A recent Gallup study found that firms with engaged workforces have 2.6 times the earnings per share growth rate compared to their industry counterparts. And an Aberdeen Group study found that companies using Web 2.0 achieved an 18% boost in employee engagement.
The Gallup study also identified the danger of failing to engage employees: $300 Billion in wasted productivity.
The benefits side of the ROI of internal social media networks depends on how effectively the social media tools help drive:
· Enhanced employee engagement
· Streamlined operations
· Better, faster innovation
Enhanced employee engagement has, in numerous studies, been shown to increase customer satisfaction and loyalty and to drive higher sales. Greater employee engagement is also predictive of lower turnover, yielding significant savings in recruiting and on-boarding costs. Employee engagement is no longer a nice-to-have; it makes hard, bottom line business sense. (for one interesting study on these relationships, see: http://www.towersperrin.com/tp/getwebcachedoc?country=usa&webc=HRS/GBR/2008/200805/ENGAGEMENT_IMPROVES_BOTTOM_LINE.pdf)
As organizations become more comfortable with internal social media, the personal and professional lines often begin to blur, creating even greater employee engagement. Sabre Holdings Corp, which owns Travelocity, was a pioneer in internal social media, beginning Sabre Town in 2007. Since that time, a number of specialized groups have formed over the social media networks, including Mom2Mom. Participants in these groups report creating strong bonds and a sense of belonging and being understood. In a recent study, Professor Jennifer Aaker of the Stanford Graduate School of Business, Assistant Professor Cassie Mogilner of Wharton, and doctoral student Melanie Rudd noted that “although spending time with bosses and coworkers tends to be associated with some of the lowest degrees of happiness, two of the biggest predictors of people's general happiness are whether they have a 'best friend' at work and whether they like their boss. Therefore, people should try to reframe relationships and workplace goals…. Building a workforce of highly qualified, hard-working, and loyal employees is an essential aspect of staying competitive in today's global markets.” ("If Money Doesn't Make You Happy, Consider Time," Jennifer Aaker, Melanie Rudd, Cassie Mogilner, Journal of Consumer Psychology, 2011)
Streamlined operations help to cut costs, the second direct benefit of the use of internal social media. The range of opportunities for cost cutting – while improving employee engagement! – is tremendous. The use of discussion boards and central project sites, for example, enables executives to spot quickly time being spent on rogue efforts that don’t further corporate objectives. Employees benefit by being able to place their projects within the big picture and make appropriate decisions.
Cisco attributes millions in savings to the use of wikis. Geographically dispersed staff can efficiently work on single documents, share ideas and comments, and decrease development time.
Search capabilities, blogs and LinkedIn-like networks enable employees to find data quickly, identify and consult experts, and seek the advice of colleagues beyond those at the coffee pot. Both the speed and quality of work benefit.
Better, faster innovation provides a long-term benefit. Internal social media helps organizations expand innovation beyond the R&D walls, from the engineers to employees dealing with customers. (How many disruptive innovations do you know that have sprung from established R&D departments? How many corporations incent their R&D staff to spend time on them?)
Breaking down the functional silos speeds up innovation and time-to-market. When IT, engineering, marketing, customer service, business development…can share ideas, project status, and roadblocks together across geographies in real time, problems are resolved more quickly.
52% of organizations using Web 2.0 ranked as best-in-class performers according to a study by Aberdeen Group. Using social media internally simply makes smart business sense.
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