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Benefiting from Relationships - Social Networks

Friday, June 26, 2009
Benefiting from Relationships

Most companies have gravitated toward the positive view of social networking -- recognizing that they can benefit from the relationships their employees have outside the organization. And, ironically, an effective model for such networking may be an ancient business form.

By Peter Cappelli


Our Center for Human Resources was having a meeting of sponsoring corporations this week, and the topic of social networks at the workplace came up for discussion.

The Internet raised an interesting challenge for the workplace as it represented both an important source of information that could be used at work and a considerable opportunity to goof off. Unfortunately, some of the use of the Internet on company time went beyond goofing off in e-mail conversations and Web-site visits. Embarrassed employers had to set up policies to restrict access.

Online social networks raise a similar challenge.

MySpace, Facebook, LinkedIn, and similar sites have big pluses and minuses. While it is certainly possible for employees to waste time on them and post potentially embarrassing information, there are different and perhaps bigger upsides than we saw simply with Internet use. This is especially so for the human resource function because these sites have become important sources of information for recruiting candidates and for shaping company image.

There is also something radical about these social networks for companies, and that is a recognition that they can benefit from the relationships their employees have outside the organization.

In the past, employers wanted their employees focused on their own workplace. In Rosabeth Kanter's famous book, Men and Women of the Corporation, she described how employees in the 1970s were actively discouraged from spending time in professional associations and from developing professional relationships with peers elsewhere.

Companies are looking at those relationships differently now, as a source for finding recruits, customers and for building brand. Most companies seem to be allowing their employees to access social-network Web sites at work, apparently on the theory that the potential benefits of using them offset the downsides.

A step further down the social-network path is where companies create their own social communities. Lots of companies try to create clubs or social groups around their products. Owners of sports cars, for example, assemble around groups like the Corvette club, whose purpose is to celebrate the car.

The idea of companies creating social networks around their products struck me during a recent presentation by Barbara Foote, vice president for enterprise effectiveness at Thrivent Financial for Lutherans.


Tapping social networks is the hottest idea in business as it provides a new way to get access to customers, credibility for products and contacts for hiring. It's a bit ironic that the most effective model for executing this hot idea is through an old organizational form.

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


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