Working from home may hit productivity in the long term; this is why

We might assume that it is only the individual employee, referred to as the human capital, who is affected by working from home. In doing so, however, we are forgetting the fundamental conditions that facilitate the effective deployment of human capital in organisations – the Social Capital.

Working from home significantly impacts the social relationships and the informal networks that employees form within their organisations. It is the hidden organisation, the company behind the organisation chart, which directly affects both the individual and collective productivity of an organisation.

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Human Capital, Social Capital, and Productivity

Human capital is the aggregate of attributes that an individual possesses, including education, skills, and professional experience. It is an asset for both the individual as well as the organisation. Research on human capital and productivity, however, tends to ignore the several conditions under which organisations are able to activate, combine, and use the competencies of individuals. One such condition is the social capital of an organisation.

Pierre Bourdieu, the French sociologist, defined social capital as ‘the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalised relationships of mutual acquaintance or recognition’. Robert Putnam, the American social scientist, on the other hand, defined social capital as ‘those features of social organisation, such as trust, norms, and networks that can improve the efficiency of society by facilitating coordinated actions.’  

Looking at both these definitions, we can agree that social capital represents the ability of individuals to benefit from membership in social networks and other social structures. In other words, it is the benefits that flow to an individual from trust, reciprocity, information, and cooperation associated with social networks. It is the addition to the individual’s human capital from collective networks.

One of the ways in which social capital is formed in an organisation is through the proximity principle, which holds that people prefer to populate their networks with individuals they spend the most time with or have most chance encounters with.

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Theodore Mead Newcomb, an American social psychologist, professor, and author demonstrated how people who interact and live close to each other will be more likely to develop a relationship than those who do not. Leon Festinger, another social psychologist, also proved the proximity principle by studying the network of attraction within a series of residential housing units at Massachusetts Institute of Technology (MIT). Both these studies provide sufficient evidence to prove that people who encounter each other more frequently tend to develop stronger relationships.

Now imagine the pre-determined, calendar-driven online meetings and interactions we are having during COVID-19. The probability of you accidentally walking into a zoom meeting room or a zoom canteen and having small talk with someone new is almost zero. It is something that happens often in a physical workplace and drives the social capital of an organisation.

While it is true that the online medium improves the ability of people to communicate, it is often only utilised between those who already know each other. This means that while we can leverage our existing formal and informal relationships online, forming new relationships that occur through acquaintances (something that can have the potential to become strong, trusted, reciprocal relationships) might not happen through online work from home.

It is one of the many ways in which COVID-19 has impacted the social capital of organisations, and in turn their productivity. In fact, during work from home, people have added to their human capital by acquiring more skills and certificates, but their social capital has fallen steeply.

It is clear that social capital is of key importance to organisations and one easy way to study it is through Organisational Network Analysis (ONA).

Networks are a way of understanding social systems, community, or an organisation and the focus is on the relationships among the entities that make the social system. The social relationships and connections between a group of people are shown in the diagram below as a network. The nodes in the diagram represent people and the lines represent their relationships with each other.

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In the diagram above, you can see the networked structure of human relationships in the senior team of an organisation. You can also understand that the productivity of this team is influenced by social networks and social capital, and not only by individual expertise.

A social network analysis (SNA) or ONA maps the social relationships between people and visualise these relationships like in the diagram above. It allows leaders to identify key people and drive more engagement and collaboration.

Once we are able to understand the networked structure of an organisation and the social capital, we can create strategies to increase the social capital or to stop the erosion of social capital in organisations. That’s why an ONA to see the hidden, networked organisation becomes extremely important.

[The author is Founder OD Alternatives( and Orglens (]

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