According to Starbucks’ Howard Schultz, “The currency of leadership is transparency.” From publishing pay information to inviting all employees to every meeting, many organizations strive to become more and more transparent to both employees and the public. But transparency does not have to be as radical as sharing how salaries are calculated. A more sustainable yet progressive demonstration is the endorsement and inclusion of social media into a company’s human capital management strategy.
Just Say No…to Policy
Mandating how employees use their personal social media accounts does not translate into sound human resources management. Just as an employer should not dictate how employees spend their time off, it should not tell someone what he may or may not share online. In fact, the National Labor Relations Board has been steadily cracking down on strict workplace social media policies. Instead, a company should make clear its formal stance and provide guidelines on how employees may best represent the company on the web. In it’s corporate (and public) blog, Adidas encourages open communication and informs employees to “tell the world about your work and share your passion.”
Encourage Best Practices
Lead by example. CEOs, directors, and managers who actively use social media influence their employees to do the same. Their affirmation also promotes transparency. Though many executives have not yet embraced social media, they should at minimum, have a professional online profile that is accurate, up-to-date, and sets the standard for others. For example, LinkedIn provides a modern day business card and resume wrapped into one convenient package and serves as an effective networking tool that can lead to new business opportunities.
Be a Coach
Teach employees how to use social media effectively. Include “Social Media 101” as a topic in new employee training programs. Gloria Burke, Chief Knowledge Officer and Global Practice Portfolio Leader of Unified Social Business at Unisys, says, “Offering such training creates a team of advocates who are equipped to represent their employer online . . . you’re empowering them to be more confident and effective in what they’re sharing.” Additionally, designate official company social media ambassadors to mentor associates on how to establish or enhance their personal online brand.
Whether or not an organization formally endorses social media, tools to facilitate communication among staff members should be implemented to encourage teamwork and increase productivity. Both Salesforce and Microsoft offer enterprise social networks as features within their products. In 2011, Nationwide launched Spot, a social intranet built on Yammer and SharePoint. Today, nearly all of its 36,000 employees are more engaged, better connected, and have access to the expertise they need to get their work done, resulting in an annual savings of $1.5 million.
As a result of the growing influence of social media, employees have become a much more valuable marketing resource. Each time a press release is circulated, a new blog post is published, or a key event is publicized, everyone should be informed, and suggested tweets should be shared. The aforementioned ambassadors may also serve as key brand promoters within the firm and with customers. If employees are too busy to keep up with Twitter, then offer support to post and retweet on their behalf. Applications like Hootsuite make it easy by allowing users to schedule activity for multiple accounts.
An obvious motivation for formalizing an organization’s social media program is to avoid public relations disasters. But, more importantly, it inspires transparency. If a company embraces employee participation in social networks, then it need not worry about what employees discuss on the web. Instead, workers will feel empowered to contribute to the organization’s success via the online community.
- Discussing with two of my aunts my bosom size and how lucky I was to be well endowed. I was TEN.
- Inviting my boyfriend (if you can even call him that) in the 7th grade and his mother over for tea. So embarrassing. I don’t even think I spoke more than 20 words to him the whole time we went steady, let alone stare lovingly into his eyes. Sorry, Bas.
- Treating me like a princess for a day. I think I was 7 or 8 years old. Even though I was the only child living at home by that time, my mom still made a big deal out of it.
- Insisting that I take private Portuguese lessons over Christmas break even though we had just moved to Sao Paulo, Brazil, and my language teacher had decided not to give me a grade as I was so new.
- Not insisting that I continue to take ballet or guitar lessons. Thank you, mom.
- Buying me a paperback copy of Dr. Spock’s Baby and Child Care two months after Christian was born. Perhaps it was her way of telling me I wasn’t doing it right. But, at least, she did not judge.
- Walking through the snow and ice in Pittsburgh during the winter of 1979 to catch the bus out to Northway Elementary School. It was miserable, but we did it every school day for several months. We had just moved back to the States after 5 years in Western Australia. And, my new classmates were weird.
- Walking everywhere. All of the time. Mom loved to walk fast.
- Making and eating pie. Mom used to bake them when I was little, lemon meringue in particular. But, in later years, she was always on the hunt for a competent, made-from-scratch piece of pie.
Writing of these few memories reminds me how my mom taught me to be open minded, to embrace different cultures and experiences, and to love and be loyal to my family. I only hope I can provide my son with half of the memories mom left me.
When business leaders decide to restructure or reorganize, they are transforming the company and, therefore, must carefully consider the design of such a change. Like an architect who takes months or years to thoughtfully design a building, a company must intricately and carefully plan for change. As they do so, they need to keep in mind the most critical component of an organizational redesign are the employees, whose performance can make or break a company.
Whether a start up or legacy corporation, the primary driver behind reorganization is usually profitable growth. Of course, such plans may also result from a desire for improvements in customer service performance or production quotas. But, most importantly, and often with little consideration, it’s how the restructuring will impact the people that matters most, which is why the emphasis on concise planning and thoughtful design is so important.
Many senior managers simply focus on the what, the desired end goal of organizational change: Improved financial performance as a result of restructuring and resizing. They often ignore the human factor in such a modification. Instead, it’s the innovators who bolster the objectives by carefully composing how employees will proactively participate in reorganization and impact the bottom line, and how they will interact for the good of the firm after the change has been implemented.
Throughout my career, I’ve both been directly involved with and witnessed organizational change. In one instance, as a lodging company prepared to go public in the early 1990’s, leadership made the strategic decision to streamline operations and eliminate the Assistant Manager position, thereby empowering non-exempt employees with such tasks as resolving customer disputes and making bank deposits. Imagine an hourly employee deciding to refund a dissatisfied guest! But, it worked. The hourly workforce was invigorated, and property managers now had home office support for what were then unconventional solutions.
On another occasion, I observed a division of a Fortune 500 company as it implemented a mass reorganization. In this instance, employees felt under informed and many worried about job security. As the implementation began, a good number were in limbo for months, “officially displaced” as managers competed for their skills and loyalty. It was evident that minimal consideration had been put into the human aspects of the organizational redesign and delivery.
A revolutionary example where people are at the center of transformational change is the recent decision by Zappos to embrace Holacracy, which, according to Forbes magazine, is “a New Age approach to leadership that involves no job titles, no formal bosses, and lots of overlapping work circles instead.” Certainly, Holacracy is not the Holy Grail, and all eyes will be on Zappos to see how it fares with this new model. However, one advantage Holacracy has is that its organizational premise is people-centered and focused on providing clarity around aligning resources and accomplishing tasks.
Human resources matter most when a company decides to restructure. A well-considered design with employees at the forefront will result in an operational transformation that benefits the organization, its employees, and its customers, thereby improving financial performance.
Scott Wise, founder and CEO of Scotty’s Brewhouse restaurants, professes that his employees are the key to his success. They are more important than customers. He states, “If your employees believe in your dreams and values then ultimately they will make your guests happy, too.”
In this post I share the Free Exchange column from the September 6, 2014, edition of The Economist. It addresses one of my favorite things: Change.
DESTROYING the old to make way for the new is the essence of market economies. Karl Marx thought it one of the nastier qualities of capitalism whereas Joseph Schumpeter, an Austrian economist, cast “creative destruction” in more positive light, as the only route to sustained growth. In the 1990s Clayton Christensen, a professor at Harvard Business School, gave the notion a modern sheen with his theory of “disruptive innovation”. The term is now everywhere. Uber is said to be disrupting the taxi business, Cronuts are disrupting breakfast and Twitter is disrupting communication.
A disruptive innovation, in Mr Christensen’s work, is a very specific thing: a new technology that is inferior in certain respects to existing ones, but has other desirable attributes. He cites eight-inch floppy disks, which could store more data than smaller ones, but were nonetheless supplanted because they were too big and expensive for desktop computers. By the same token, publishers of music and newspapers were wrong-footed by the advent of online distribution, which was initially of lower quality. So was digital photography, but it nonetheless ended up displacing film.
Most studies that examine the size of a firm and its capacity to innovate fail to detect a relationship between the two. Yet that in itself is odd. Established firms ought to enjoy big advantages over would-be disrupters: skilled employees, infrastructure at the ready and the opportunity to share costs among products. At worst, incumbents should be as capable as new entrants of succeeding in nascent markets. Yet research by Rebecca Henderson of Harvard Business School finds that the money old firms in fast-evolving industries devote to research brings much lower returns than the research budgets of their younger rivals.*
Divining the reason for this poor performance is a challenge. Firms with straitened finances might be unable to invest adequately in a new business without cannibalising the old. That, in turn, might lead them either to decide not to invest in the new market, or to invest less than they should in both the old and the new. Yet the adjustment is often most difficult for firms that are wildly profitable in their established lines of business.
Profitable firms might underinvest in a competing technology for fear of hastening the end of their existing, successful business. Rational managers should be able to see that cannibalising their own sales and surviving is preferable to sticking to their knitting and falling prey to competitors. But bosses may not think much about the long term, or may be reluctant to write off sunk costs.
Yet even short-sighted or embarrassed managers should react when the threat from upstart technologies becomes clear. They do not, economists reckon, because of organisational rigidities. Ms Henderson suggests firms can be seen as giant information-processing organisations that evolve a structure and personnel to fit their respective business. Information on sales or production is efficiently filtered to decision-makers, who can then direct new research. When new technologies are no more than tweaks to old ones, this set-up is a competitive advantage. When innovations are more radical, however, the old networks are a hindrance.
In other research with Sarah Kaplan of the Wharton School of Business, Ms Henderson considers why older firms struggle to pursue new technologies. Many of them have systems in place to detect and respond to changing market conditions or new technologies. But they have also built up a system of incentives to ensure employees meet existing goals. Systems designed to encourage consistency and efficiency in the production of established goods or services might be a powerful deterrent to experimentation or creative thinking about new markets, regardless of what the corporate memos say.
One still might expect more adaptability given a serious enough threat, argues Ms Henderson in another paper along with Timothy Bresnahan of Stanford University and Shane Greenstein of Northwestern University. Established firms, they point out, can always set up loosely affiliated “entrepreneurial” divisions with the freedom to build a new business from the ground up. Yet even this will often prove difficult, they argue, thanks to assets like a firm’s reputation that cannot help but be shared between the old business and its internal rival.
IBM, for example, was initially a mainframe computing company that set up an internal unit devoted to developing personal computers. The PC business did well at first, thanks in part to IBM’s longtime reputation for quality. Yet this became a problem when the mainframe buyers became big consumers of PCs—an embryonic business in which kinks were still being ironed out. Customers began to interpret quality problems in the PC business as quality problems within IBM as a whole, undermining the existing mainframe business. When IBM resolved internal tensions by reabsorbing the PC unit, it in effect conceded the PC market to others.
Innovate or buy
Disruption need not be a death sentence, however. IBM remains a big, profitable firm. Work by Matt Marx of MIT, Joshua Gans of the University of Toronto and David Hsu of the Wharton School suggests that survival often comes down to what they call “co-operative commercialisation”. Once it becomes clear that start-ups have an edge in a new technology, incumbents can respond by striking deals with or purchasing their new rivals. The authors focus on the business of speech-recognition, but there are lots of other examples: Facebook, for instance, has gobbled up one competitor after another. To most, “If you can’t beat them, join them” has a more appealing ring than “Innovate or die”.
The future is here, happening every day. And, the robots are coming. Are you ready?