call-off rate and eventually a higher turnover rate. Based on this information, one has to wonder, is the issue recruitment or is it retention. After all, if we can’t stop the leak, we may never be able to fill up the cup. Unfortunately, this is not the whole story either.
Research indicates that there are individuals who are willing and able to work part-time. According to recent figures put out by the Department of Labor and Industry, 15% of the labor force is working part-time. However, it appears that 15% does not provide sufficient numbers to fill the recruitment requirements of the retail industry. To add to our recruitment woes, according to recent Department of Labor and Industry statistics, there are over 94 million working-aged individuals in this country who have removed themselves from the job market. These are not unemployed individuals, these are individuals whom, for whatever reason, have stopped looking for work. This represents an all-time high for this group and appears to be contributing to the available employee pool shortfall.
Staggering numbers indeed. However there are some that believe, as do I, that there are recruitment opportunities within this group. How do we attract them? It would appear that passive recruitment activities such as yard signs, reader boards, flyer, brochures and in-store kiosks are no longer effective standalone recruitment tools here. It is my opinion, in order to successfully recruit from the above-mentioned group, as an industry we need to be willing to address some barriers to employment (transportation or provide more flexible schedules around family issues) and be willing to be more proactive in our recruitment efforts by developing strategic relationships with industry professionals (social workers, case workers, counselors or clergy) whom by the very nature of their work come in contact with or service a portion of this group. It is my belief that a successful recruitment program is all about developing strategic relationships. Once local industry professionals become familiar with our organizations’ recruitment needs, they will be in a better position to match our needs with the needs of individuals. Based on this manager’s experience, individuals recruited and hired through this process are more invested in the organization and as a result, stay longer.
There is little doubt that recruiting is a complex issue and what is proposed here is only a partial solution to the ever increasing problems associated with the shrinking pool of qualified candidates, however it is a start. I guess we will see what 2016 has to offer.
What is Social Capital?
Recent research conducted by (Fukuyama 2010), (Cohen and Prusak 2001) and (Saul 2011) indicates that social capital is a result of individuals with similar interest and beliefs coming together and developing a relationship forged out of trust. Relationships built out of trust take time (Fukuyama 1999). Efficient well run organizations foster an environment that promotes trust (Cohen and Prusak 2001). The type of trust that allows individuals to interact and freely exchange information, knowledge, and resources in a way that benefits the organization with measurable results (Prusak and Cohen 2001). Beyond social capital in organizations, there are benefits to individuals as well (Crosier, Webster and Dillion 2012), (Fluera 2012). However, the true value of social capital is difficult to measure (Fukuyama 1999). According to (Fukuyama, Social capital and civil society 1999), social capital is an informal norm that promotes cooperation and reciprocity between at least two individuals or can be more complex exchanges between larger groups. Social capital is the informal exchange between individuals or groups and is more efficient than more formal methods such as contracts, hierarchies, and bureaucratic rules. As a result, social capital reduces transaction costs (Fukuyama, Social capital and civil society 1999).
As (Knoke 2012) points out, social capital is “a relatively less familiar form of capital investment” and, as a result, may be less understood. Social capital does not get its strength from individual actors but the collective as a whole (Knoke 2012). Social capital is an “informal norm that promotes cooperation between two or more individuals and can range from a norm of reciprocity between two friends all the way up to complex and elaborated doctrines” (Fukuyama 1999). (McFaden and Cannella 2004), suggest that social capital is both the interpersonal relationships of an individual as well as the resources embedded in those relationships.
Knowledge is recognized as one of the most important resources for managers within an organization (McFaden and Cannella 2004). Knowledge is power and can be used in both beneficial and detrimental ways (Fukuyama 1995). Knowledge management is “the sharing and integrating of expertise within and between functions and divisions through real-time interconnectedness” (Jones 2013, 347). Knowledge management is, therefore, an important tool for increasing the level of organizational integration between people, functions and divisions (Jones 2013). (McFaden and Cannella 2004)argues that knowledge creation results from strong interpersonal relationships, (social capital) not from the number of connections within an individual’s network.
Trust in Social Capital
“Trust is an essential element in human activities and is a key component of social capital." According to (Saul 2011), the focus of consumer’s and investor’s is changing; consumers and investors are placing value on social and environmental impacts and are willing to pay more for goods or services from companies that engage in social and environmental issues with measurable results. From this writer's perspective, it is the measurable results that lead to trust.
Social Capital and Trust in Social Networks
According to (Fiske, Gilbert and Lindzey 2010), “building relationships of any kind and effectively working with others depends on mutual trust, a willingness to cooperate, and a sense that reward and responsibilities are being distributed fairly." I believe that it is this sense of mutual trust that fuels the development of social capital.
It is my opinion, that social capital does positively impact both organizations and individuals. According to (Fukuyama 2010), (Cohen and Prusak 2001) and (Saul 2011) social capital is a result of individuals with similar interest and beliefs coming together and developing a relationship forged out of trust. Efficient well run organizations foster an environment that promotes trust, the type of trust that allows individuals to interact and freely exchange information, knowledge, and resources in a way that benefits the organization with measurable results (Prusak and Cohen 2001). Beyond social capital in organizations there are benefits to individuals as well (Crosier, Webster and Dillion 2012), (Fluera 2012).
For a quick reference on Social Capital go to :
Cohen, Don, and Laurence Prusak. 2001. In Good Company: How Social Capital Makes Organizations Work. Boston: Harvard business School Press.
Crosier, Benjamin S., Gregory D. Webster, and Haley M. Dillion. 2012. "Wired to connect: evolutionary psychology and social networks." Review of General Psychology (US: Educational Publishing Foundation) 16 (2): 230-239. Accessed August 20, 2015. http://dx.doi.org.proxy-campuslibrary.rockies.edu/10.1037/a0027919.
Fiske, Susan T, Daniel T Gilbert, and Gardner Lindzey. 2010. Handbook of Social Psychology. 5. Vol. 1. Hoboken: John Wiley & Sons, Inc.
Fluera, H. 2012. "Measuring social capital: a new approach." Management Challenges of the Contemporary Society (4): 219-223. Accessed September 2, 2015. http://web.b.ebscohost.com.proxy-campuslibrary.rockies.edu/ehost/detail/detail?vid=12&sid=61913b16-ae55-4b99-a765-ecd5a606cdfa%40sessionmgr114&hid=115&bdata=JkF1dGhUeXBlPWlwLHVybCx1aWQmc2l0ZT1laG9zdC1saXZl#AN=97821318&db=bth.
Fukuyama, Francis. 1999. "Social capital and civil society." International Monetary Fund. October 1. Accessed August 14, 2015. http://www.imf.org/external/pubs/ft/seminar/1999/reforms/fukuyama.htm.
—. 2010. "The future of work." LEF Research. Accessed September 1, 2015. https://www.youtube.com/watch?v=qVBvLW893CM.
—. 1995. Trust: the social virtues and the creation of prosperity. New your: Free Press Paperbacks.
Jones, Gareth R. 2013. Organizational Theory, Design, and Change. 7th. Upper Saddle River, New Jersey: Pearson.
Knoke, David. 2012. Economic networks. Cambridge: Polity Press.
McFaden, Ann M., and Albert A. Jr. Cannella. 2004. "Social capital and knowledge creation: diminishing returns of the number and strength of exchange relationships." Academy of Management Journal 47 (5): 735-746. Accessed September 9, 2015. doi:10.2307/20159615.
Prusak, Laurence, and Don Cohen. 2001. "How to invest in social capital." Harvard Business Review.
Saul, Jason. 2011. Social innovations, inc. San Francisco: Jossey-Bass.