Tuesday 25 May 2010

The Promise and Limitations of Social Media

Potential problems with the use of social media include breaking down barriers between an individual's professional and personal lives, the amount of time it requires and the potential for ineffective assistance from an employee's network.

By Peter Cappelli
I recently spent a couple of days at a conference listening to employer representatives talk about what was on their minds. The most interesting issue was the growing use of social media.

Social media is about the social relationships that we have with other people and the new technologies that make those relationships easier to develop and maintain. In the business context, the idea is to tap our social networks to solve business problems.

OK, what does that mean in practice?

In hiring, it means using personal contacts facilitated through software such as LinkedIn to hunt for job candidates. In sales, it means using similar contacts, perhaps even less business-related, through sites such as Facebook, to find customer leads. In training and development, it means using mentoring to provide career advice and peers to help find solutions.

There is nothing new about social relationships or using them in business. The software just makes it easier to use them.

The revolution is in management and the willingness to engage them for business purposes. If this doesn't sound like a revolution, go back and read accounts of business from a generation ago, such as RosaBeth Kanter's famous Men and Women of the Corporation, which describes how managers and executives in the 1970s were discouraged from participating in professional organizations or any other outside organizations for fear it would take their focus away from the company.

The appeal of social media is that it seems as though it can solve business challenges for free: No need to hire a search firm, just tap your personal contact list to find good candidates. Why hire consultants when one of your acquaintances can give you the advice without charge. Don't hire a coach when you can get a volunteer mentor from your current executives. Training? Find someone who knows how to do what you need and ask them to show you over lunch.

To the extent to which these efforts take off, it truly is a revolution. It moves business further away from formal, bureaucratic approaches to informal, individualized solutions to business problems. It erodes any remaining separation between private life and business life. The boundary of the firm more or less disappears as personal relationships with outsiders can become just as important as those with fellow employees.

Those of you who have read my columns before will sense the wet blanket coming. Will this promise of social media really play out as the above description suggests? It's hard to believe that it will, and I already see the beginnings of a pushback. Here are some reasons.

First, do you hear the pitter patter of lawyers?

Consider these issues:

* The social network that one of your employees has been using to attract new hires turns out to be based on a shared belief in anti-Semitism.

* Hourly employees start claiming time spent on LinkedIn should be used for overtime compensation on the grounds that the company rewards applicants uncovered through social networks.

* One of your employees reveals company secrets when answering a business question on a user group's Web site.

If they haven't done so already, company lawyers are going to have fits throwing up restrictions and imposing limits on the use of social media.

Second, it's not free. Let's repeat that. The use of social media is not free. It is another set of tasks pushed onto employees, like making them do their own word processing and scheduling their own appointments when the company got rid of assistants.

It only appears to be free because the company is not accounting for the time required to do it. Getting a free answer from someone else's employee is free, but when your employee stops their work to reciprocate, it no longer is.

Inside the business, is it cheaper to have a peer take work time to show you how to do some fancy PowerPoint application than having a trainer do it?

Third, in many cases, the results are worse than if the problems had been solved the old-fashion way. The most obvious aspect of this is the "TMI" problem: Too much information.

I ask my LinkedIn network to recommend an applicant for an opening, and I get 100 recommendations, many of which I suspect are efforts to unload a poor performer. What do I do with all that information? I don't have the time or resources to sort it all out.

Or I ask my company network the best way to deal with a server problem and get five possible solutions. No. 3 sounds best to me, but someone elsewhere in the company with the same problem went with option No. 1.

How do we handle these coordination problems? More generally, how do we decide what is good information vs. dangerous advice? The old adage that free advice is worth what you pay for it comes to mind.

Finally, and perhaps most importantly, this new approach to business both requires and then creates a very different business culture than the one most businesses have today. To make it work demands a very high level of mutual trust and employee commitment.

Because social media is controlled by employees, not the employer, it is hard to monitor what the employees are doing. The temptation to use social media to enrich oneself at company expense (e.g., helping colleagues at another company where one wants a job) is very tempting in a "me first" culture.

Encouraging social relationships for business purposes reinforces the importance of those relationships and the pull from outside the organization.

But the promise of something for nothing is so overwhelming that many companies will jump into social media feet first. Within a year, though, the risk-management theme will begin to intercede, possibly after some spectacular abuses ("Gang: Anyone out there know how to plug a leaking oil well?").

And the hot topic will be how to rein in the abuses of social media while keeping the promise of those free solutions.

Striking that balance will be hard to do and will chew up a ton of time crafting rules and regulations. Managers will tire of trying to decide how much time is reasonable for employees to spend on Facebook and policing which social media are appropriate.

Some employees will find it more difficult to impose business problems on friends and acquaintances as the latter grow weary and stop returning messages.

My guess is that we will gradually go back to something not that far from where we are now: A few jobs such as those in recruiting and sales where the focus has always been on outside relationships will use social media extensively. Other employees will occasionally ask their social network for help with work problems but will be wary of abusing outsiders.

Peter Cappelli is the George W. Taylor Professor of Management and director of the Center for Human Resources at The Wharton School.

May 24, 2010

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