Close this search box.

Social capital, reputation and identity in organisations Implications for leaders

We intuitively understand that our reputation is extremely important. It takes a long time to develop a good reputation, but it can be destroyed almost instantly. Reputation is an important component of individual social capital since it relates to trustworthiness and a range of other factors.

We may think that our reputation is solely the result of our actions. For example, when we are careful to never betray trust, we prove ourselves to be trustworthy. However, events are open to interpretation and the way people talk – the words they chose to use – shape our collective understanding and therefore our reputation.

Consider how rumours and gossip shape our perceptions and understandings. There may be little or no basis for the rumour, but it indelibly influences our understanding of reality.

Slander tends to have lasting impacts, even after the mistruths are clarified. We have difficulty completely discarding false information, so some of it tends to remain, creating subtle uncertainty.

For example, you may think Jane is trustworthy but hear that she lied about something important. This damages her reputation, and even after you find out she didn’t lie there still tends to be doubt. It may just be a hint of uncertainty about whether she is trustworthy but it has lasting impacts.

This has been understood since at least the middle ages, documented in the proverb: “Speak slander boldly: something always sticks”.

Thus, language powerfully shapes our understanding and may have little connection to truth.

This is very important because research suggests that up to 70% of our daily conversations contain positive or negative informal evaluations about someone, and often the subject is not present[1]. This is essentially what we call gossip. These conversations are often based on opinion, hearsay, supposition, and sometimes are completely contrived.

Gossip and the creation of identity and reputation

The nature of these conversations are normative, meaning that what is appropriate to discuss and not discuss is socially defined. In some organisations or groups negative gossip is not acceptable, and deviation from this norm can be harshly sanctioned. In the absence of negative gossip, gossip tends to be positive, constructive, and affirming creating solidarity, inclusiveness, and trust.

This subtly yet powerfully shapes social capital in constructive ways since it has positive effects on reputation and identity. It helps the target of the gossip to create a positive self-image and indicates support and social inclusion.

Perhaps even more importantly is the lack of negative effects. Negative gossip represents a social judgment that relates to undesirable factors which can reduce the target’s self-confidence and reduce others’ trust and willingness to cooperate with the target.

Since the nature of gossip is normative it can be influenced by leadership. Strong and effective leaders can set the example for what is and is not appropriate and by virtue of their position and status, leaders also have more options for effective sanctioning (both positive and negative sanctioning).

Gossip (and language generally) not only shapes our reputation but also shapes our identity. Much of how we see ourselves is validated by the people around us and the language they use[2]. People construct ideas or concepts that would not exist without other people and their language to validate those concepts. The things we are told subtly influence our beliefs about ourselves. For example, if we are repeatedly told we are funny by many different people over many years we are likely to identify with this quality.

Our beliefs, perceptions, and interpretations are reinforced through repeat experiences and can become so ingrained that we fail to see them as opinion, and not facts. We find these beliefs difficult to separate from fact because they are based on experiences supported by tried and tested beliefs about the nature of reality.

Most people can identify with more than 100 different labels.

We identify with various labels simultaneously. For example, I am a social theorist, teacher, author, Australian, Caucasian, man, reliable, honest, stubborn, etc. I could identify at least 100 labels that describe me, my attributes or my interests. Each label carries meaning about what it means to be that thing and what actions are appropriate and acceptable.

These labels can be situational, meaning they may only apply in a specific social context. For example, the other players on my cricket team don’t know that I am a teacher, so I feel no inclination to act how a teacher is expected to act. With my work colleagues I am a problem-solver and because I identify with this label (and have that reputation) I feel compelled to get involved in problems that arise. In a different social context, where I don’t feel the label is relevant to me (in the group context), I may not be so inclined.

Labels and reputation create expectations. These expectations exert an influence on behaviour and also set a reference point for evaluation (both evaluation of self as well as external evaluation by others). This is often evidenced by statements such as “not bad considering…”. They create benchmarks, such as “I’m a community leader so of course I would help someone in trouble” or “what do you expect, I’m a criminal”. These types of statements tend to reinforce the label and solidify the meaning that is attributed to it.

Labels limit the available options and can make us inflexible to new ideas or ways of doing things

When making choices about how to act, labels distort the suitability of the available options, that can result in the selection of suboptimal action. This can be based on feelings of expectation and can be closely related to the expected sanctions that are believed to be associated with acting contrary to their perceived label. For example, a politician has reason to be concerned about negative sanctioning for pursuing personal interests but may not be concerned about sanctioning for kissing a baby since they feel ‘baby-kissing’ is expected of them.

The meaning and significance that we attribute to each label depends on our individual and cultural understanding of what it means to be that label.

For example, what ways of thinking and acting are expected of a politician? What is appropriate behaviour for a politician, and what is not? What are politicians expected to do or not do?

This may suggest that labels are constraining and should be avoided. However, labels help us to organise the complex social world. They give us a mental framework for understanding. This can make life a lot easier since these mental constructs carry the background context for thought and action. They give us a framework of presuppositions that provides the foundation on which we can find meaning and quickly make decisions.

Labels help us organise the complex social world and make sense of our experiences

For example, for a Christian there is a broad collection of presuppositions about what it means to be a Christian. There are specific ways to think, act and be. This label provides the background context for thought and action that shapes understanding and experience. This can feel very comforting since it gives us certainty about ‘how it is’ and a strong foundation for understanding the world, our place in it, and the appropriateness of our actions.

Labels can also create inflexibility to new ideas or ways of understanding phenomenon. We tend to get locked-in to ways of thinking based on our background understandings and this can make it difficult for us to understand others’ perspectives that significantly differ from our own. Oversimplified examples are how economists see the world in terms of utility, engineers see force and pressure, psychologists see cognitive processes, and medical doctors see physiology and disease. These background understandings provide the basis for finding understanding.

Leadership can create positive organisational culture

Labels tend to be self-fulfilling. If you identify as a clown (someone who employs slapstick or similar types of physical comedy) then you are more likely to act in ways that you believe are expected and appropriate for a clown. Therefore, people are more likely to call you a clown, and this reinforces the label. In this way the label solidifies a pattern of acting and thinking that can become habituated and so ingrained that we believe them to be fact.

The origin of the label can be external or internal. Staying with the clown example, someone may do something that gets a laugh, which feels good. Their internal dialog may describe their behaviour as being a clown, and since they attribute positive experience they identify with the label. This encourages them to act this way more often and before long someone is likely to call them a clown. This is similar to role-taking where people take on a role, for example, the leader, the helper, the technical expert, etc.

It’s also possible for the origin of the label to be external when someone is called a clown. If the person identifies with this label, they may act clownish in future, reinforcing the label. The label can become ingrained and often people don’t remember that someone else gave them the label.

A label links us to a mental construct. We experience the world through the “lens” of our constructs. The way we see things, our experience and understanding of events, the way we think, feel and act are all the result of our constructed reality. It gives us meaning and helps us to understand the world around us.

The labels that collectively make up our identity are based on a lifetime of experiences that support or reject our mental constructs. Another commonly used term for this is someone’s worldview. A worldview is a unique arrangement of meaning each person builds, and lives through.

These meanings are typically so deeply embedded that we are not aware of them. They form the background context for knowing and acting. They only become conscious when they are challenged or come into conflict with each other. They are dynamically changing and evolving but they tend to change slowly and incrementally if at all, remaining in the background, beyond our everyday awareness.

We are not capable of imagining the world as entirely different than it is. Events that shake our understanding of ‘how it is’ tend to have profound effects and can be experienced with a great deal of uncertainty and discomfort. We can feel lost when we become uncertain of the validity of our mental constructs, leaving some aspects of our identity open to question and reinterpretation.

We are not capable of imagining the world as entirely different than it is.

It doesn’t take earth-shattering events to shake up our mental constructs, they can be interrupted when we encounter problematic situations that challenge our presuppositions of reasoning and acting. Just as mental constructs are constructed, they can be deconstructed when they are made conscious where they are susceptible to scrutiny and reconstruction. The background contexts of knowing and acting is largely beyond view until they are forced onto the “horizon” of our awareness.

When done thoughtfully and compassionately this “deconstruction” can be an effective way for leaders to change established patterns of behaviour.

The role of language in shaping our experience and understanding

The language we use creates our reality. It gives meaning and significance to experiences, intentions and desires. Words shape the nature of our shared understandings and powerfully creates our identity.

When we formulate pre-verbal experiences such as thoughts and emotions into words, we create meaning that may or may not perfectly match our intended or desired meaning. This happens even when the words are unspoken. Our internal dialog has the same effects, except it doesn’t shape the reality of others.

We encode our thoughts[3] into words based on habituated patterns of linguistic usage. While there are at least 250,000 English words[4], most people know a fraction of them, and use even fewer in everyday language. So, the conversion from thoughts (pre-linguistic) to words involves choosing the known word or words that best fit. However, there can be considerable variation between the thoughts and the actual definition (dictionary) of the words.

When words are chosen that are imprecise (due to lack of vocabulary or habituated patterns) the reality the words describe is forever changed. This is especially true when you consider how memory generally stores words rather than the experiences they describe (which contain far more detail, so our memory encodes just the symbols that are easily remembered). When recalled, our understanding of the words applies new meaning to the experience, creating inaccuracies or reinforcing the existing errors.

For example, when John is at work, he often experiences a heightened state that he perceives as busy. He encodes this as “stress” with thoughts such as “I’m feeling so stressed today”. This makes his experience adverse, distressing, traumatic, and difficult. This is because he takes a commonly accepted definition of the word “stress”, noun: a state of mental or emotional strain or tension resulting from adverse or demanding circumstances. However, he could have chosen to use a word such as “productive” with an internal dialog such as “Wow, I’m really productive today”, which has very different and much more positive connotations.

These two different words change the nature of John’s experience and create meaning in events that follow. For example, later in John’s “stressed” day if someone were to ask him to complete an additional task he may respond with negative thoughts or actions such as frustration. However, if the same thing happened later in John’s “productive” day, he may be ready for the challenge and respond positively.

This describes the internal processes that create our individual experiences.

Our awareness of our thought processes is primarily linguistic, so the language we chose has significant impacts on the nature of experiences, as the example above demonstrates.

All of this happens in our mind and if it remains unspoken it is not subject to evaluation by others. This can allow our individual reality to become rather disconnected from the shared reality (which is not the same as objective reality). There are several psychological processes that can make it difficult for us to self-evaluate the accuracy of our constructed reality, for example, confirmation bias. There are approximately 175 different cognitive biases that can influence our experience.

Since our thoughts are not open to external assessment, we don’t tend to evaluate them as critically as words we speak out loud. We tend to check spoken words for accuracy and evaluate them against the expected outcomes before we speak (except for people who suffer from foot-in-mouth disease).

While this may stop many people from speaking gross inaccuracies, it exposes another source of error since the recipient of the words must comprehend the intended meaning of the words.

Our comprehension of language is based on our understanding of the meaning of the words, AND critically also meaning derived from our past experiences and understandings. Research has found that language comprehension involves semantic memory[5]. This means that we find meaning of words from the knowledge stored in our brains through a lifetime of experience, not just the dictionary definition of the words.

For example, when we read a book, each person finds different meanings. The phrase “as he rode through the forest” conjures rich meanings that can be starkly different for different people. A Scandinavian person may imagine a boreal forest on the side of a mountain, a Bangladeshi person may imagine a tropical rainforest on the plains, and an Australian may imagine a dry sclerophyll forest. The word “rode” can also be interpreted differently since it could mean riding a horse, bicycle, motorbike, or other ridable things.

Even the subtle meaning of words can have different meanings. For example, the word “sceptical” may mean ‘a healthy suspicion’ for one person but mean ‘a negative mindset of distrust’ for another person. Another example is the word “demanding” that may mean busy to some people or it could have negative connotations of unfair expectations to another person.

These examples highlight how linguistic meanings are a form of shared understanding. This shared understanding is developed over time through repeat linguistic interactions and together is an important part of culture. Shared understanding is a very important component of social capital since it facilitates accurate and effective communication and allows for belonging and collective action.

The full process of communication involves constructing understanding through encoding it into language, transmission in written or spoken form, decoding and interpretation as illustrated in Figure 1.

Figure 1. Linear representation of linguistic communication from one individual to another

This process repeats in cycles of turn-taking in a conversation between two individuals as illustrated in Figure 2. This process is significantly more complex when more individuals are involved in the conversation. I can’t understate the importance of existing and shared understandings in this process and the potential for misunderstandings when shared understandings are not present.

Figure 2. Simplified representation of communicative action between two individuals

Words not only solidify meaning in our minds, the same processes create shared understandings. Our utterances create meaning that may not reflect reality.

For example, after John’s weekly meeting with his boss Jane, who gave him some critical feedback, he says to a colleague “Jane is being really nasty today, you’d better watch out”. Jane may have been polite, professional, and even compassionate, but John has created a different meaning (which will influence his reality) and shared that with others, which will create shared understandings. This may influence others to find similar meanings and over time this could create a reputation.

The words we choose can create vastly different understandings that may have limited connection to reality, but over time tend to shape reality.

Regardless of whether you think of yourself as a leader, you influence the nature of others’ reality in your everyday life. It may be your children, your friend group, your sporting or interest group, your work colleagues, or any other social grouping. The words that form in your mind that make up your internal dialog, and the words you chose to speak out loud, influence the shared understandings of those around you. It may seem innocuous and benign, but over time and repeat interactions it has powerful effects.

Gossip, social capital and leadership

Social capital is generally considered to have three dimensions: structural, cognitive and relational. Gossip has considerable implications for the cognitive and relational dimensions of social capital by shaping the nature of shared understandings and relational qualities such as trust. Since the dimensions of social capital are not discretely separate phenomenon, the effects of gossip are likely to have effects on every aspect of social capital through its complex interrelationships.

Leaders can powerfully influence the nature of the social capital in their group, department or organisation by consciously and purposefully using language to shape the nature of the shared understandings.

The most obvious way to do this is to discourage gossip that involves negative labels or assigns negative reputation. Strong leadership sets the example of what is appropriate and sanctioning (both positive and negative) can direct people to think and act in prosocial ways.

The aim should not be to eliminate gossip (where gossip is defined as informal conversations about others that not inherently positive or negative), since gossip is a normal part of the human experience, but to change the nature of the gossip. When gossip is appropriate it can have a strong positive influence on social capital. It can create social support and inclusion, solidarity and trust that are important components of social capital.

If gossiping excludes leaders there may be insufficient or ineffective systems for people to express themselves. It’s a good idea not to discourage gossip otherwise you may find yourself excluded from gossiping and then unable to influence the nature of the gossip. It is desirable to have gossip occur in the open rather than secretively as an outlet for frustration or a means to ‘vent’. Secretive gossip is a sign of problems that often relate to negative norms or people feeling like they are not heard, respected, or valued.

When gossip is in the open, leaders can actively participate in positive ways. Leaders can deliberately flip labels in conversation, restate negative gossip in a positive frame. For example, someone who is described as bitchy could be reframed as opinionated, someone who is bossy could be assertive, and someone who is called arrogant could be confident. Many labels are bipolar since they differentiate someone from something else. We can often flip the labels with negative connotations to labels with positive meanings.

Where appropriate, leaders can conduct exercises to deconstruct negative labels and reframe them as positive. This can be done individually or in small groups but must be very carefully conducted and to be effective it requires repeat interaction to break habituated patterns.

In many societies gossip is generally considered negative, loaded with inappropriate judgement and inaccuracies, often casting labels that represent a negative version of reality. This is often culturally defined and reinforced through experiences in school, work, and numerous television shows and movies. This tends to mean that leaders must overcome strong existing norms that are deeply embedded and habituated.

Often the best way to ‘reset’ the shared understanding is to address the issue directly so that it can be discussed and explored allowing for alternatives to be considered. This introduces uncertainty about ‘how it is’ that shakes up established mental constructs and provides the opportunity for things to change. As a leader you must force people to consider that maybe things are entirely different than they thought.

This must be part of an overall strategy that is social, supportive and authentic. It can be difficult to shift habituated patterns, so it requires repeat intervention that is deliberate, thoughtful and compassionate. Once changed, it is often relatively easy to maintain the new shared understandings, but it’s important to ensure newcomers are appropriately introduced to the internal cultures.


  1. Dunbar, R. I. M., Marriott, A., & Duncan, N. D. C. (1997). Human conversational behavior. Human Nature, 8(3), 231–246 ^
  2. Charles Cooley stated based on his Looking-Glass-Self theory: “I am not who you think I am; I am not who I think I am; I am who I think you think I am.” ^
  3. It could be argued that we think in words so here I am referring to pre-linguistic thought or perception ^
  4. Some sources suggest there could be 500,000 or more words ^
  5. Kutas, M., & Federmeier, K. D. (2000). Electrophysiology reveals semantic memory use in language comprehension. Trends in Cognitive Sciences, 4(12), 463–470. ^

About the Author

More Articles

Tristan Claridge

The difference between social capital and cultural capital

Export Reference Download PDF Print The concepts of social capital and cultural capital are similar and overlap in some significant ways depending on the meaning attributed to each concept. Cultural capital has at least two different meanings, and social capital

Read More »
Receive the latest news

Subscribe To Our Newsletter

Get occasional updates about social capital related events and publications.