S Y M P O S I U M

r Academy of Management Perspectives2015, Vol. 29, No. 3, 370–385.http://dx.doi.org/10.5465/amp.2014.0140

S Y M P O S I U M

HUMAN CAPITAL, SOCIAL CAPITAL, AND SOCIAL NETWORKANALYSIS: IMPLICATIONS FOR STRATEGIC HUMAN

RESOURCE MANAGEMENT

JOHN R. HOLLENBECKBRADLEY B. JAMIESONMichigan State University

Human resource management research has traditionally taken the attribute approach;outcomes are considered to be dependent on attributes of the individuals or attributes ofthe job itself. However, many of the phenomena and outcomes related to human capital,such as recruiting and onboarding, teamwork and communication, knowledge manage-ment, and employee satisfaction are also dependent on social capital and the relationalnetworks that exist among employees. Social network analysis is amethodology that hasso far been underutilized within the human capital field, but it is uniquely suited forhelping researchers and practitioners understand the complex relationships that aredriving organizations. This article provides an introduction to social network analysisand explains how it can be applied to both research and practice, with the goal ofdeveloping new ways of thinking about human capital, social capital, and the importantinteraction between the two.

Imagine a traditional workplace survey designed todetermine how satisfied employees are with commu-nication. It might ask straightforward questions, suchas “How often do you communicate with your co-workers?” or “Are you satisfied with the level of com-munication with your coworkers?” If the results arepositive, it might be assumed that inter-employeecommunication is going well, and that would bethe end of the story. Is it possible, however, that thesekinds of traditional surveys and analyses may bemissing part of the story? Take the case in whichone formal group of employees never interacts withmembers of a separate interdependent formal unitbut has a great deal of interaction among its ownmembers. In another unit communication withinthe unit is nonexistent, but members communicatefrequently with members of other units. These aretwo clearly distinct patterns of behavior that couldlead to very different group or organizational out-comes, yet traditional surveys may produce verysimilar-looking results.

As another example, even though all the em-ployees may feel satisfied with the amount of

communication, this might result from a situationwhere the channels of communication are re-dundant and inefficient. For example, in one unita manager may individually communicate the samemessage to 20 employees, while in another unit themanager may communicate with only one or twowell-connected group members who then relay theinformation with little or no decay to the rest of theunit. In both cases there are open lines of commu-nication that could produce similar-looking surveyresults, but again, these are two very differentnetwork patterns, and one is much more efficientthan the other. These two examples illustrate whatmight be missed by studying individual percep-tions of communication satisfaction rather than thelarger relational social networks in which in-dividuals are embedded.

Traditional research and practice in the area ofhuman capital management have been dominated byframeworks that focus primarily on individual attri-butes, job attributes, or their interaction (Borgatti &Li, 2009). That is, important outcomes such as jobperformance and voluntary turnover are viewed as

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http://dx.doi.org/10.5465/amp.2014.0140

being caused by personal attributes such as consci-entiousness and cognitive ability (Dudley, Orvis,Lebiecki, & Cortina, 2006; Van Iddekinge & Ployhart,2008) or job characteristics such as autonomy andsocial impact (Grant, 2007; Morgeson, Delaney-Klinger, & Hemingway, 2005). This conceptualframing has had a great deal of value and hasgenerated a number of excellent interventionsthat leverage personnel selection techniques,training programs, job redesign efforts, andcompensation plans that promote internal andexternal equity (Wright, Gardner, Moynihan, &Allen, 2005).

Without question, this focus on the attributes ofthe individual and the job has been productive;however, this approach neglects other critical as-pects of organizational behavior and drivers ofpractical outcomes at work. As organizations arebecoming increasingly structured around teams(Ilgen, Hollenbeck, Johnson, & Jundt, 2005), this fo-cus has precluded a deep examination of how hu-man resource management research and practicecould be furthered by studying attributes of therelationships between individuals or jobs. Fewwould argue against the notions that modern or-ganizations are social entities and that these entitiescan be decomposed into social networks of in-dividuals and subgroups, but this perspective has notplayed a large role in human capital managementresearch or practice to date. This omission is im-portant because the result of losing someone centralto an organization’s informal network will be muchmore detrimental than losing someone on the fringe,even if one holds the attributes of individuals andjobs constant. Similarly, adding a new employeewholinks two or three previously unlinked units cancreate synergistic value far beyond what one mightpredict simply from the individual’s attributes or thejob description. Thus, although marginal gains maybe accomplished by a continued emphasis on theattributes of individuals and jobs, more substantialgains could be achieved by tapping into unrealizedopportunities for framing human capital manage-ment and practice around the attributes of relationalnetwork properties (Kilduff & Brass, 2010).

Within the larger realm of the social sciences,there has been a resurgence of interest in relationalnetworks (Borgatti & Li, 2009; Borgatti, Mehra, Brass,& Labianca, 2009). Some of this can be attributedto improved modern methods for capturing and an-alyzing network data. In particular, social metricsthat arise naturally from digital traces and socio-metric sensors have created databases that were not

conceivable even 20 years ago (Kim, McFee, OlguinOlguin, Waber, & Pentland, 2012). When this iscombined with the availability of increased comput-ing power for analyzing this type of big data, the op-portunities for leveraging data on social networks areunprecedented. Accordingly, social network analysisis gaining a foothold in the management literature,and researchers are beginning to explore how orga-nizational network ties are formed and how these tiesaffect other organizational outcomes.

To a large extent, however, this approach has nothad as much effect on research or practice in thefield of human capital management. Therefore, thepurpose of this paper is to show why social net-work analysis should be leveraged in this area ofmanagement—and how it could be. It seems appro-priate to use this special issue of Academy of Man-agement Perspectives, created specifically to changethe way researchers and practitioners think abouthuman capital, to discuss the merits of social net-work analysis as a means of assessing the role of so-cial capital, which can be a unique complement tohuman capital. Although one might think that this issimply a data analytic technique, in fact the inputsrequired to conduct such an analysis, the decisionsone makes about how to process these inputs, andthe resulting outputs that emerge from this analysisall force one to ask new questions and come to gripswith new answers.

We hope that this article will stimulate new lines ofthinking and streams of research that provide novelinsights into the role of social capital as a force thatmay accentuate or neutralize the common effects at-tributable to human capital. By examining humancapital from this new social perspective, humancapital managers may be able to make better-informed decisions about their personnel and cre-ate more efficient work systems and teams. Inaddition, by highlighting some of the possible re-search opportunities around social network anal-ysis in the human capital domain, we can draw theattention of researchers from other fields and ex-pand the general interest in human capital. Thiscould generate a richer, more diverse knowledgepool, ultimately leading to a better understandingof human capital and more effective human re-source management practices.

This article consists of three main sections. First,we provide a brief history of social network anal-ysis and review some of the ways this techniquehas been used in other disciplines and within themanagement field particularly. We then intro-duce some of the key terms used in social network

2015 371Hollenbeck and Jamieson

analysis and highlight some of the key inputs andoutputs that might be especially relevant to thoseresponsible for managing the human resourcesfunction within a large organization. The finalsection focuses on specific ways in which organi-zations can use social network analysis to furtherimprove their understanding of their organiza-tional networks and how this information might beused to improve outcomes for individuals, teams,and organizations.

PRIOR APPLICATIONS OF SOCIAL NETWORKANALYSIS IN RESEARCH

In the most general sense, social network analysishas been defined as the study of sets of actorsand the relations that connect and divide them(Freeman, 2004). Social network analysis can traceits roots to the work of psychiatrist Jacob LevyMoreno (Wasserman & Faust, 1994), whose 1934book Who Shall Survive? introduced the conceptof sociometry, the mathematical study of psycho-logical properties of populations. Moreno wasattempting to explain a sudden increase in run-aways from a girls reformatory school in Hudson,New York. His analysis revealed that the ability topredict who would run away had very little to dowith individual traits and attributes of the girls,but instead was strongly determined by the re-lational ties and cliques among the girls (Borgattiet al., 2009). By mapping the social network of theschool, Moreno was able to see the channels ofsocial influence and the flow of ideas between thegirls, which offered a better understanding of thesocial influences that were causing certain girls torun away. From this starting point, researchers andscientists developed the methodologies and termi-nology necessary for more robust quantitative ana-lyses, which turned intowhat is now known as socialnetwork analysis.

The recent growth of social network analysis inresearch and science can be seen quite clearly bylooking at the number of published articles con-taining the phrase “social network analysis.” Accord-ing to the Web of Science, a citation indexing serviceand means of searching for scholarly articles, at thetime of writing there were more than 2,500 peer-reviewed scientific articles that mentioned social net-work analysis. The first use of the phrase occurred inthe early 1970s, but more than 1,600 (65%) of thesearticles have been published in the past four years.This exponential growth illustrates the acceptance ofsocial network analysis by the scientific and academic

communities as a legitimate and useful way of un-derstanding networks, organizations, and phenom-ena. Also, as noted earlier, it is due in part to theincreased ease of capturing and analyzing verylarge volumes of relational data (Burt, Kilduff, &Tasselli, 2013).

As the social network perspective has grown inpopularity, it is no surprise that management re-searchers have found ways to incorporate it intotheir work. In an article similar in nature to this one,Borgatti and Li (2009) highlighted the various waysthat social network analysis could be applied toa supply chain context. Giuliani and Bell (2005)looked at networks within the Chilean wine industryto study organizational knowledge sharing, cluster-ing, and innovation. Carcamo, Garay-Fluhmann,and Gaymer (2014) similarly looked at the inter-organization relationships in the management andgovernance of coastal marine ecosystems; the col-laboration and knowledge sharing necessary amonga network of government agencies, marine organi-zations, the fishing industry, and universities madesocial network analysis uniquely appropriate tounderstanding the interplay of the organizationsand their roles in the system. Monaghan, Gunnigle,and Lavelle (2014) used organizational network tiesto explain the success of certain firms entering intoforeign markets based on their communication ofresources, development of business relationships,and access to tacit knowledge based on network ties.

Social networks have also been used to explainthe movement of knowledge among individuals andeven the movement of workers themselves. Casper(2007) was able to track the mobility of laborers andmanagers within the San Diego biotechnology in-dustry and map the emergence of sustainable tech-nology clusters by studying social network formation.Breschi and Lissoni (2009) also used social networkanalysis tools to map the geographic dispersion ofhighly skilled workers in the biotech industry andstudy localized knowledge flows and inventionclusters and their impact on patent citations. Morerecently, Morandin and Bergami (2014) used net-work analysis methodology to map sense-makingand decision-making patterns in recently hired callcenter employees.

All of these management research studies high-light two important facts. First, the network andrelational perspective is able to explain organiza-tional outcomes that would not be fully understoodthrough traditional research methods or conceptualframeworks that only consider human attributes.Second, organizations that understand their position

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in an organizational network or that understand thesocial network of their employees will have a uniqueperspective compared to their competitors and canuse this knowledge to gain a practical competitiveadvantage.

THE BASICS OF SOCIAL NETWORK ANALYSIS

Modern social network analysis is an amalgam ofterms andmethods developed over the past 80 yearsby many individuals across a wide spectrum ofsciences. However, theWasserman and Faust (1994)text Social Network Analysis: Methods and Appli-cations serves as a suitable summation of the socialnetwork approach, and is often cited for providingthe definitions of network terminology and valida-tion for the use of certain methodologies. As such, itis an appropriate starting point for introducing somekey terms and the basics of social network analysis.

To contextualize this information for the humanresource management context, we will illustrate theconcepts as they might be understood by a newlyhired chief human resource officer (CHRO) who,upon arriving at his or her new job on the first day, ishanded a traditional organizational chart. Figure 1shows a portion of this chart for one division of thecompany, which for elucidation purposes we willassume comprises six subunits (or teams) of similarsize and structure. This formal chart would be ac-companied by a set of formal job descriptions foreach person that we will assume is up to date. TheCHRO would also be given attribute information oneach job incumbent in the form of demographiccharacteristics, experience-related information, andscores on a battery of cognitive ability tests andpersonality inventories. This would be a commonstarting point for a CHRO whose organization takesan attribute approach to managing the human cap-ital management function and is accustomed to un-derstanding human capital in attribute terms ratherthan relational terms.

Now beyond this, imagine a scenario where thisCHRO is also handed one additional chart, such asthat depicted in Figure 2. This figure shows an ac-curate depiction of the social network that corre-sponds to the within-division ties in the divisiondepicted in Figure 1. The machine-like, man-made,top-down, symmetrical nature of the structuredepicted in Figure 1 stands in sharp contrast to theorganic, emergent, bottom-up, asymmetrical struc-ture shown in Figure 2. This figure could be aug-mented by a hypothetical Figure 3 (not depictedhere) that might show the organization-wide ties foreach person, where the organization as a whole iscomposed of five additional identically sized andstructured divisions. Figure 3 would be quite largein the sense that it might depict 252 people (6 3 42)outside the top management team. This could alsobe augmented by hypothetical Figure 4 that mighttake Figure 3 and simply plot the ties for the 36 unitswithin and between the six divisions, creatinga group-level analog to Figure 2. Finally, this mightbe even further augmented by a hypothetical Fig-ure 5 that would depict the external ties among in-dividuals within the organization (or units) andindividuals (or units) outside the organization. Dueto space limitations, we do not produce Figure 3through Figure 5 here, but we will occasionallymake reference to these hypothetical figures.

With these figures in mind, the question becomesthis: What useful information is available to theCHRO from Figures 2 through 5 that is not availablefrom Figure 1 alone? We will use this question andFigure 2 to describe the logic, the basic elements, andthe core constructs within the field of social networkanalysis and how they might manifest themselves inthe context in which this CHRO operates.

Actor

The most basic unit in a network is an actor. InFigure 2, this is operationalized at the individual

FIGURE 1A Typical Organizational Chart for a 6 3 7 Division


level and depicted as a colored circle for frontlineemployees and a diamond for division managers. Aswe noted, there are 42 individual actors depicted inthis particular division of this organization. We usecolor to represent units, the number 0 to reflect su-pervisory status, and the numbers 1 through 6 to re-flect the relative rank of each member in the unit interms of tenure, with 1 representing longer tenure.

Relational Tie

The social link between actors is referred to asa relational tie; these are indicated in Figures 1 and 2by lines. For example, the link between individual R1and R0 in Figure 2 indicates that they frequentlycommunicate with each other. Relational ties cancome in many forms and are dependent on the in-terests of the researcher or practitioner. Relational tiescould simply reflect that one actor communicateswith another actor at some level of frequency or in-tensity, or a tie could reflect a relationship that hassome affective value, such as friendship. Clearly, afriendship tie is qualitatively different than a commu-nication tie, and thus the precise nature of the tie is

often important for understanding the meaning ofa network such as that depicted in Figure 2.

Ties can come about in a number of differentways, but when it comes to communication ties,these links are often “appropriable.” This simplymeans that ties may come about for nonwork rea-sons (employees who are tied to each other becausethey play in the same bowling league or belong tothe same country club) but can often serve work-related functions. That is, if two people who work inthe same organization spend a great deal of timetogether outside the organization, it might be onlya matter of time until topics involving work comeup. This is especially the case if these ties areclosed, as we will discuss more fully below.

The appropriability of ties also has implicationsfor answering the question of who appropriatesvalue from such ties. Some of the value might ac-crue to the organization or the individual, or thedyad or closed triads or small subgroups, and all ofthis depends on who manages these ties and to-ward what end. If the organization hopes to derivevalue from these ties, at the very least, some degreeof awareness is essential for accomplishing this goal.

FIGURE 2A Social Network Map for a 6 3 7 Division

Note: Diamonds represent supervisors; circles represent frontline employees; asterisks represent members of a protected group.


Thus, a CHRO who is unaware of the informationprovided in Figure 2 would be in a much weakerposition to leverage these kinds of social ties thana CHRO who is in possession of this kind ofinformation.

There are several ways of measuring relationalties. The simplest is a dichotomous value, usuallya 0 indicating that no relational tie exists or a 1 in-dicating that there is a relational tie between theactors. More refined continuous measures can alsobe employed, but we will keep it simple here byfocusing on dichotomous ties that do not vary bystrength. In addition, ties can be directional ornondirectional. For example, if one person com-municates with another person, a nondirectionalcommunication tie exists between them. However,if we look more closely, if one person is alwaysgiving advice and another person is always seekingadvice, their communication tie is directional. Again,for our purposes, we will focus on nondirectionalties.

Dyad

A relational tie between two actors forms a dyad.These dyads form the base of the relational per-spective inherent in social network analysis. Anyrelational tie is the property of the pair, not a trait orcharacteristic of a single actor. For example, theleader of a small work group such as R0 may havea relational tie with each member in that group,forming multiple dyads. If the CHRO is interested incommunication between the leader and group mem-bers, it is possible that the leader communicates dif-ferently with each member, and so each dyad wouldhave a different communication score if a con-tinuous measure is employed. Within a dyad, one ofthe focal actors can be referred to as the “ego,” orrater, and the other actor would be the “alter,” or therated.

Triad

Triads are formed by adding a third actor to therelationship being studied, and they can take dif-ferent forms. A third-party brokerage relationshipexists when an actor serves as the link between twoactors who are not otherwise linked. This is alsocalled an open triad. Third-party brokerage rela-tionships rely on external personnel for knowledgetransfer, and so they tend to suffer from informa-tion loss due to the involvement of an intermedi-ary who might not be intimately familiar with the

domains associated with the other two actors. Forexample, in Figure 2, G6 and O5 do not communi-cate with each other directly, but G5 serves as anintermediating link between these otherwise un-related individuals. This third-party relationship isnonredundant in the sense that there is no other wayfor G6 and O5 to communicate. This situation dif-fers a great deal from the third-party ties associatedwith the link between G4 and O4. Again, G4 and O4are not directly linked, but there are two paths forG4 to communicate with O4. He or she can gothrough Y3 or Y4, and hence these paths are re-dundant. A third-party broker is more powerful andhas greater social capital when he or she is part ofa nonredundant relationship than when he or she ispart of a redundant relationship.

A closed triad exists when all three members ofthe triad are related. This is sometimes referred toas a Simmelian triad (Krackhardt, 1999), becauseGeorg Simmel argued that the quality of a direct tiebetween two individuals changes in the presence ofa third partner. A third-party tie serves to (1) con-strain individual interests in favor of collective in-terests (i.e., an individual can be outvoted by theothers), (2) curb individual bargaining power (i.e.,the threat of withdrawal carries less weight), and (3)prevent conflict escalation (i.e., third-party media-tion is available).

Thus, compared to simple dyads or open triads,Simmelian triadic relationships are characterizedby reduced individuality, reduced individual power,and mediated conflict. This suggests that an individ-ual who is part of this type of three-person informalgroup is more constrained and less independent thanan individual in an isolated dyadic relationship. Forexample, the relationship between O0 and O5 isa vertical dyadic relationship between a formal su-pervisor and a new, low-tenured group member. O0andO5, however, both have close relationships to O3,a longer-tenured group member. The relationshipbetween O0 and O5 is affected by their joint re-lationship to O3, and thus, if one tried to infer thenature of the relationship between O0 and O5 basedsolely on their individual attributes and job de-scriptions, one would be making a very largemistake.A true understanding of this relationship can beascertained only by appreciating the nature of thisthird-party relationship.

Subgroups and Fault Lines

Although units are typically viewed as holistic con-structs, especially when moving from the individual


level to the group level, as we might do whenmovingfrom Figure 2 to hypothetical Figure 4, in fact therecan be a great deal of variability within units thatmay be lost upon aggregation. That is, it is possiblethat identifiable subgroups will form within units.For example, in Unit V, there are two definable sub-groups: V1, V3, and V5 versus V2, V4, and V6. Onecan also see that the V2/V4/V6 subgroup is stronglytied to the supervisor V0 (the in-group) but that this isnot the case for V1/V3/V5 (the out-group).

There are two special cases of subgroups that areworth mentioning. First, a subgroup might formaround a demographic fault line. Similar to Unit V,there are also two subgroups within Unit O inFigure 2. However, in this case the subgroups arebased on a demographic characteristic. That is, asindicated by the asterisks, the subgroup O2/O4/O6comprises members of some demographic groupdefined as a protected class by the Civil Rights Actof 1964 (e.g., African Americans). Like the distinctionbetween an open and a closed triad, the distinctionbetween a subgroup caused by a demographic faultline and one that might emerge for some other moreinnocuous reason (avid sports fans in the group ver-sus those who appreciate the fine arts) can havemeaningful implications within the context of humancapital management.

The other special case is a subgroup that is de-fined by a single member. In Unit Y, all the teammembers are close to one another with the excep-tion of Y4, who is an isolate within this unit. If onehad a figure that captured interdivisional or in-terorganizational linkages as we described in hy-pothetical Figures 3 and 5, we might see that Y4 isa cosmopolitan figure, with strong ties outside thedivision or organization but very weak ties withinthe division. If this were the case, the value that thisperson might bring to the unit because of his or herextra-organizational ties may not be understood bythe organization using traditional organizationalcharts. Alternatively, Y4, who is low tenured, mayhave been brought into the group recently to addsome skill or knowledge base that was not pre-viously represented in the unit. If this is the case,one can see how hiring a skill and integrating theskill within current operations are two very differ-ent things.

Individual B6 is also an isolate in this organiza-tion, but in addition, he or she is a new hire anda member of a protected group. Any effort thatsomeone in the human capital management groupmakes to help create a tie between this individualand his or her own group or the subgroup O2/O4/O6

might make the difference between retention andturnover for this person. For reasons described be-low, there may also be value in creating a tie be-tween this person and R1. In general, Figure 2 showsthat, except for the highly cohesive Unit R, low-tenured members in this division are not tightlyintegrated into many networks. This might point tothe need for stronger socialization programs.

Formal and Informal Groups

The formal group is the finite collection of all theactors that make up a unit according to the organi-zational chart and written job descriptions. Thus, Ris a formal unit comprising members R0 throughR6. As we noted above, this is also a very cohesivegroup, in the sense that all members within thegroup are strongly tied to others within their owngroup, even recent hires such as R6. This is oftenreferred to in social network terminology as closure.In contrast, G is also a formal unit, but the within-team ties in this group are very weak. However,what members of Unit G lack in within-team ties isoffset by their strong ties to members of other units.Many members of Unit G occupy “structural holes”and serve as the only informal link between other-wise disconnected units.

In contrast, Unit R has very weak between-teamties. Strong ties within the unit provide some ad-vantages to Unit R in terms of developing andmonitoring norms, as well as promoting efficientwithin-team coordination. This comes at the cost ofacquiring new and novel information that could beobtained with increased ties to individuals outsideof the group. On the other hand, Unit Gmay be filledwith individuals who have new and unique infor-mation, but the unit may struggle with the processof translating this information into practical out-comes due to conflict and coordination problems.Understanding the nature of the formal and informalrelational ties both within and between units willhelp organizations identify and solve problems re-lated to various social structures.

There is one member within Unit R who is linkedto individuals outside the group, however, and thisis R1. In fact, Figure 2 shows that R1 is stronglylinked to O1, Y1, G1, B1, and V1, and together thiscollection of individuals defines an informal groupthat in this context might be very powerful due totheir seniority. That is, this informal group hasa great deal of experience and implicit knowledge,and in most cases, they are also strongly connectedto their own individual units. For our new CHRO,


the ability to tap into this network might go a longway toward speeding the integration process, and interms of reaching some organizational membersthere may even be more value here than attemptingto move through formal channels.

For example, although the formal supervisors inUnits R, O, and Y are closely tied to their teams, theformal leaders of Units G, B, and V are less stronglytied to their teams, and instead are tied closely toonly their most tenured members. In this instance,one might be tempted to follow up formal commu-nication attempts from the top management team tothe teams themselves with some informal commu-nications that proceed via the R1/O1/Y1/G1/B1/V1route. Clearly, one would not want to subvert theformal structure by totally bypassing formal channels.However, for critical information, prudence dictatesthat one might want to cover all the bases by movinginformation through multiple channels—especiallychannels as efficient as R1/O1/Y1/G1/B1/V1. Thismight be especially true when the formal channelsseemweak, as in the case of B0 and V0. It is one thingto support the formal network and help strengthen it,but quite another to simply assume it is strong be-cause of the lines one sees on the formal organiza-tional chart.

Finally, although it is quite easy to understandhow the informal group R1/O1/Y1/G1/B1/V1 cameabout, the nature of other informal groups is some-times harder to understand. For example, there isalso a strong informal group defined by O1/Y0/G4/B3/V2. Some due diligence might reveal that this isa group whose children all play on the same highschool athletic team, and who spend a great deal oftime together outside of work traveling to and at-tending such events. This takes us back to the notionof appropriability of ties, in the sense that the sub-group G4/B3/V2 is much more connected withinthis division than one might surmise just fromlooking at the organization chart. This subgroup hasexcellent access to both Y0 and O1, who for bothformal and informal reasons are very central to thisdivision when it is conceptualized in relationalterms.

Centrality

One of the uses of social network analysis is todetermine the most important actors within a net-work. For example, as we mentioned above, O1is a central actor within this division. Althougheveryone within the R1/O1/Y1/G1/B1/V1 informalsubgroup has some importance, O1 is particularly

central because as we have shown, he or she is alsopart of the O1/Y0/G4/B3/V2 informal subgroup.Importance, or synonymously prominence, hastypically been measured through centrality. Cen-trality is mainly concerned with an actor’s activitywithin the network, and one operationalizationof this is called “degree centrality.” Degree cen-trality is a proportional measure of the number ofdirect ties an actor has out of the total number ofpossible ties.

In Figure 2, Y1 is immediately connected to 11other actors, meaning that he or she has a rela-tively high degree centrality score within thisnetwork. However, actor Y4 has only three directrelationships, indicating that he is less active inthis particular network, which would be quantifiedthrough his lower degree centrality score. An actorwith a high degree centrality score is often “a majorchannel of relational information” and “a crucialcog in the network” (Wasserman & Faust, 1994,p. 179). This important information could not begleaned strictly from the formal organizationalstructure.

Summary

Although Figure 1 would certainly be requiredfor our newly hired CHRO, as one can see fromthe discussion above, given the opportunity, theCHRO would undoubtedly find value in being ableto supplement Figure 1 with the information inFigure 2. He or she might even find it worth the effortto generate Figures 3 through 5 as well. Certainly ifour CHRO is accustomed to having this relationalinformation from previous appointments, he or shemight perceive himself or herself as “flying blind” inhis or her new post if provided with only attributeinformation about the actors and their formal jobdescriptions.

THE POTENTIAL ROLE OF SOCIAL NETWORKANALYSIS IN HUMAN RESOURCE

MANAGEMENT

When considering the introduction of a new meth-odology or theory in research, it is important to ask thisquestion:What can this new approach help us explainthat we were not able to explain before? As we seek tobring new practices into organizations we must aska similar question:What can the new approach help usaccomplish, and what value does it bring to organi-zations above and beyond the traditional and alreadyestablished practices?


With these goals in mind, we now explore thepotential uses of social network analysis in the do-main of human capital. Our focus here is howcompanies can use this technique to gain a betterappreciation of their social networks, and then le-verage this information to promote better decisionmaking and understanding of the effects of certainpolicies and practices. While our focus is morepractical, we hope the topics and ideas presentedwill also provide management researchers witha new perspective on how their work could beapproached.

We do not mean to imply that social networkanalysis should replace the individual-attribute ap-proach to human capital. Attributes are still impor-tant within the social network because researchshows that certain people can take better advantageof their superior structural situation than others can(Kilduff & Brass, 2010), and few scholars withinthe field of social network analysis embrace purestructural determinism. However, social networkanalysis is a useful supplement to current methodsand the attribute approach, and it may help explainor control some aspect of human capital that is notyet fully understood. In the following sections wediscuss the potential for social network analysis interms of (1) the acquisition and preparation of humancapital, (2) the assessment and development of hu-man capital, and (3) the compensation and retentionof human capital.

The Acquisition and Preparation of Human Capital

An important role of the human resource man-agement team in any organization is identifying,selecting, and recruiting employees. Recent re-search has found that highly productive employeesare rarer and harder to find than originally thought(O’Boyle & Aguinis, 2012). Therefore, companiesthat develop valid measures for predicting futureperformance will have a strategic advantage overtheir competitors. In particular, as companies con-tinue shifting toward team-based structures andcompete through improved knowledge manage-ment systems (Zarraga & Bonache, 2003), it will becritical to understand what kinds of employees helpmaximize team potential and the flow of knowledgethrough the organization.

Using social network analysis, organizations canpinpoint which employees are best at developingstrong, trusting relationships, which is a factor criti-cal to success both within teams (De Jong & Elfring,2010) and between teams (Hinds & Cramton, 2014).

As for knowledge networks, it is important that or-ganizations know who influences the spread of in-formation and who serves the important brokerageroles across structural holes (i.e., linking otherwisedisconnected subgroups) (Hansen, Mors, & Lovas,2005). Organizations can use social network analysisto determine which employees are most critical totheir network; determine what skills, experiences,and traits these critical employees possess; and thenhire future employees accordingly, providing im-provements to both concurrent and predictive vali-dation selection processes. The knowledge gainedfrom understanding the network ties among em-ployees will allow selection departments to test po-tential applicants with more accurate and validmeasures, leading to the acquisition of more highlyproductive employees within team- and knowledge-based systems.

However, before companies can test applicantsfor fit, they have to find the applicants. As notedpreviously, researchers have already used socialnetwork methods focused on extra-organizationalties (like those that would have been depicted inhypothetical Figure 5) to identify talent pools out-side the organization and track the movement ofhighly skilled workers (Breschi & Lissoni, 2009;Casper, 2007). If companies are able to developsimilarly sophisticated network capabilities, theycould begin to identify regions filled with talentedworkers or universities and other recruitmentsources with track records of producing valuableemployees.

Employee referrals and word-of-mouth recruiting(Van Hoye & Lievens, 2009) have traditionally beenused for recruiting purposes, but social networkanalysis takes these recruiting approaches to a newlevel. Current employees already have firsthandknowledge of the company and specific job require-ments and so they are particularly well suited foridentifying other individuals who might be a good fitwith the organization and for championing the ben-efits of the company to these potential applicants.However, most employees have a very weak un-derstanding of other people’s ties, and thus, theability to triangulate on a specific recruit or source ofrecruits is easier to accomplish with social networkdata in hand. By formalizing some of the practicesalready in use, social network mapping can help tapinto the external networks of employees to identifypotentially underutilized talent pools and moresuccessfully exploit known pools.

As new employees are brought into organizations,human capital managers should ensure that they are


properly trained to do their jobs and assist inonboarding (i.e., helping new hires adjust to socialand performance aspects of their new jobs) (Snell,2006). The types and strengths of relationships newemployees form have a significant effect on theoutcomes of both of those functions. Research hasshown that employees who fail to form meaning-ful relationships with their coworkers and super-visors typically have lower job satisfaction, possiblyleading to higher intention to change jobs (Eisenberger,Stinglhamber, Vandenberghe, Sucharski, & Rhoades,2002).

Work norms and expectations are often shared astacit knowledge transferred through relational tiesand knowledge sharing (Nonaka & von Krogh,2009). If new employees fail to integrate, they couldalso fail to adapt to the department or organizationculture, further isolating them and negatively af-fecting their performance. Social network analysiscan help organizations overcome these problemsin a number of ways. First, it allows companies toidentify the “social butterflies” in the network anduse these individuals as liaisons to help facilitatethe socialization process. Second, it can help iden-tify employees who seem socially isolated and al-low the organization to focus social interventionsin the right areas. Over time, the organization canmonitor the formation and development of networkties, which can help human capital managers de-termine the effectiveness of their onboarding andknowledge management practices.

Finally, another human capital issue relevant tomany companies operating in today’s global envi-ronment is how to select and prepare expatriateworkers (Takeuchi, Tesluk, Yun, & Lepak, 2005).Living and working overseas offers many uniquechallenges and can be difficult for employees whoare not set up to succeed. One of the ways compa-nies can help their expatriates succeed is by ensur-ing that there is an established social network forthem to join in their new locale. They need indi-viduals who can help them understand and adapt tolocal customs and expectations and a supportgroup to share ideas and concerns with, possiblyinvolving peers who have already been throughsimilar experiences. Also, the well-being and so-cial life of spouses or significant others must beconsidered, as their happiness and acclimation canhave a significant effect on an employee’s happi-ness and success. Additionally, from a businessstandpoint, as highlighted by Monaghan et al.(2014), having a proper network in place is im-portant to successful entry into a foreign market.

Social network mapping could allow companies tosee what resources are in place and what types ofrelationships may need to be established to allowtheir expatriates and overseas operations the greatestchance of success.

The Assessment and Development of HumanCapital

Assessing and developing human capital isa central goal for all organizations. Research hasshown that effective learning systems involve bothformal learning (e.g., class sessions) and informallearning (e.g., the exchange of information by in-dividuals) (Galagan, 2010; Roy, 2010). Training in-terventions will be more effective if employees havea training support network within which they candiscuss their newly acquired knowledge and havea social environment in which they feel comfortabletrying out their new skills (Parry, Friedman, Jones, &Petrini, 1990). In line with this idea, Zohar andTenne-Gazit (2008) found via social network anal-ysis that infantry soldiers with strong friendship tieswere more likely to reach a consensus regardingplatoon safety expectations. Similarly, Meyer (1994)found that group cohesiveness as measured bystrong relationship ties was associated with similarperceptions of organizational standards and expec-tations. If management wants training efforts to beeffective and organizational personnel policies to beaccepted, they need to facilitate strong network tiesamong employees and be able to identify centers ofinfluence within the network. As human resourcepractitioners are expected to make evidence-baseddecisions (Rynes, Giluk, & Brown, 2007), socialnetwork analysis can provide the data to showhow organizational policies and practices aroundacquiring and preparing human capital affect theorganization.

Performance management systems are an im-portant part of any organization. They are tied tocompensation policies, training and developmentprograms, and promotion and downsizing de-cisions. They can also help determine how wellcompany strategy is being implemented (Liao,Toya, Lepak, & Hong, 2009). Despite the clear im-portance of having an effective assessment systemin place, research has shown that employees andorganizations alike are both relatively unhappywith the current methods. More than 60% of em-ployees feel that current review processes do nothelp them improve performance, and more than70% of organizations that use appraisal systems


are only somewhat satisfied, not very satisfied, orextremely dissatisfied (Fox, 2009; Ruiz, 2006).

To understand why these processes are not en-tirely successful, we must first look at what types ofperformance measurement approaches are beingused. One of the common methods used in organi-zations is the attribute approach: Managers of thecompany identify traits and competencies they be-lieve are important for the company’s success andrate employees’ performances based on supervisors’perceptions of the employees possessing the givenattributes (Heslin, Latham, & VandeWalle, 2005).The behavioral approach evaluates performancebased on employee execution of specific behaviors,and as with the attribute approach, many of thebehaviors important to success involve working wellwith others, communicating knowledge and exper-tise, being an effective team member, or some othersocial aspect. Both of these approaches typically relyon managers or supervisors using their judgment torate employees’ traits and behaviors. In knowledge-or team-driven organizations that rely on employeeinteraction and the flow of information, the super-visor’s perception might not be the best indicator ofperformance.

For organizations that care about the sociallydriven traits and behaviors discussed above, socialnetwork analysis could be the answer to improvingtheir performance measurement assessments. If com-panies are interested in how well an employee in-teracts with his or her teammates, the teammateswill provide a more accurate rating than a supervi-sor will. This is also true for communication andinterpersonal skills. The employees who are com-municating with and interacting with the focal actorare best positioned to provide an accurate assess-ment of these skills and behaviors. Moreover, whilepossessing knowledge has merit in and of itself,companies are also interested in how this knowl-edge is shared and put to use. By asking employeesquestions about who they go to for advice and ex-pertise or who helps them generate new and novelideas, it is possible to create knowledge networkmaps and quantify an employee’s knowledge out-put, thus giving organizations a new and meaning-ful way to measure performance.

Besides using social network analysis to evalu-ate individual outputs, this technique can also beused to diagnose team and structural inefficienciesin the organization. Teams rely on communicationfor many reasons, such as sharing individual rolesand expectations, establishing a team mission, co-ordinating work efforts, and providing feedback.

Therefore, breakdowns in communication are det-rimental to team success. Organizations can usesocial network analysis to study their teams’ com-munication networks and find lapses or bottlenecksin the communication process. Are certain mem-bers isolated from the main group and not receivingthe necessary information? Does one person havetoo much control in the process? Are there toomany lines of communication, creating inefficien-cies and redundancies in the communication pro-cess? These are all questions that can be answeredby organizations that use social network analysis tounderstand their network relationships. Once theproblem is identified, the organization can thenstart taking the appropriate actions to correct it,whether that means creating more formalized com-munication channels, encouraging team socializa-tion, or removing individuals that do not seem to fitwell into the network.

The development of corporate culture is a socialprocess that can affect both broad values related toethical issues at work (Umphress & Bingham, 2011)and specific beliefs regarding narrow topics such asadherence to safety policies (Zohar & Luria, 2005).Culture can also help employees identify with theirorganizations or help organizations stand out fromtheir competitors (Gully, Phillips, Castellano, Han,& Kim, 2013). If a socially inappropriate culturestarts taking shape in the organization, the companythat understands its social network will be betterable to identify the source of the negative influ-ence and take appropriate action. Alternatively,companies that wish to promote a positive culturewill know what channels will best help spread themessage, and will know which areas of the organi-zation tend to be isolated and may need specialattention.

In addition to fine-tuning structure, social net-work analysis can also be an effective way to assessculture. Consider an innovative company thatprides itself on collaboration and communicationamong its employees. A traditional measure mayask, “How often do you communicate with yourcoworkers?” Everyone answers on the high end, andso it appears that effective communication is takingplace. A social network approach would ask, “Howoften do you communicate with Employee A?”Nowwe find out that Employee A and Employee Bcommunicate frequently, but never communicatewith Employees C and D. Or perhaps Employee Abelieves that he or she communicates frequentlywith B, but B does not believe he or she communi-cates with A. These types of responses can indicate


lapses in the network and identify possible break-downs in communication. A company using tradi-tional methods might not recognize these kinds ofissues, but companies that adopt a social networkapproach will.

Similar to culture, the implementation of strategyrequires employee buy-in and is subject to the in-fluence of the organizational social network. Anyleader, from a CEO implementing companywidechanges to a line manager making adjustmentsto the work schedule, needs the changes to be ac-cepted by his or her subordinates. Once again, theleader who understands who holds sway and in-fluence in the organization will have an easier timeframing the new policies or changes in such a wayas to be seen as beneficial to the influential em-ployees, making buy-in more likely.

As noted earlier, peers are already used asa source of performance management informationfor many organizations. Peers who are working sideby side or who interact with each other regularlycan provide information and insight about perfor-mance that a supervisor or manager with limitedexposuremight not have (Woehr, Sheehan, & Bennett,2005). Additionally, employees may possess morespecific expert knowledge about job requirementsthan a manager responsible for overseeing manydifferent jobs, and so peers can help providea more accurate performance evaluation thana supervisor alone. Of course, one of the disad-vantages of using peer feedback is the potentialfor friendship bias (Dierdorff & Surface, 2007).However, if peer evaluations are used as part ofa more complete social network analysis system itis possible to control for friendship biases and tounderstand how personal relationships affectperformance evaluations, possibly leading tomore accurate performance measures. That is,one can assess “advice networks” and “friendshipnetworks” at the same time, and then control forthe effect of one on the other.

An important aspect of employee development isthe formation of trusting interpersonal relationships(Elfenbein & Zenger, 2014). By interacting withmore experienced members of the organization,employees can develop their skills and gain a betterunderstanding of company standards and expecta-tions. One way companies try to promote the for-mation of these types of relationships is throughmentoring programs (Kram, 1985). While formalmentoring programs ensure that all employees arematched up with a mentor, these types of artifi-cially created relationships may not provide all the

benefits of a relationship that forms naturally (Chao,Walz, & Gardner, 1992).

Therefore, companies need to be aware of theirinformal mentoring relationships, another areawhere social network analysis could be used. Byunderstanding who is interacting with whom andwho is missing out on interpersonal developmentopportunities, organizations can focus their effortsand encourage socialization and relationship de-velopment where it is most needed. Researchershave hypothesized that one of the causes of “glassceilings” and other barriers to advancement forwomen andminorities is the difficulty experiencedby these individuals in forming meaningful men-toring relationships and breaking into the “oldboys network” (Noe, 1988; Ohlott, Ruderman, &McCauley, 1994). Organizations that are well in-formed about the networks and relationships amongtheir employees will be better equipped to combatbarriers such as glass ceilings, and be able to ensurethat all employees are given the same developmentalopportunities.

The Compensation and Retention of HumanCapital

One of the major drivers of compensation de-cisions is equity theory, or the idea that individualsevaluate the fairness of their compensation bycomparing their situation to the situation of others(Adams, 1965). Specifically, the ratio of perceivedoutcomes to perceived inputs of the focal actorneeds to be proportional with that of some criticalreference person. Breakdowns in perceived com-pensation fairness can lead to disruptive employeebehaviors such as loafing, work withdrawal, or theft,as these are ways employees feel they can bringbalance to the equity ratio (Yang, Bauer, Johnson,Groer, & Salomon, 2014).

Given the comparative social nature of compen-sation, this is another area of human capital inwhich social network analysis could be used tomake more informed decisions and to better un-derstand how employees receive these decisions.First, it could be useful for companies to identifywho their employees are comparing themselves to.Even if an individual is the best-paid employee fora certain job at one organization, if that individualcompares himself or herself to employees at otherorganizations who make more, the feeling of in-equity could still exist.

Organizations that understand internal and ex-ternal networks will have a better gauge of what


their employees expect and will be better positionedto make and explain compensation decisions. Ad-ditionally, research has shown that employees’perceptions of pay fairness are based on their per-ceptions of inputs and outcomes, not the actual in-puts and outcomes (Bamberger & Belogolovsky,2010). By using social network analysis, organiza-tions can gain a better perspective of how em-ployees view their pay relativity and the workproduction of their coworkers. Knowing whereperceptions of inequity exist allows managers tomore effectively discuss pay decisions with theiremployees, and could help them identify other un-derlying problems that are leading to these percep-tions of inequality.

As mentioned in the previous section, socialnetwork analysis can also be used as a way tomeasure performance, and effective performancemanagement systems should be tied to compensationoutcomes (Trevor & Wazeter, 2006). If the companycares about knowledge management and innovation,it makes sense to reward employees who are centralin those processes. If the company cares about in-tegrating new employees, it makes sense to rewardemployees who are helpful in that process. If thecompany cares about effective teamwork and pro-social behaviors, it makes sense to reward the em-ployees who are getting along with everyone andhave a positive influence on the company culture.Many behaviors and outcomes companies want andexpect from their employees are socially driven. Byusing social network analysis, organizations canrecognize who is demonstrating these behaviorsand delivering these desired outcomes and rewardthem appropriately, reinforcing their value to theorganization.

Beyond these applications, social networks canalso support employee health and wellness. Giventhe recent attention to rising health care costs,many companies are exploring ways to preemp-tively improve employee health by establishingemployee wellness plans. Social network re-searchers interested in adolescent behaviors anddecision making have found that personal healthchoices can be heavily influenced by peer groupsand social network influences (Ennett & Bauman,1994; Paxton, Schutz, Wertheim, & Muir, 1999).Also, culture and organizational norms can be spreadthrough these same social networks. Companies thatare able to identify individuals with influence andcentrality in their social networks can attempt to usethese individuals to help promote healthier habits,such as engaging in regular physical activity or

quitting smoking. Additionally, these influentialindividuals could be used to establish and recruitmembers for company-sponsored sports teams, whichprovide a source of exercise for employees and couldalso promote teamwork and cohesion back in theworkplace.

Limitations of Social Network Analysis in theHuman Capital Domain

Although social network analysis has a wide vari-ety of uses in this domain, one also has to note severalpotential limitations. In an organization that valuesand rewards (explicitly or implicitly) network con-nectedness (or other network positions and skills),one may see employees (including managers) engag-ing in increased social interactions.While thatmay bea positive outcome, it may also result in interactionsthat are more frequent but of lesser quality. Too muchemployee socializing (social loafing or social butter-flying) can result in loss of time and focus on sub-stantive matters. Employees may try to connect withthe individuals with high centrality and overwhelmthese individuals with interruptions and friendlyexchanges.

Further, the collection of sensitive data on whointeracts with whom (how often, how long, when,where, and why) can produce information that canbe subject to abusive or unethical use by the com-pany, company managers, and those who have ac-cess to it. Firms may inappropriately try to benefitfrom such information, and in some cases this in-formation may result in firing of or discriminationagainst certain employees (e.g., isolated employees,or those who have redundant ties).

CONCLUSION

Social network analysis is a methodology thatis gaining momentum across a wide variety ofsciences. It allows researchers to take a relational-based perspective of phenomena not easily un-derstood by more traditional individual-attributeapproaches. In a field such as human resourcemanagement, in which so many human capital de-cisions are influenced by social relationships, socialnetwork analysis can provide organizations with in-sight and information previously unavailable. It canbe used to:

• Identify and select more productive employees.• Improve training and development programs and

facilitate knowledge-management programs.


• Identify key employees and guide compensationand pay decisions.

As technology continues to improve, organiza-tions will be able to develop efficient social networkanalysis systems, and companies that understandthe social and knowledge networks driving theirhuman capital will have a clear advantage over theircompetitors.

Social network analysis also provides manage-ment and human capital researchers with a valu-able yet underutilized tool for developing morethorough theory and knowledge. We hope that byformally introducing social network analysis tothe human capital community, we have providedresearchers and practitioners alike with a novelmethod for approaching their work. This shouldultimately lead to a more well-rounded and com-prehensive appreciation of human attributes andhuman capital, as well as relational attributes andsocial capital.

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John R. Hollenbeck ([email protected]) is a UniversityDistinguished Professor at Michigan State University, aswell as its Eli Broad Professor of Management at the EliBroad Graduate School of Business Administration. Hereceived his PhD in management from New York Uni-versity. He conducts research on team performance andmulti-team systems.

Bradley B. Jamieson ([email protected]) is a PhDcandidate in the management department at MichiganState University. He received an international MBA fromthe University of South Carolina. His research interestsinclude leadership within teams and social networks, andstrategic human resource management.


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