The Fine Art Of Recovery

Does social capital help organisations recover faster

Insightful asymmetries

Daniel P. Aldrich, an Assistant Professor of Public Policy at Purdue University was employed by Tulane University in 2005, when Hurricane Katrina hit New Orleans leaving 80% of the city underwater. Aldrich would spend the following five years observing the process of rebuilding in the city. Recovery was a long and painful, yet something kept him deeply intrigued: neighbourhoods with similar levels of damage and poverty bounced back from the disaster at very different rates.

As Aldrich writes of his many observations, "the Vietnamese community centred around Mary Queen of Viet Nam (MQVN) Church in Village de L’Est brought back a tremendous number of residents and businesses. This was despite high levels of poverty, flood waters, and low levels of formal education. Within a year of the disaster, for example, observers estimated that 9 in 10 businesses and households had returned to the area. Residents set up their own charter school, built an urban farm, and set up new medical clinics to avoid the 25 minute wait for ambulances. On the other hand, similar neighbourhoods seem untouched since the day the levees broke." Interestingly, "government officials did not send more funds to survivors in the MQVN area; if anything (they told Aldrich in interviews) they often ignored the neighbourhood."

So what was the difference? Aldrich – who will soon publish “Building Resilience: Social Capital in Post-Disaster Recovery”, a full review of the 1923 Tokyo earthquake; the 1995 Kobe earthquake; the 2005 Katrina disaster; and the 2004 Indian Ocean Tsunami – concludes the phenomenon behind these differences is Social Capital.

In short, Aldrich’s findings suggest that “places with low social capital tend to wait for the state to repair devastation while places with high social capital take more immediate self-action to repair”. Harvard professor Robert D Putnam had already observed this when looking at earthquake recovery in Italy: “in places with high social capital one was unaware there had been an earthquake there several years later, whereas in low social capital places, the results of an earthquake were apparent 30-40 years later and residents were still blaming government for not adequately responding.”

The definition of Social Capital (a concept first appeared in a 1916 article by L. J. Hanifan) significantly varies by discipline. Putnam defines it as "the collective value of all social networks and the inclinations that arise from these networks to do things for each other”, in other words, who knows whom and what would they do for each other (see other definitions here and here).

No bunch of strangers

In the last 25 years, significant research has positively associated social capital with improved health (Kawachi, Kennedy, & Lochner, 1997), better educational outcomes (Coleman, 1988), reduced crime (Putnam, 1995), the creation and maintenance of economic prosperity (Fukuyama, 1995), regional development (Grootaert & Bastelaer, 2002), collective action (Burt, 1992) and democratic governance (Putnam, 1993; 2000) among others.

Given its merits, it has surprisingly had little attention in the realm of business. Cohen & Prusak make perhaps the only published case for nurturing and monitoring social capital in organisations.

But as organisations attempt to rally their employees with one hand while executing severe budget cuts with the other, Aldrich's insights should make us reconsider what is it that brings organisations back to their feet in the aftermath of a major crisis. It wouldn't be wild to assume that organisations with high social capital (those where employees know each other and would do things for each other) would be quicker to recover than those with low social capital.

Though anecdotally and intuitively we might nod in mild agreement, more targeted research is needed. It might be in any case advisable to keep some of the Christmas celebrations' budget in place and hope that associates mingle and bond - they might be the safety net next time numbers fall off a cliff.