Online social networking is invading business—for better and for worse.
Already there are more than 40,000 MySpace groups devoted to companies or co-workers, with some 8,000 work-related networks at rival site Facebook. The arrival of Generation Y to the workforce means companies have little choice but to adapt to these highly communal, highly wired young workers, experts say.
Social networking technologies promise not only to score points with 20-somethings—they can also help firms recruit and develop employees and increase productivity. The tools may even herald a return to the family feel cast aside by corporations during the downsizings of the past few decades.
But companies are learning about social networking technology in a sort of trial by fire, and can stumble badly. The tools can lead to awkward relations among co-workers, embarrassing public disclosures and newfangled ways to waste time.
Vendors tout business-focused social networking products designed to prevent such problems while boosting the bottom line. But no one is certain how the mash-up of corporate culture with MySpace-inspired technologies will shake out.
Dow Chemical Co. is installing a corporate social network to help it improve relations with company alumni, retirees and employees on leave. But the chemical industry giant expects the tool will be put to uses scarcely imagined today, says Julie Fasone Holder, Dow's corporate vice president for marketing and sales, human resources and public affairs. "I'm sure we're at the beginning," she says.
Social networking technologies refer to software programs and Internet sites that allow people to create profiles of themselves and link up with others in a virtual community. The tools typically let users add people to their network, send messages and post photos or other content. During the past few years, social networking technologies have garnered attention primarily as consumer services—wildly popular ones. Facebook claims more than 31 million active users. Nearly one in four Americans used MySpace in June, according to the site's parent, News Corp.
Social networking site use is even more pronounced among young people: Nearly 80 percent of 12- to 17-year-olds use MySpace at least weekly, News Corp. says.
The cohort known as Generation Y, or the Millennials—typically defined as those born between the late 1970s and 2000—also is inclined to bring a collaborative, communicative mind-set to the workplace, research suggests. A survey last year sponsored by corporate social network provider SelectMinds found that nearly half of Generation Y members rate the availability of support/networking programs for employees with common interests as an important factor in their decision to join and/or remain with an employer, compared with 36 percent of their peers.
Jason Corsello, vice president at consulting firm Knowledge Infusion, says younger workers will push their employers to adopt social networking technology. "Over time, it will become a necessary evil, just as people's mobile phones" became part of corporate operations, he says.
"People are out for themselves. This is not a loyalty-driven network. Individuals are loyal to other individuals, and that loyalty boosts employee retention and productivity."
--Anne Berkowitch, co-founder
and CEO of SelectMinds,
a corporate social netowrk provider
Zia Khan, a principal at consulting firm Katzenbach Partners, argues that social networking tools can help companies nurture the "informal organization," which refers to unofficial channels of communication and collaboration that are vital to a firm's effectiveness. Khan says his own organization is experimenting with software to expose the knowledge and social ties of each employee. "It's hard for people in organizations to know what everyone in their network knows," he says.
Corporations are not complete strangers to social networking technologies. Marketers and recruiters in particular have been active in tapping networking tools. Professional networking site LinkedIn has emerged as a major tool for recruiters, who can use the 13 million-member community to search extended networks for candidates and references.
"The biggest bang for the buck right now is attracting the right passive candidate through social networking," says Rick Fletcher, founder of consulting firm HRchitect.
In late August, recruiting software firm Taleo announced plans for an application for its small and midsize business customers that will let users post jobs and share them with friends on Facebook.
Tapping social networking sites or software for broader workforce purposes is newer territory for corporations. Yet even if companies are not actively embracing the technology, it is colliding with them. Among the thousands of company/co-worker sites at MySpace are a number that appear to be unofficial groups focused on prominent corporations, including coffee giant Starbucks as well as retailers Gap and American Eagle Outfitters.
Gap spokeswoman Robin Carr said the company does not have an official policy on the Gap Inc. MySpace page. "It's something we're looking into," she said.
American Eagle Outfitters declined to comment for this story, and Starbucks did not respond to requests for comment.
HR vendors get in the game
Vendors, though, are responding to the social networking trend and its implications for corporations. The major consumer social networking sites, MySpace and Facebook, make it easy to start a workplace group. Oracle and SAP, the titans of the HR software arena, also are exploring social networking. SAP launched an internal site in the spring dubbed Harmony and is observing how the firm's North American employees use it. Oracle, meanwhile, released a social networking tool for its employees in August that attracted 10,000 users—just over one-seventh of the company—in less than than three business days.
"Over time, it will become a necessary evil, just as people's mobile phones" became part of corporate operations.
--Jason Corsello, vice president, consulting firm Knowledge Infusion
Analyst Corsello imagines SAP and Oracle weaving social networking into their broader lineup of HR software. "I sense that both SAP and Oracle are looking for opportunities to embed this into their overall applications strategy," Corsello says.
Then there are technology vendors that have fashioned social networking tools from related products. In August, HR software maker SuccessFactors announced a new version of its "Employee Profile" tool. SuccessFactors, which makes applications for tasks including performance management and succession planning, said the new software is "an online, companywide directory that applies social networking concepts to the business context of managing and engaging employees at work." It is designed to let companies and employees populate directory profiles with data such as individual skill sets or competencies, languages spoken, career goals, key accomplishments, compensation history and leadership potential.
"Every employee has a story and we've designed Employee Profile to let them share it, so that they don't feel like just another number in a payroll database," Rob Bernshteyn, SuccessFactors' vice president of global product marketing and management, said in a statement.
Nobscot, which makes software to facilitate mentoring programs, rolled out its Mentor Scout Talent Networking edition this summer. The service enables employees to create profiles, ask questions of colleagues and arrange for real-world get-togethers. It also has a "praise" tab, making it easy for colleagues or bosses to write quick notes of appreciation to one another.
That feature is a direct response to evidence that Generation Y employees tend to need frequent positive feedback, Nobscot CEO Beth Car vin says. "The system is encouraging that flow of thanking people," she says.
Nobscot's networking tool is offered on a subscription basis, with prices ranging from $8 to $75 per participant per year. The fee depends on factors including the number of people at the client using the software.
SelectMinds, which had focused on helping companies keep in touch with former employees, has in recent years developed a broader set of corporate social networking products. SelectMinds has mo- dules for connecting current and former female employees, retirees, interns, company alumni and all current employees. It also offers a tool for onboarding employees by helping them link up quickly with colleagues who will play important roles in their work.
Annual fees for SelectMinds' services can range from $125,000 to $500,000 for a large Fortune 500 company. But there's a clear return on that investment, according to SelectMinds. The company says its clients—which include several dozen Fortune 500 firms—report an average gain of 8.8 percent in employee retention, a 10.3 percent gain in overall productivity and an 11.7 percent gain in new business revenue.
Kevin Small didn't need those numbers to be convinced that SelectMinds would help his firm, Dow Chemical Co. Small, who leads the Global Resource Management Center within Dow's HR operation, was looking earlier this year to improve the company's relations with its retiree population, its former employees still in the workforce and current Dow workers on leave—especially maternity leave.
"Facebook and MySpace are very consumer/individual-driven by design. That is a good thing for the public Internet. In a corporate setting, however, a free-for-all would more than likely be counterproductive.
--Beth Carvin, CEO, Nobscot
A key motivator for Small is the possible disruption to Dow's business caused by an aging workforce, which is a dilemma many companies face. Some 40 percent of Dow's employees will be eligible for retirement in the next five years, he says. This makes Small and Dow keen to devise ways to transfer knowledge among workers and tap retired ones to help as contractors in a pinch.
The company recently signed a contract with SelectMinds and is in the process of introducing the networking services. Small expects reduced recruiting costs as the networking tool helps bring back former employees or those on leave. "You can easily pay about $2,500" in recruiting costs to hire an expert in the oil or gas industries, or someone with experience starting up a business unit, Small says. If Dow can lasso half a dozen former employees and double the number of female workers on leave who return, the service will pay for itself annually, he says.
What's more, as Dow announced the networking effort this summer, other company officials asked about the system. Dow Ventures, a group focused on new business development, wants to use the networking tools to showcase its work and generate new ideas, Small says. "A social network becomes an environment to improve and contribute to Dow's bottom line," he says.
Dow's Fasone Holder learned about corporate social networks from an article describing one at Procter & Gamble. She also felt that a corporate networking tool would fit in with Dow CEO Andrew Liveris' internal company blog. And she says a social network site can tap current and former Dow employees around the world to aid in recruiting and promoting the company. More than half of Dow's 44,000 employees are based outside the United States. "It does help us spread the word about Dow globally," she says.
Fasone Holder's support helped seal the SelectMinds deal, Small says. But he struggled initially to sell Dow colleagues on the concept of a corporate social network. In fact, Small pitched SelectMinds as an alumni network to avoid the anything-goes reputation of social networking sites. Dow executives "could get their heads around that better than if we called it a MySpace tool, or something like that."
Keeping it all business
Consumer social networking sites can appear quite unprofessional. Personal profile pages on MySpace and Facebook are notorious for racy images, photos of people drinking alcohol, or otherwise objectionable content. The profile page of the person ostensibly in charge of the American Eagle Outfitters site includes profanity and what appear to be ads for penis enlargement.
Fifty percent of employees are blocked from accessing Facebook at work, according to research from technology security firm Sophos. Corsello says organizations are concerned not just about tasteless material on employees' profile pages, but also about potential disclosures of confidential information and the possibility that employees will fritter away their time on the sites. "You don't want an employee who should be spending time on a marketing plan living and breathing on Facebook," he says.
Social awkwardness is another risk with the sites. Employees may not want to join a supervisor's Facebook or MySpace network if it means their own profiles on those sites will need to be cleaned up.
Such problems are why business-focused social networking services are vital, Nobscot's Carvin says. She notes that her software does not allow people to form their own exclusive networks, which eliminates the problem of uncomfortable "friending" requests. And, she says, putting the networking system under the control of the human resources or corporate learning department helps prevent inappropriate content from popping up.
"Facebook and MySpace are very con sumer/individual-driven by design," Car vin says. "That is a good thing for the public Internet. In a corporate setting, however, a free-for-all would more than likely be counterproductive."
SelectMinds also says its system is designed specifically for business users. The 55-person company provides business-related content, such as articles about challenges in returning to the workforce after taking time to raise a family. Company co-founder and chief executive Anne Berko witch says the firm is also thinking about expanding corporate social networks to in- clude customers and suppliers. "Over the next few years, we'll look at external-facing networks," she says.
Revenue at SelectMinds is doubling annually, and the growth is accelerating for the seven-year-old company. But Berkowitch faces challenges, such as standing out from a horde of vendors that claim they offer effective corporate social networking. "It's like a land grab right now," she says.
SelectMinds and other vendors also have to convince companies that corporate social networking is more than the latest fad. Dow's Small has little doubt. In fact, he says, the arrival of social networking tools may help revive the sense of family that often pervaded workplaces before the dramatic layoffs of the 1980s and 1990s. Dow itself cut several thousand jobs just a few years ago. "We've lost a lot of that bond over the years at Dow and other companies," Small says. "This kind of environment has the potential to bring some of that back."
Berkowitch agrees her company's tools can foster stronger connections between workers and firms, but says those relationships will look different from the past. Employers are not going to return to an offer of lifetime employment, she says, but they are recognizing the value of at having a lifelong relationship with their employees. Those workers, meanwhile, will not blindly trust companies, but nonetheless come to appreciate the way their firms help them relate to colleagues personally and professionally.
"At the end of the day, people are out for themselves," Berkowitch says. "This is not a loyalty-driven network. Individuals are loyal to other individuals, and that loyalty boosts employee retention and productivity."
Whether corporate social networks re kindle workplace bonding in a meaningful way remains to be seen. Much, in fact, about the new set of tools is still unknown, Carvin says. "We're interested to see how it's going to change," she says. "It's going to look a lot different from how we expect."
Workforce Management, October 22, 2007, p. 1, 28-37 -- Subscribe Now!