Social networking sites increase employee productivity

An interesting piece by David Quach on the ABC News site (Hat Tip @aussienick) about how more people should use Facebook to improve worker productivity. Here is the summary:

Well, while any adverse effect of Facebook on productivity is detrimental to the economy, economic theory also suggests that the economy could be improved if there were more users. In other words, as long as Facebook isn’t used at work too much, everyone would be better off if more people used it.

The basic idea is that each user of Facebook not only gains individual benefits from using the social networking site, but also provides (network) benefits to other people. And since people generally do not take into account the benefits to other people when deciding whether or not to join Facebook, there are fewer users than is ideal for society.

Allow me to explain.

In the language of economics, Facebook is said to exhibit network effects; it is a technology that becomes more valuable as more people use it (and the network gets larger), like mobile telephones or fax machines, for example.

The network effect is real and does increase productivity. But what really got me interested was the comments being left by readers which ranged from full support to a complete lack of support. The comments could be classified into four major themes:

  • What about your privacy
  • Facebook is the best thing
  • Facebook is a complete waste of time
  • People with real social lives don’t use Facebook

Here are a few.


27 Nov 2008 2:22:02pm

Concur. I take singular delight in not being registered on any of these social networking sites. People with REAL social lives don’t have the time to waste on them.


28 Nov 2008 12:13:05am

Nobody forces you to post every detail of your life on facebook. If you consider it a public place and only post things you’d be happy posting in public then you have nothing to worry about.

Merlin 23:

27 Nov 2008 2:11:48pm

The statement “Concerns about Facebook’s negative effect on the economy – especially an economy on the verge of recession – were raised just recently when 13 Virgin Atlantic staff were sacked for criticising the airline online” is proposterous.

‘Facebook’ is an application and didn’t do anything – the people using it did. The same result would have occurred if they done the same thing using the any other form of media and their boss heard about it.


27 Nov 2008 3:25:12pm

We are all selfish for not joining face book! I can’t believe this guy wrote such an article! It is amazing the space that he took up saying so little.
I agree with the statements in the comments regarding fraud, identity theft, and invasion of privacy! It does happen and as much as it may be stated that its safe and ok, personally I won’t take the risk. I have plenty of ways to communicate with friends without reducing myself to that level. So go ahead – call me selfish!

From a business point of view Merlin 23 is correct Facebook/MySpace/etc is not the problem, management is. What would you do if someone was always late to work, spent too long at lunch or on a smoking break (do they still have them)? Same thing should be done if people are wasting time on Facebook.

Privacy is an issue but it needs to be managed. Jeremy is right, no one is forcing you to put all your details on the site, remember The Mother Test?

Cricket seems confused. While claiming to be a real person with a social life they seem to have the time to hang out commenting online ;-). Which brings me to my final point, usage of social media is growing in Australia and growing quickly.

In the 2007 Q1 Forrester Technographics Survey of Australian Adults online found 11% were Creators of content, 23% Critics on content, 5% Collectors of content, 14% Joiners to social networks, 38% Spectators reading what other said and 56% Inactives ignoring social media. 12 months on these figures had changed dramatically 2008 Q1 Forrester Technographics Survey showed:

  • 26% Creators
  • 35% Critics
  • 16% Collectors
  • 45% Joiners
  • 63% Spectators
  • 24% Inactives 

With this sort of growth David Quach will get his wish, but businesses out there who do not know how to manage employees within this new world will have a lot of trouble.

UPDATE: Minutes after hitting post I found a story from Financial Times blogs on time clock watching bosses discussing the “Japanese concept of ba: a hard-to-translate notion that, in this context, appears to describe an elevated state of knowledge-sharing between colleagues.”

Violence in the workplace

Violence in general is terrible and should never be in the workplace. But when it happens HR is usually involved. Years ago I remember talking to a senior HR executive who had an employee come into his office and sit down. The employee calmly announced that he had just murdered his family. I have known HR managers who have flown into war torn countries to help evacuate employees, who have had to assist the children of an executive from a large multinational who had a heart attack while holidaying in Australia, counselled employees after the Melbourne CBD murders last year. 

Over the last week I have seen several articles that once again raise the issue of violence in the workplace.

An HR managers job can be tough.

Capitalism & Poverty

Today is blog action day, and the topic is poverty. I was wondering what to write about and decided on the topic below.

Over the last couple of weeks I have been reading The Wal-Mart Effect, and highly recommend it to anyone interested in the globalisation of business. Overall the book is an eye opener to the way one of the largest corporations in the history of mankind operates.

Throughout the book Charles Fishman highlights several examples of where through Wal-Mart’s drive to have the lowest prices all the time is, in my mind, actually causing harm to not just America but countries all over the globe.

An example, health insurance in the state of Georgia as of writing over 10,000 children of Wal-mart employees we enrolled in the state insurance program for poor children who had parents who worked for Wal-Mart. the next highest employer in the state was 734. Now ignoring the size differences Wal-Mart had 1 child for every 4 employees while the next employer was 1 in 22.

There are stories after stories in the book of the impact that this massive company is having on people’s lives not just in America but all over the globe. While the drive to have the lowest prices all the time is smart for business at one level. When you get to the size of Wal-Mart it can have a devastating effect on organisations and people. Dare I say it possibly driving some into poverty, and not just in western countries they could in fact be keeping some people in poverty by pressuring manufactures to keep their prices down.

Enterprise 2.0, employees and profits

Last night at PubCamp I led a small unconference session around Enterprise 2.0, employees and profits, overall it was Ok but not as good as I would have liked. A part of the issue was a couple of vocal participants in the front row who kept heckling the group the robust debate going, Duncan Riley and Tom Reynolds you know who you are. Actually the main issue was as I suspected wrong audience but it did force me to prepare some content so the I am very pleased with that as an outcome.

I had created some slides just in case but did not use them, maybe I should of to focus the group further rather than just talk. Next time. The plan was to introduce my thoughts with the slides and then open the floor up for discussion.

The slides are on SlideShare but like most of my presentations without the commentary they are fairly meaningless.

Here are some of my notes for the slides.


My basic premise is that businesses exist to create shareholder value, this is generally through revenue and profits. Therefore increasing revenue and profits must be the primary driver for all activities, even corporate social responsibility activities fundamentally exist to enhance shareholder value.

Slides 2 & 3

The first couple of slides are to highlight some of the documented reasons and benefits for organisations to undertake enterprise 2.0 activities. The last 3 benefits increased productivity, reduced turnover and improved communication are the focus areas for the remaining slides.

Slide 4

While it is generally accepted that happy and loyal employees are good for business, it is only recently that hard dollar evidence has been produced to support the idea.

Slide 5

In Australia we have a major employee engagement issue. A Gallup poll in 2005 of 1,500 employees found that 20% are actively disengaged (disruptive, unproductive or disloyal), with another 62% not committed to their role or employer. Gallup estimated this was costing the Australian economy A$30 billion annually. This research is backed up by recent studies in the US that found only 27% of workers were actively engaged.

Slide 6

Research from Alex Edmans, a business professor from Whartons School, has shown that happy employees do in fact drive company performance. He looked at Fortune magazine’s list of “100 Best Companies to Work for in America”and found that an annually rebalanced portfolio returned 14% between 1998 – 2005 compared to the market in general of only 6%.

Slide 7

A 2007/2008 Watson & Wyatt research report looked at employee engagement on a global basis and showed a strong linkage between engagement and financial performance. In summary organisations in the top 25% of engagement had a 20% total return to shareholders, a 22% market premium and $276K productivity per employee when compared to the bottom 25%.

Slide 8

This same survey found communication, compensation & benefits, customer focus and strategic leadership as the 4 key drivers for engaged employees. Communication & customer focus are areas that Enterprise 2.0 can help, well also strategic leadership but mainly from a communication point of view.

Slide 9

A further 2007/2008 Watson & Wyatt research report on communication best practices found that organisations with a “most effective” communication programs provided a 91% total return to shareholders from 2002-2006 compared to 62% for least effective. Improved communication effectiveness is associated with a 15.7% increase in market value. While finally organisations with “most effective” communication had an employee engagement level 4 times that of “least effective”.

Slide 10

The same communication survey found that there are 4 key emerging trends from organisations who communicate effectively:

  1. Give managers the information, tools & training to navigate change
  2. Give employees the opportunity to provide input into decisions that affect them
  3. Promoting a culture that supports information sharing
  4. Sharing the voice of the customer

Items 2 and 3 are the exact benefits organisation are seeing from Enterprise 2.0 deployments! Items 1 and 4 are also supported by Enterprise 2.0 but from my point of view they are secondary.

Slide 11

Another hard dollar area for Enterprise 2.0 is around retention of employees. If your employees are more engaged they are more likely to remain as employees, hence reducing the need to replace them. The cost to replace an employee ranges from 15% – 150% of their salary depending on the level and industry. For every employee who you retain you are contributing to the bottom line via cost avoidance.

Slide 12

A recent case study from Gartner on the use of Social Software by Dow (the chemical company) supported the previous slides. Over the next 5 years 40% of Dow’s 46,000 employees will be retiring, requiring a massive recruitment cost to replace. Dow have used social software to connect retired, long term leave of absence and current employee in an alumni style site. In the first 3 months of usage they had 25,000 referrals, 24 full time jobs and 40 contract roles filled. Based on the average cost per hire this tool could be saving them anywhere from US$50k-$200K per month already!

Over time I plan to enhance this presentation and my thoughts as they are directly related to where I want to take my new business.

Employee engagement

I have been meaning to write this post for a while, about 4 months, and today Penelope Trunk provided the platform.

Penelope wrote about how to be a good manager, a great post but in my mind it can be summed up in one sentence.

So the first rule, and probably the only rule of management, is to be respectful.

She goes on to discuss Maslow’s Hierarchy of Needs and how they relate to management, well worth the read.

This bring me to the original post back in January about employee engagement, where I pointed to a video from McDaniel Partners. The video uses a hypothetical village of 100 people to show how many employees in a typical organisation are engaged. The numbers break down like this.

Of the 100 people in your village:-

  • 54 men and 46 women
  • 27 are engaged, committed and loyal to your organisation
  • 59 are just not engaged
  • 14 show up and do not care about what they are doing
  • 77 feel burned out
  • 33 are chronically over worked
  • 67 are overwhelmed by the daily bombardment of communications and information

The story gets worse!

  • On a typical day employees are interrupted 7 times an hour, of which 80% of the interruptions are trivial
  • 50% of your senior managers are too tired to talk to their spouses after a day in the office
  • 7 of your 100 employees are sinking into depression
  • 96 want flexible working time and more control over their time
  • 73 would curtail their careers in favor of more family time!
  • 15 are actively pursuing new jobs
  • 50 are passive candidates and would jump if the right opportunity was offered to them
  • Only 40 are interested in a career in senior management

The closing message in the video:

Treat people as people and you gain their loyalty.

New model for management

Couple of related posts appeared in my feed reader today.

First was from Mark Pesce who wrote about the fact that education provided in schools currently does not reflect modern communication cultures. When a kid goes to school they have to disconnect from the “hyperconnected” world.

What this means, in a practical sense, is that students have lost respect for the classroom, because it has no relevance to their lives. Yes, they will be polite – as they’re polite to their grandparents – but that is no substitute for a real working relationship. School will be endured, because parents and state mandate it. But it’s a waiting game.

This drawing parallels to how many a Gen Y approaches the modern corporation. They turn up because for many it is the only way to make money but it holds no relevance to their lives. They are generally not engaged.

The challenge for managers both today and in the future is to make the corporation relevant.

Or is it?

This brings me to the second post, from Collab@Work referencing a HBR article, which develops the notion that leaders in MMORPG games, like WOW, are the future leaders of business.

… players who lead teams in the game are learning skills that they will be able to use in business situations, when they will become leaders in the organization

The authors focus on three main components of this leadership: speed, risk-taking and temporary aspect of leadership position.

So, does it matter that the modern corporation has no relevance to the future generations because they will change the corporation to suit?

My take. It does matter, today, and only to corporations not Gen Y. It is the old story you want to attract Gen Y you need to engage them, companies that don’t will go out of business, while those that do will prosper.

The post from Collab@Work goes on to discuss leadership as temporal. Just cause you were the leader of project X does not mean you are the leader of project Y. A very interesting idea which I will explore later.

Innovating to Reboot

Over last several months I have gone through several changes in my life which has resulted in me reviewing many things.

I have been struggling with how to conduct this process, but I figured it is a bit like a reboot but I can’t really turn myself off and on again like a computer now can I. Then I remembered the 10 areas for innovation from Doblin, while designed for product and organisational innovation I figured it might also work for me to complete my “reboot” process, which in some part is a review of my personal brand.

The 10 areas for innovation are split into 4 main categories; Finance, Process, Offerings & Delivery, below I have outlines some of my initial thoughts on how they can be applied to a personal reboot.


The finance has two components your business model and you networks/alliances.

The first part business model, covers how you make money. Can you change this? Supplement it? Begin consulting or take a full time role in a company. If you are a consultant, could you create a “product” out of your knowledge and sell that on top of your billable hours, this sort of decision allows you to make money while not actually out working. Remember that this decision will either influence or be influenced by the rest of the innovation areas. For example it is not very good if you want to be a consultant but are not involved in a professional network.

The second covers your social/professional networks and alliances and what new arranges you could make for mutual benefits. Are there new or different groups you could get involved with? Could you take a more active role in an existing network? Involvement in networks and alliances increases your visibility and this will in time translate to additional work and income.


The process section covers both enabling and core processes. Enabling process look at how you support core processes, for example time management, exercise, and social activities. Review these processes; can you modify or update to help support your new direction, will an update open the doors to a new direction? Remember if your enabling processes are not supportive of your overall requirements then you quite possibly will fail or not operate at 100% efficiency.

Following your enabling processes you now need to review your core processes. Your core processes are the things that make you and your offering function, for innovation here look at ways you can create new value, do you need to update your education, or if you are a consultant/product provider how about some aggressive volume/pricing/delivery contracts?


The offerings area starts to get a little more complex, this area covers your performance, your systems or services. How can you innovate these fundamental items so as to modify what you deliver? Examples are can you adjust your product or service offerings and maybe package as a series of deals, example IT consultants could provide proactive system health check services instead of after the even reactive services. Think outside the box here, the more ideas the better.


Having relooked at your revenue streams, processes and offerings, it is now time to look at how you deliver these offerings to the marketplace, in marketing speak this is your “Go To Market” strategy. Essentially you are looking at how you take your offerings to market. Examples if you physically visit clients can you do more virtual or remote work to allow more freedom? How to you communicate your offerings? Have you updated your resume, your web sites, brochures, blog etc. Do you need to update your wardrobe to reflect your new offerings? Do you need to market yourself as a brand? If you are now a brand make sure you pass the 15 words or less contest challenge to describe yourself & your brand. In fact if you follow Tom Peter’s advice on creating Brand You, you will most likely have rebooted yourself.

While I have looked at using the 10 areas for personal innovation, managers and leaders could do the same to reboot their teams or departments.

5 Ways to Engage Employees

Over the last few days there has been a really stir over Jason Calacanis‘s “Fire non Workaholics” statement. While he has updated the words in his post (completely I disagree with his first version) I feel the bottom line message is still there. Jason wants his employees to be engaged and committed with him on the journey of his company, what CEO wouldn’t? But a large majority of employees will not be fully engaged or committed to a company without a reason. As a CEO, manager or leader you need to provide the right environment.

So here are five ways to engage your employees:-

  1. Show you care about them as a person, take 5 minutes each day to get to know one of your employees. You need to understand them, their struggles, frustrations and desires both professionally and personally.
  2. Invite them to join you and your organisation in doing something meaningful.
  3. Once you have invited them to something meaningful make sure you provide individuals goals. But not just any goals, sexy goals! They need be a driving force, give your employees chills down their spine when they talk or think about them. Your employees need to be able to deeply connect to their goals.
  4. Ensure timely recognition of performance, not just at an annual performance review. Send a quick handwritten note to someone who has delivered, not just above & beyond, or who has had a hard day.
  5. Provide your employees with extra responsibilities, allow them to grow and explore new areas of personal and professional growth. This is easy if you have completed step 1.

Once you have engaged employees then they will be fired up about your organisation and its goals. They might even act as workaholics for a period of time. But ensure this is balanced so they do not burn out, otherwise they will then disengage. By the way if you have completed step 1 above you won’t let them burn out because you will see and treat them as people, not machines.

Finally to quote Sir Richard Branson:-

“Loyal employees in a company create loyal customers, who in turn create happy shareholders. The process sounds easy but it’s not, and it has defeated some of the bigger organisations of the twentieth century.”

Fire non workaholics?

Oh man what a storm.

Jason Calacanis has triggered quite a storm in the tech community with his post “How to save money running a startup (17 really good tips)“. Overall the tips are very very good, but the one that caused a lot of the stir was:

Fire people who are not workaholics. don’t love their work… come on folks, this is startup life, it’s not a game. don’t work at a startup if you’re not into it–go work at the post office or stabucks if you’re not into it you want balance in your life. For realz.

As you can see Jason edited the statement after the storm, but the damage was done. Duncan Riley seemed to be the first big name to take offense with his post on TechCrunch. Well after that is seems to have been on for “young and old“:

So now where? My thoughts.

  1. Burn rates matter to all companies, startups need to watch them a little more closely than established ones. But is wouldn’t hurt established firms to be a little more careful with their money either.
  2. Good people make or break a company.
  3. Engaged employees make or break a company.
  4. Having to replace employees costs you lots of money.
  5. Not everyone wants to or should have to work in a startup. The reserve is also true.

Jason is right that employees who love their work tend to produce more than ones who turn up just for a pay check or are disengaged. But Duncan is right you can’t just fire someone who is not in love with the job to the point of being a workaholic. Don’t hire them to start with! Hiring the wrong people will kill any company and in a startup wrong people means that the owner/founder/CEO has screwed up.

If you do have someone who was all fired up and now isn’t, it is again most likely the owner/founder/CEO’s fault. Why? Because something has changed and they did not see it. Has the employees personal situation changed, or are they no longer in love with your idea, what has happened? Find out, try to fix it otherwise it will be far more expensive to fire them and rehire.

In summary the trick is when hiring make sure you hire correctly up front, that way you won’t need to fire anyone.

UPDATE: Another Aussie perspective from stilgherrian. Also this is a very complex and difficult issue to cover I have lots of other thoughts just not the time to write them all down.

Disengaged employees

We all know disengaged employees are bad. Here is a story of a guy who had his mate shoot him in the shoulder (Hat Tip Evil HR Lady) so he did not have to go to work!! True story, I kid you not.

Sheriff’s detectives in Franklin County, Washington, say a man had his friend shoot him in the shoulder so he wouldn’t have to go to work.

If you employees are that disengaged you might want to celebrate 7th March Employee Appreciation Day with these 5 tips on employee engagement.