The Value of Schmoozing in the Age of Social Media

Research by McKinsey and Company shows that more than half of all firms use some form of social media to enable employees to collaborate and exchange information. According to Wharton operations and information management professor Lynn Wu, the adoption of enterprise social media can improve a firm’s bottom line, but it also has a surprising effect: The more individuals use “social” terms — such as “coffee,” “lunch” or “baseball” — while engaging with colleagues on social networks, the less likely they are to be laid off.

Wu wrote about that finding in a paper titled, “Social Network Effects on Productivity and Job Security: Evidence from the Adoption of a Social Networking Tool.” In an interview with Knowledge@Wharton, Wu discussed her research and its implications for workers and managers who use social networking tools.

An edited transcript of the conversation follows.

About the research:

I study how enterprise social media affects various types of work outcomes. There has been an uptick in [enterprise social media adoption] in recent years. In 2009, a McKinsey Report showed that only 28% of firms used some type of social networking tool. But by 2012, that had gone up to 53%.

We are familiar with consumer facing social media, such as Twitter and Facebook. There are lots of studies, start-ups or industry activities around consumer facing social media. But how enterprise social media affects performance, affects firms, affects employees and affects collaboration hasn’t been examined. And that’s what I’m trying to do — to understand how enterprise social media enables network formation and information acquisition, and how these benefits ultimately affect various outcomes, such as your billable revenue or you probability of being laid off in the next cycle.

“Social communication has bigger power than objective performance [measures] in predicting whether individuals were laid off during the recession.”

How social media affects the bottom line — and more:

Information diversity and social communication are two factors I looked at in this research. I found that both have an impact on work outcomes, but affect them differently. For example, information diversity measures how much information [you have] or how diverse your information is…. We found that [an individual’s] information diversity is strongly correlated with billable revenue. The more information you have, the more you’re able to bill. It makes sense — the more information you have, the better a worker you are and the better able you are to solve your client’s problem.

Interestingly, we found that social communication [itself] does not have a direct impact on billable revenue, but it had a tremendous impact on whether individuals were laid off in the 2009 recession. And, the more social words you include in your communication — such as “coffee,” “lunch,” “dinner,” “football” and “baseball” — the less likely you are to be laid off.  Twitter In fact, that’s the most significant predictor, above and beyond objective performance measures, in predicting whether you’re laid off.

A surprising finding:

[The takeaway about] social communication is surprising because I deliberately [chose to look at] an industry (consulting) where you can measure an employee’s value to the firm very clearly. In the end, how much money you bring into the firm should be the ultimate value…. But in fact, what I found is that social communication has bigger power than objective performance [measures] in predicting whether individuals were laid off during the recession.

I’m not saying that people should necessarily just stop working and [use social media] all the time. But perhaps there’s a value that social communication can provide that we don’t see. Perhaps this person is a really good team player, and people really enjoy working with this person. Maybe he did not bill directly, but he enabled his co-workers or his colleagues to do a better job. Perhaps that’s one reason. Or you can think of the traditional old boys’ club where people who tend to schmooze a lot get [ahead].

On the practical implications:

For business or workers, obviously you want to do a good job. Getting lots of information on time is very important, and your social network plays a really key role in helping you get the information. And social networks also help you to [develop] relationships around you…. It actually pays to get to know your co-workers, to understand what’s going on at a work force. Those kinds of intangible benefits through social communication can be very valuable to workers.

…Whether social communication is a positive or negative in your work force — I think managers have a particularly better insight than anyone else. Maybe social communication is really a [social] lubricant; it makes team collaboration better. Then you should foster that. But if social communication really is about political back-stabbing or an old boys’ club, maybe you should try to [prevent] that from happening.

Although I’m studying consultants, this type of work can generally be applicable to all kinds of information workers, including lawyers, scientists — any kind of information related worker will find this research valuable. And I think that as enterprise social media is becoming more prominent, any firm trying to adopt this type of technology will find this very interesting as well.

Was Yahoo right?

[Regarding] Melissa Mayer’s decision to ask all the workers to show up instead of working remotely — there’s a lot of backlash against that particular new policy, especially among working moms. I’m actually a working mom myself. But I think there’s some merit [in her decision]. If social communication [is] an important predictor in your career outcomes or career trajectories, perhaps it pays to show up and to [enhance] those social connections around you and to understand your colleagues who know what’s going on — because a lot of information, especially intangible information, is passed through water cooler conversations. If you’re working at home all the time without having that access, perhaps you’re actually worse off as a result.

On misperceptions the research may dispel:

In America, we think of meritocracy. We think that meritocracy is ultimately what gets us promoted. We are rewarded for doing our job well. But the fact is that the research has shown that social communication matters. That’s an interesting takeaway in the sense that not only should you do your job well, but you also should worry about intangible communication or other things you have to do at work to make it more likely that you’ll be keeping your job or may be promoted or improve your career outcome.

“Not only should you do your job well, but you also should worry about intangible communication or other things [that] make it more likely that you’ll be keeping your job.”

What sets the research apart?

Enterprise social media in general hasn’t been studied much. We see a lot about, again, Facebook and Twitter — social media that is consumer facing. What is unique about this research is that I have [studied] a real social network of employees. If you think about your communication and electronic communication channels, including your calendar of events that captures some [social] encounters — these are all real communications on a real network at work. [Looking at] the work-related outcomes that these networks produce is something that hasn’t been done before.

What’s next?

I’m actually in the process of initiating another project related to this…. As social media is being adopted at work, we actually see an additional divide among workers. You would think that perhaps social media would enable people to find each other more easily — and [in doing so], erase some of the barriers we have in connecting to other people at work. And perhaps [an isolated employee] in such a world would be better off because he has to use social media to find the people he needs to find.

But in fact, what I found is actually a little disconcerting in the sense that [he would be] worse off as social media becomes more available. If you think about it, in order to make a connection, you need to find the person you want to connect with, but you also need to persuade that person to become connected to you. So, as the search costs become erased because of social media, this conversion cost of making a person become your friend is becoming more prominent. If you had social capital before, you are even better off because you have the power to make that person connect to you. If you don’t have that power, even if you have found a person you [want to connect with], they may not choose to connect with you, and then you’re actually worse off. So, in a sense, we actually do see a rich getting richer and poor getting poorer phenomenon with enterprise social media. And I think that’s, again, [an example of the] unexpected consequences that firms should try to understand before they adopt these types of technologies.

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