Social Capital—What It Is, Why It's Important, and How to Build It

Posted by Britney Blomquist on July 26, 2022

What Is Social Capital in Stakeholder Engagement?

Social Capital

In stakeholder engagement, social capital is often about the social relationships and networks built based on shared values and trust, which can help facilitate cooperation. It’s the “level of mutual recognition, understanding and trust established by the firm with its stakeholders” (Dorobantu, Henisz, & Nartey, 2012).1

At its core, social capital often involves acting in alignment with the following values:

  • Honesty
  • Integrity
  • Reliability
  • Respect
  • Trust

Social Capital Can Look Different with Each Individual Stakeholder or Community

How you build social capital may differ depending on your relationships with your stakeholders and communities, their interests, or how your project impacts them.

This ties back to their values and history with you and other organizations. Therefore, building social capital requires getting to know your stakeholders and communities to understand where they’re coming from so you can engage with them meaningfully and effectively.

Understanding your stakeholders is a big part of building social capital. To help you understand what you need to know about them, read this blog with our engagement specialist, Sarah Hope.

A Tip from Jambo’s Stakeholder Engagement Specialist: If stakeholders and communities have been burned in the past or there’s a challenging history with your organization, building social capital in these cases might look different. You need to consider that stakeholders and communities have unique characteristics and how you work towards building social capital should take into consideration:

  • Expectations
  • History
  • Who they are
  • What they value
  • How they’re motivated
  • What success looks like to them

Why Is Social Capital Important in Stakeholder Engagement? 

The more you demonstrate a genuine commitment to shared values, the better you’ll understand each other and develop trusting relationships.

As relationships become stronger and that social capital continues to grow, those relationships can shift into partnerships where they are mutually invested in your project and organization's success. This is vital as it can help you reach your goals, gain support, make a more meaningful impact, and even lower risk when things don't go according to plan.

How Social Capital Helps When Plans Go Off Track

Social Capital

Sometimes things don’t go the way we plan. Issues can arise, and you may need to ask for grace from your stakeholders and communities. In this situation, having already built some social capital can help you preserve those vital relationships and protect your project from unnecessary risk and your organization from reputational damage.

This becomes possible because your stakeholders and communities have already seen examples of you upholding those values, acting with integrity, and speaking honestly. They already know you’re reliable and trustworthy, so social capital can help you ask for some grace during a difficult situation based on the good faith you’ve earned.

However, even with some social capital already built, you still need to navigate these situations with clear, honest, and respectful communication.

How to Preserve Social Capital When You Make a Mistake

When you make a mistake, you want to acknowledge it, apologize, and work towards finding a solution. You want to tell the affected parties that you remain committed to the relationship (your partnership) and that you’ll do what you can to make it up. It’s also important to make time to understand how your stakeholders and communities perceive the issue.

You want to be very honest about what has happened while taking accountability for your actions or failures and then describing what will happen moving forward.

What To Do When You Don’t Know How to Fix a Mistake

Communication is a big part of this work, so if you don't know what to do, don’t be afraid to ask and be open to hearing possible solutions. (However, be honest about what's on or not on the table regarding potential solutions).

Consider utilizing one of the following questions:

  • “How can we best continue to work with you?”
  • “What could help repair this relationship from your perspective?”
  • “What would make you feel confident or comfortable continuing to work together?”
  • “What does success look like to you moving forward?”

How To Build Social Capital with Your Stakeholders

Building social capital is about building trust and understanding. This all takes time and involves showing your stakeholders and communities that you understand their values and will be respectful of them in your project; that you’ll take care to ensure the work you’re doing is not in conflict with those values.

Remember, social capital is something that’s earned, not given (which also means it can be lost!).

How You Build Social Capital Might Include:

  • Working to identify and understand any shared values
  • Ensuring your words and actions align with your shared values
  • Visiting your stakeholders and communities in person (or in whatever form that is preferred)
  • Focusing on developing trusting relationships by communicating on time
  • Being consistent, transparent, and respectful in all your communications
  • Following through on all commitments (i.e. promises)
  • Resolving any issues that arise in a timely manner
  • Practicing honesty when things aren’t going according to plan and clearly explaining what’s happening

Trust is a vital part of building social capital. Learn seven ways to build stakeholder trust.

A Tip from Jambo’s Stakeholder Engagement Specialist: Depending on how you’re working with your stakeholders and communities, consider asking them at the beginning of your project: “in a year from now, what would success look like for you?” Having this conversation at the beginning of your project can help you maintain trusting relationships, even when your project faces unexpected changes or challenges.

This question gives you something to refer to when you need to make a challenging decision or have to change course. You can say, "previously, we talked about what success would look like, and to get us there, we have to change course. With this in mind, is that vision of success still true for you today?” This can help show your stakeholders and communities that you continue to care about those identified values and are committed to shared success moving forward.

How Software Helps When Building Social Capital

Stakeholder Relationship Management Software

In stakeholder engagement, Stakeholder Relationship Management (SRM) software can help you maintain and even build social capital. An SRM is a way to keep all your stakeholder information consistent, organized, and available in one location. With access to all your stakeholder information at your fingertips, you can plan for better engagements and ensure you and your team are more informed and able to communicate and act in alignment with your shared values. This can help build stronger relationships with your stakeholders and identify meaningful ways to earn social capital.

7 Ways an SRM Can Help When Building Social Capital:

1. Keep Track of Important Updates or Tasks, so You Never Forget What Needs to Be Done Next

From the conversations you’re having, to any issues or commitments that might arise, an SRM helps you understand what’s happening in your project and what needs to be done next.

With an SRM, you’re not relying on memory or handwritten notes to remember important tasks or information. This dramatically reduces the likelihood of anything being lost or forgotten, which is essential because that’s often when you break trust and lose social capital.

2. Have Line of Sight into Your Engagement History, So You’re Always Prepared and Informed

An SRM will give everyone in your organization access to the information they need, so there’s a baseline understanding of:

  • What’s important to each stakeholder and community
  • What kind of issues they’ve raised
  • Any commitments made
  • The conversations being had (so you can stay on top of key messages)
  • The full history of engagement for each relationship

This line of sight allows you to have more meaningful and focused conversations, which helps make it clear to your stakeholders and communities that they are a priority.

3. Illustrate Your Work and Efforts Through Sharable Reports

An SRM gives you a place to log all your data and the ability to compile it into valuable reports. Reports can help you summarize your efforts, show your progress, and highlight your commitment to accountable, dependable, and transparent engagement.

Reports can help illustrate your dedication and ensure your engagement projects succeed. Learn 4 ways SRM reports can help your projects.

4. Support Two-Way Dialogue That’s Essential When Building Social Capital

An SRM supports two-way dialogue because it allows you to track what you're saying and hearing, so you can understand both sides. By accurately tracking what your stakeholders and communities say to you and incorporating it into your SRM, you’re respecting the time they’ve taken to share their feedback with you. You can then use your SRM to compile notes on what you’ve heard and share it back with stakeholders to make sure you captured it right and create understanding.

5. Share Knowledge with New Team Members

An SRM helps with internal knowledge transfer, so any new team members can review your data and easily learn from it to understand your project, engagement history, and what they need to be mindful of to maintain social capital.

6. Be Transparent When Meeting Engagement Regulatory Requirements

For some regulatory requirements, you must submit your records to the involved stakeholders and communities before submission to the regulator. You are saying, “this is what we’re submitting to the regulator. Do you have any changes?”

stakeholder relationship management software

You’ll need to show the regulator that the community has seen it and signed off on the records as being accurate and truthful. With an SRM, you can compile a record of your full engagement history to meet regulatory expectations while showing your stakeholders and communities you’re committed to transparency and honesty.

7. Maintain Trust After Your Contact at an Organization Changes

When a new contact joins or takes over at an organization, you can quickly lose earned social capital because they may not know your history and experience. You can’t assume that the social capital you built with their predecessor will remain.

With an SRM, you can run a report on the history of engagement with the organization to share with the new contact and bring them up to date. This can help show how you’ve worked together in the past and that you’re a reliable and trustworthy partner.

A Tip from Jambo’s Stakeholder Engagement Specialist: If a new consultation manager joins a community, you can pull a shareable report from your SRM to summarize all the data related to the engagement that has occurred in their community. Sharing this report can start the relationship with the new manager in a positive way

For example, you might say, “we’ve really appreciated your partnership and collaboration with you over the last year. In that time, we’ve sponsored x number of events and had x number of workshops with your community, which we’ve summarized here in this report.”

Next Steps: Using Your Stakeholder Data for Social Capital and Beyond

The stakeholder data you’ll be collecting throughout your project can offer you a wealth of insights and information that you’ll need to build social capital, reduce risks, and create positive project outcomes. To learn expert tips to get the most out of your stakeholder data, check out our blog!

Reference

1Dorobantu, Sinziana, Witold J. Henisz, and Lite Nartey. "Stakeholder capital and performance in tough times." Manuscript, University of Pennsylvania, and University of South Carolina (January) (2012).

Topics: Stakeholder Relationship Management, Improving Stakeholder Engagement