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Benefiting from Relationships

Benefiting from Relationships | Human Resource Executive Online 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.

Monday, June 22, 2009
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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.

Barbara's presentation was about a talent-management program she introduced in sales and then moved to headquarters. The idea behind the program is to begin to treat the development of talent with the same rigor as they use in making investment decisions. And the practices around talent are designed to drive business strategy -- all good notions.

What's particularly interesting, though, is how Thrivent itself operates with its customers. It is a Fortune 500 organization, but it is not a company in the usual sense. It is a fraternal-benefit association.

The interesting thing about the model is that people who buy insurance or other financial products from Thrivent are then organized into chapters based on their location, 1,400 across the United States. The chapters are volunteer organizations, led by local elected officials, who get together to do good works and provide services to individuals and the community.

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Real people talking to each other and working together face-to-face, not online. These networks that Thrivent creates knit its members together. It claims 14 million people participating in its programs, who donate something like 20 million volunteer hours for charitable causes.

The goal of a fraternal-benefit society is to serve the members, just as the goal of a publicly held company is to benefit shareholders. In the Thrivent model, the social networks that are created around the chapters serve one set of needs for members and their communities; the business side of the operation serves their financial needs. The two reinforce each other.

Fraternal-benefit societies are an ancient organizational form, dating back to the days of the guilds. In the early days of the United States, they were one of the few avenues available for providing help to those in need.

Many of their functions were taken over by other organizations, most prominently mutual insurance companies, which are owned by their clients. There are 69 mutual benefit organizations operating in the United States now, most of them old organizations with roots in religious or ethnic groups. Many foster the kind of social ties among members that one sees at Thrivent.

Whether organizations like these will make a comeback now isn't obvious, but more traditional corporations may find ways to adopt the idea of creating social networks around customers.

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. www.talentondemand.org.

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