Human Capital Evaluation with Social Network Analysis Support

Human Capital Evaluation with Social Network Analysis Support Department of Human Capital Development, Warsaw School of Economics The purpose of this article is to show the social network analysis as the perspective of human capital evaluation. It presents interrelation between the social and human capital, the brief introduction to social network theory and its analyzing method. However, social network analysis (SNA) is the method to evaluate social capital, the author pointed out the possible SNA metrics essential in the human capital evaluation. The article shows the SNA and human capital in the individual perspective ego. It provides the idea of the human capital evaluation in broader and more precise way. Keywords: human capital, social capital, social network, social network analysis, human capital evaluation. Introduction The name of the article is to show a new perspective of human capital evaluation. The stated below questions show the way of building the proof. Is there any possibility to consider human capital from social perspective? Does the social capital influence human capital, or reversely. How should we evaluate human capital without considering the social capital? Is it possible to use social network analysis (SNA) the tool of social capital exhibition in the human capital evaluation process? Are there any SNA metrics supportive to human capital evaluation metrics? Answers to these questions lead to the conclusion of the usage of social network analysis in ego perspective in the human capital evaluation process. Looking for the findings require broad scope of secondary studies within the scientific papers. Thus, the paper is the theoretical concept with recommendation for management application and further scientific researches.

60 1. Human and social capital interrelation Human capital is a conceptual category developed at the interface of several disciplines, sociology, management and economics. Discussion on human capital has been in place for several decades. While introducing human capital management as a category, it is important to show the sources from which it is derived. According to Bourdieu, human capital includes cultural, social, economic, and symbolic capital. On the basis of economics, human capital management becomes a factor in the creation of enterprises and economies value. G.S Becker shows the human capital as an investment object. All individuals decide about costs and benefits as the two parties to the investment process. Return on investment is the category used to evaluate the effectiveness of the human capital (Kwon, 2009). Sheffin stresses that human capital is the stock of skills and knowledge embodied in the ability to perform labor so as to produce economic value (Kwon, 2009). So, it is workforce capability to perform in order to achieve economic value. The turn of twentieth and twenty first century brings a lot of considerations of the intellectual capital. Looking at enterprises and economies in terms of broader than financial capital is a shared concept. The pioneer papers show human capital as the value that the employees of a business provide through the application of skills, know how and expertise Human capital is one of the two key components of intellectual capital. The other one is structural capital (Edvison & Malone, 2001). In other concept the human and structural concepts are enriched by client capital (Sain Onge, 2000). The parts of the intellectual capital according to other scientists (Bratnicki, Strużyna, 2001) are: social capital including the supportive conditions to the system of interpersonal relationships within the organization and shared norms, language, history of the organization; human capital including employees competencies (know what, know how, talent), intellectual agility (innovation, entrepreneurship, the ability to change and imitation) and motivation (the desire, commitment, ethics in action, personality traits to the tasks, authority and leadership management); organizational capital includes developmental capital (innovation, learning, strategic orientation and process and openness to change), the external structure (market resources and relationships with others outside the organization) and internal structure (organizational structure, culture, and organizational processes and systems operation). As M. Juchowicz underlines (Juchnowicz, 2013) human capital is one of the three components of the intellectual capital, next to organizational capital and

Human Capital Evaluation with Social Network Analysis Support 61 relationship capital. As pointed out by her the human capital is the main determinant of value and competitive edge of the organization. For exemplification of this thesis the 4C Model is propose. It is a concept indicating the specific characteristics of human capital in the organization. The Cs consist of : Competence, or knowledge, skills, abilities, physical fitness, styles, actions, personality, professed principles, interests and other characteristics, which are used and developed in the work leading to the achievement of results in line with the strategic intentions of the organization, Interpersonal relationships, including relationships, as well as communication and information system in the company, Organizational culture, the informal system of thought and behavior patterns in the organization, and Organizational climate, i.e. atmosphere in the organization, subjectively perceived by the employees, depending on the individualized personal characteristics of employees and organizational conditions. Some concepts of human capital reveal a strong relation with the social capital. Social capital and its selected components are parts of the human capital. This raises the question of what social capital is. According to classic sociologist Bourdieu social capital is the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance and recognition (Bourdieu, 1985). Putman concept of social capital refers to the collective value of all social networks and the inclinations that arise from these networks to do things for each other. Thus, social capital by Bourdieu is a characteristic of the relationship, while Putman focuses on the specific properties of cooperation. Nahapiet and Ghoshal stress the social capital as the resource of networks. According to Burt s concept, social capital is the way to extract the human capital. As he points out friends, colleagues, and more general contacts through whom you receive opportunities to use your financial and human capital (Burt, 2005). Cohen and Prusak show social capital as the aspect of the organization. In this perspective social capital is the condition for cooperation. consists of the stock of active connection among people; the trust, mutual understanding, and shared values and behaviors that bind the members of human networks and communities and make cooperative possible (Cohen, Prusak, 2001). Social capital is created in social networks and the value raised from the relationships between the network nodes.

62 2. Social Network Social Network is a social structure made up of individuals connected by specific relations. The core concept compose nodes, flows and relations. In order to form a social network, nodes are required. However, without the flow of a certain intensity and specificity social network does not exist. The notion of Social Network was coined in 1954 by J. A. Barnes. Social network shows relations and flows between people, also organizations, IP numbers and entities. The others define it as a set of actors (individuals, groups, organizations) and the set of ties representing some relationship or absence of relationship between the actors (Brass, Halgin, 2012). The beginning of the network theory was started by J. Moreno sociogram concept. It has been developed by researches, pointing to only: Small world phenomenon (Miligram, 1967), strength of the week ties (Granovetter, 1983), structural holes (Burt, 1992), structure power (Krackhardt, 1993), knowledge sharing (Hansen, 1999; Burt 2004) and more. The Polish scientists have developed the network theory as the interorganizational relations (Czakon, 2007), network enterprise (Łobejko, 2010), employment in the labor market (Sławecki, 2010), competencies development (Fryczyńska, 2010, 2012). Nowadays, in the Web 2.0 as well as social media the social network theory arises as the new star. 3. Social Network Analysis Social network analysis (SNA) provides a mathematical analysis of relationships and their visualization. Hence, the measuring and mapping of the relations might proceed, as it focuses on understanding how patterns of relations influence the whole network and individuals quality and performance. Social network analysis shows the structure of nodes. It is a map of specific ties. The map is quite a adequate term because the social network analysis (SNA) is also the tool for visual exhibition. Social network analysis is the tool to measure social capital. If so SNA allows you to measure social capital, and informs whether there is a possibility of measuring human capital. As previously noted there are common points between human and social capital that create the promise of possible measurements. Scientists show different perspective on what and how to analyze the network features. D. Krackhardt developed four levels of analysis. Level 0 shows network structure as a whole. Thus, it gives an answer of the shape of the network. It shows

Human Capital Evaluation with Social Network Analysis Support 63 all the nodes as the effect of the relations with other nodes. Level 1 concentrates on The Individual Actor. The focus is on one node in the net. It explains what is the certain position of the defined Actor and what it stands for. Next level 2 is the dyad. At that level there is the search for the answer why nodes have relations with others. Level 3 calls the cognitive social structures, explores the opinion, thoughts, about the network. Due to the research problem, the analysis level should be emphasised (Krackhardt, 2010). The scale network analysis can also provide one of two perspectives i.e. individual ego perspective or the whole network perspective. Ego network analysis collects data related to only one node as part of the whole population or data pointed by ego s relations to alters. (Brass, Halgin, 2012). The whole network analysis uses date of all nodes, without pointing firstly egos or alters. Based on the ego perspective, it counts the value of each human being capital. The whole network perspective shows the value of the whole company, society or country human capital. Of course, it is possible to extract information about egos from the whole network. It is risky to evaluate human capital in the whole network perspective. It might occur as a misleading change from human to social capital. Thus, the proposition values the human capital in the individual network perspective (INP). It means the measuring of human capital value as the capital of ever ego, the capital created by the place and functions in the social network. The place and function in the network is the result of relations the ego is engaged in or not. Hence network analysis focuses on finding conclusion of: similarities (e.g., physical proximity, shared experience), social relations (e.g., kinship, friendship, cooperation), interactions (talks with, gives advice to, shared work), or flows (information, resources, referrals) (Borgatti, Mehra, Brass & Labianca, 2009). 4. Social network analysis application in the human capital evaluation Human capital evaluation is the reason which established the term human capital. Despite the fact that researchers are conducted in this there is no consensus. The joint project launched by the Polish Agency of Enterprise Development (Leader) and the Warsaw School of Economics (Partner) aims at building the concept and toolkit of human capital evaluation widely used by enterprises. According to the concept (Juchnowicz, Sienkiewicz, 2013) the human capital diagnosis embraces its measurement and valuation. The human capital can be evaluated as a collective category, e.g. corporate human capital or national human capital. The author chooses an individual

64 perspective of what it means, the evaluation focuses on the calculation of the value of an individual (ego). Fig. Human capital evaluation with social network usage HUMAN CAPITAL Individual capital derived from social network validation validation HUMAN CAPITAL METRICS Social network metrics Source: own concept. On the way to point ego human capital in the social network, the social network analysis metrics are used. Social network analysis uses many metrics useful for different purposes. It shows the influential metrics in the ego human capital evaluation. The degree shows the number of the links that lead into or out of the ego. It answers how many relatives the ego has. It does not differentiate the flows into or out of the node. The out degree shows how many relations are initiated by ego. The in degree shows the opposite direction; how many connections came as the alters activity result toward the ego. The incoming relations indicate the human value of the ego in the network. The competencies the ego has are valuable for the society e.g. company members, team fellows. Thus, the ego is appreciated. The reciprocity metric indicates the interrelation between ego and alters. It is defined as a ratio of linking flows in both directions between ego and each alter. Hence, the point is to measure cooperation scope of the ego. The network density ratio of the number of nodes in the network overall to the total number of possible nodes between all pairs. Showed in the ego perspective inform about how well the ego utilizes the potential of direct relations. The ego network density shows the proportion of connections between the nodes associated with the ego. The higher the score, the more collaborative human capital is (ego). Eigenvector centrality measures value of the nodes relations. It is not only about having relations. The point is to have good relations with valued nodes. It is proportional to the sum of the eigenvector centralities of all nodes directed to it. The other nodes flow to the ego and build the value. High score might be interpreted as the access to the most valued resources in the network.

Human Capital Evaluation with Social Network Analysis Support 65 The network theory focuses on the huge relation scope, measuring the distance between all nodes and its characteristics. The degree measures the shortest path between two nodes, ego and alters. In the network perspective the structure of the whole network is crucial, as well. Closeness is the degree an ego is near directly or indirectly all other nodes. It counts the mean length of all shortest paths from a node to all other nodes in the network. Closeness metric gives the information about the ability to access to the nodes and its resources. The competencies improvement, more alternatives in the decision making, power influence, more ideas in the innovation are expected. In finding the characteristic of human capital the in between position measure is useful. It is the number of shortest paths that pass through an ego divided by all shortest paths in the network. It shows the extent to which an ego node lies in between other nodes in the network. The ego with high measure of in between positioning reflects as the facilitating factor for cooperation or as the linkage on the way of the information, resources exchange process. Relations between nodes might be split out. Worse if the relation might disappear between two (or more groups) in the whole network. The less relations between group members (nodes) the risk is higher. SNA use the bridge metric showing the node connecting with almost separated groups. The bridge collapses, the group is disconnected. So, finding the answer how well the ego is placed in the clustering network, gives the impact on the ego human capital value. The more the bridge is the more valuable, especially in the resources flows. Conclusions Social network theory is the linkage between human and social capital. However the differences between two capitals is not so distinctive if it is possible to engage social network analysis in the human or social capital evaluation separately. Ego perspective of human capital means individual human beings value e.g. citizen, group fellow, employee. Furthermore, ego perspective in the social network analysis is a possible way, also. Focusing on the ego perspective protects from measuring two kinds of capital once. As the possible SNA metrics for human capital evaluation point: degree, in degree, out degree, ego network density, eigenvector centrality, closeness, in between positioning and bridge. SNA metrics enrich the human capital evaluation. Due to evaluation need of social rooted competencies as the part of human capital SNA is worth to consider. To build the renewed human capital evolution methodology, the rules must be established. The steps should be taken as follows:

66 point out the SNA metrics appropriate to the human capital evaluation aim, to human capital validation criteria, conduct the SNA surveys, as the outcome of organizational data (e.g. e mailing, calling record, ICT platform usage) or as the dedicated research, build the matrix SNA scores and human capital quality, calculate final human capital value score of each ego (employee, fellow of the group) and multiply of all members. References Batorski, D., Zdziarski, M. (2009). Analiza sieciowa i jej zastosowania w badaniach organizacji i zarządzania, Problemy Zarządzania, nr 4. Borgatti, S., Mehra, A., Brass, D. J., & Labianca, G. (2009), Network analysis in the social sciences, Science, Vol. 323, No. 5916. Bourdieu, P. (1985), The forms of capital, in: J.G. Richardson (ed.), Handbook of Theory and Research for the Sociology of Education, Greenwood Press, New York. Brass, D.J., Halgin, D.S. (2012), Social networks: the structure of relationships, in: L.T. Eby, T.D. Allen (eds.), Personal relationships: The effect on employee attitudes, behaviors, and well being, SIOP Frontiers Research Series, Routledge, New York. Bratnicki, M., Strużyna, J. (red.) (2001), Przedsiębiorczość i kapitał intelektualny, Wydawnictwo AE w Katowicach, Katowice. Burt, R. (1992), Structural Holes: The Social Structure of Competition, Harvard University Press, Cambridge. Burt, R. (2005), Brokerage and Closure: An Introduction to Social Capital, University Press Oxford. Cohen, D., Prusak, L. (2001), In Good Company. How social capital makes organizations work, Ma, Harvard Business School Press, Boston. Czakon, W. (2007), Dynamika więzi międzyorganizacyjnych przedsiębiorstwa, Wydawnictwo AE, Katowice. Edinsson, L., Malone, M. (2001), Kapitał intelektualny, Wydawnictwo Naukowe PWN, Warszawa. Fryczyńska, M. (2010), Towards the Network Development of Employees, Human Resources Management, 6. Fryczyńska, M. (2012), Kompetencje kapitału ludzkiego w przedsiębiorstwach sieciowych, w: S. Łobejko (red.), Przedsiębiorstwa sieciowe i inne formy współpracy sieciowej, Oficyna Wydawnicza SGH, Warszawa. Granovetter, M. (1983), The Strength of Weak Ties: A Network Theory Revisited, Sociological Theory, No. 1. Juchnowicz, M. (red.) (2014), Zarządzanie kapitałem ludzkim. Procesy, narzędzia, aplikacje, PWE, Warszawa.

Human Capital Evaluation with Social Network Analysis Support 67 Krackhardt, D. (2010), Social Network, in: J.M. Levine, M.A. Hogg (eds.), Encyclopedia of Group Processes and Intergroup Relations, Sage, Los Angeles. Krackhardt, D., Hanson, JR. (1993), Informal networks: the company behind the chart, Harvard Business Review, 71(4). Kwon, D. B. (2009), Human capital and its measurement, The 3rd OECD World Forum on Statistics, Knowledge and Policy, working paper. Łobejko, S. (2010), Przedsiębiorstwo sieciowe zmiany uwarunkowań i strategii w XXI wieku, Oficyna SGH, Warszawa. Milgram, S. (1967), The Small World Problem, Psychology Today, Vol. 2. Nahapiet, J., Sumantra, G. (1998), Social capital, intellectual capital, and the organizational advantage, Academy of Management Review, 23 (242). Putnam, R.D. (1995), Bowling alone: America s declining social capital, Journal of Democracy, 6. Rostkowski, T. (2003), Zintegrowany system zarządzania kompetencjami, in: M. Juchnowicz (red.), Narzędzia i praktyka zarządzania zasobami ludzkimi, Poltext, Warszawa. Saint Onge, H. (2000), Shaping Human Resource Management Within the Knowlwdge Driven Enterprise, in: J. Phillips, D. Bonner, Leading Knowledge Management and Learning, ASTD. Sławecki, B. (2010), Zatrudnianie po znajomości. Kapitał społeczny na rynku pracy, C.H. BECK, Warszawa. Watts, J. D. (2007), Six Degrees. The Science of a Connected Age, ISBN 0393325423, Kindle ed.. Peзюмe Оценка человеческого капитала с использованием анализа социальных сетей Целью настоящей статьи является демонстрация анализа социальных сетей как предпосылки для оценки стоимости человеческого капитала. В статье представлены взаимосвязи между социальным и человеческим капиталом, а также очерчена теория социальных сетей и методов их анализа. Несмотря на то, что анализ социальных сетей (SNA) является методом оценки социального капитала, авторка определила меры SNA, информирующие о качестве человеческого капитала. Она применила индивидуальную концепцию его использования как в SNA, так и в оценке человеческого капитала. Представленное предложение указывает на новые возможности оценки качества человеческого капитала, которые до сих пор на практике не применялись.

68 Ключевые слова: человеческий капитал, социальный капитал, социальные сети, анализ социальных сетей, оценка человеческого капитала., Ph.D. She works for Human Capital Development Department at the Warsaw School of Economics. She is interested in human capital issues in general. Specifically, she focuses on social network perspective influence on human capital management, career development, competencies assessment and their development. She conducts researches and publicizes their findings. She teaches international students and supports their competencies development. Business projects she engages in improve the way of scientific and educational tasks fulfilling. She widely shares the conviction of the key advantage of the network cooperation between people, teams and organizations.