The Neighborhood Effect: Implications of Hybrid Work
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We will most likely look back on the past 20-plus months as a quantum leap forward on the landscape of work, with the future of work potentially advancing as much as 10 years as a result of our collective experience of working virtually. More than anything, we will surely reflect back upon this time as the "great shift" from human capital centric organizations, toward institutions that focus more on the importance of social capital.
Human capital is best described as the summarization of one's skills, experiences, and knowledge, while social capital is how well one is positioned to leverage these attributes. Both are necessary, but in a socially disconnected, hybrid working environment, what you know is simply not enough. Indeed, while strong human capital remains necessary, it is now insufficient to ensure success. How we are connected is critical in determining work outcomes such as, productivity, innovation, and cultural development.
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Understanding Social Capital
For organizations to make this shift, it will be necessary for them to delineate between two primary types of social capital: bonding and bridging. Bonding social capital helps to facilitate in-group interactions. Strong bonding social capital is present when there are many redundant connections. In other words, strong bonding social capital occurs when individuals are highly interconnected with one another, such as within a team where each individual actively interacts with every other individual. In contrast, bridging social capital helps to facilitate across-group interactions. Therefore, bridging social capital exists when various groups are connected to one another. For example, if an individual from one team acts as a bridge to another team, which would have otherwise been disconnected, this individual would be strong in bridging social capital.
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Both types of connections are critical to long-term success. Strong bonding social capital enables a team to move fast, as one cohesive group, executing and quickly iterating by sharing ideas, challenging assumptions, and building better products with trusted peers. The result is often greater productivity and better tacit learning. In contrast, strong bridging capital provides access to novel and diverse sets of information, making it essential for the creation of new ideas and breakthrough insights. Bridging connections also provides access to resources outside an employee's immediate team that help to facilitate scaling and adoption activities. Understanding these nuances have never been more critical.
Now, consider a network of nearly 700 individuals of a large engineering organization, at the beginning of the pandemic (Figure 1). This network diagram demonstrates a dense set of bonding connections within the various functional engineering groups (highlighted by the multiple colors of tightly connected individuals). Of the seven functions, only the teal and light green groups on the left and the brown team in the center are spread out more broadly. The network also has very strong bridging connections across the various functions. During the early stages of the pandemic, this engineering organization seemed to be functioning well in the new, virtual working environment. Indeed, it was well positioned to innovate by having broad access to information and ideas through bridging social capital, and it had solid bonding social capital which helped to facilitate strong execution, while also enabling them to move quickly in building out new ideas. Prolonged social disconnection over time, however, resulted in a marked deterioration of these benefits.
Figure 1. Large Engineering Organization
The Neighborhood Effect
Research suggests that employees are generally able to sustain bonding capital virtually, according to Xiaochen Angela Zhang & Yoon Hi Sung in Communities Going Virtual: Examining the Roles of Online and Offline Social Capital in Pandemic Perceived Community Resilience-Building, Mass Communication and Society, DOI (2021). During the initial stages of the pandemic, this appears to have been the case, as bonding capital actually increased nearly 40% within the close collaborators, according to The Implications of Working Without an Office, in Harvard Business Review: The Big Idea (2020, July 15). However, over time, exhaustion and employee churn, consisting of attrition, new employees being hired, and team members moving on to different groups, appear to have taken their toll as these bonding connections began to break down, dropping off more than 25% from their peak. In contrast with bonding connections, bridging connections immediately deteriorated almost 30% during the first few months of the pandemic, according to Clive Thompson in "What If Working From Home Goes on … Forever?" in The New York Times (June 9, 2020).
Perhaps this is best illustrated through a follow-up review of the same large industrial engineering organization highlighted above. Figure 2 demonstrates the erosion of both bonding and bridging social capital after prolonged virtual work, nearly 12 months into the pandemic. Overall, the network has lost 26% of its connections working virtually. This is most obvious in the reduction of bridging across the seven engineering functions. However, if you look more closely, you can also see a decrease in bonding connections, whereby there appears to be a splintering within some of these functions.
Indeed, these groups seem to be breaking apart from one another. This is most obvious in the lighter green function at 1 o'clock and then again with the purple function at 11 o'clock. The combination of losing bridging connections and the resulting splintering effect within the groups has created a network with more distinct clusters, with many more voids.
Figure 2. The Neighborhood Effect
Implications on Hybrid Work
The loss of social connectivity in the example above, resulted in an organization that must now extend greater effort to traverse across these network voids to openly share ideas, information, and communication. Throughout the pandemic, as many have been forced to work virtually, most organizations have morphed from relatively cohesive networks structures that are broadly diffused, to socially disconnected neighborhood structures that are more dependent on a limited set of local interactions. As more distinct clusters emerge, these groups become more detached from one another and from the broader organizational purpose. In fact, according to one survey, HR leaders believe employees are 41% less connected to colleagues and 32% less connected to their organization’s purpose, according to research from Reward Gateway. Perhaps this phenomenon is contributing to the Great Resignation, as employees are more willing to step away from their respective organizations and colleagues when they feel disconnected from them.
As we migrate toward the new normal of a hybrid working model, the implications of the neighborhood effect are massive. Research has shown that a more socially fragmented organization limits growth and adaptive capacity, according to my research in Adaptive Space: How GM and Other Companies are Positively Disrupting Themselves and Transforming into Agile Organizations (McGraw-Hill Education, New York, 2018).
Such fragmentation affects both the breadth and depth of work, because as broad based, bridging connections erode, an organization limits its access to new ideas and insights, resulting in greater insularity. In addition, the decay of bonding relationships results in a decrease of trust, potentially stifling speed and execution as local interactions are restricted. Sadly, a reduction in bonding connections can also have an adverse effect on the tacit learning that occurs through local interactions.
Understanding the neighborhood effect and its implication on hybrid work is essential for HR professionals. Our centricity toward human capital solutions that narrow in on the development of an employee's skills, experiences, and knowledge must shift toward social capital centric solutions. We will need to become much more focused on how well someone is socially positioned to leverage his or her skills, experiences, and knowledge, and we must intentionally facilitate the building of bridge connections, in a hybrid world, to span the network voids across neighborhoods. Finally, we must cultivate an environment that will help to restore the local bonding connections that fuel trust and tacit learning.
In a socially disconnected world, HR professionals must recognize, that human capital centric solutions are still important, but insufficient alone to facilitate success in a hybrid work model. HR professionals must also embrace the need for social capital centric solutions.
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