Business Social Networking

In Sociology, a social network is a type of social structure that is made up of individuals that share certain commonalities.  These commonalities connect the individuals by interests such as friendship and kinships, physical and sexual relationships, religion, and education, social and financial status.

In recent years, and with the rise of online sites like MySpace and Facebook, social networking has evolved from occasional occurrences to part of a normal day’s routine.  Social networking is no longer just a trend, it’s the norm and businesses have been keen to pick up on this. 

Businesses are learning that there are as varied uses for social networking as there are businesses.  For instance, some businesses use social networking for marketing, some for public relations, some for finding talent to add to their rosters, and some use them for expanding their business nationally as well as globally.  Still others use social networking to grow a business from scratch.  As evidence of the growth and popularity of social networks, some social networks run as a business model, i.e. MySpace and Facebook which earn revenue from advertising fees.

But as businesses discover the varied positive benefits to using social networks they should also concern themselves with any perceived negatives that may be a byproduct of this new media.  Some of theses byproducts include loss of productivity, consumption of bandwidth, and vulnerability to breaches of data security, and privacy issues which stem from compromised confidentiality.

The following pages will be an examination of both the positives and negatives that are par for the course when it comes to businesses and social networking.  It is my contention that the benefits are far more compelling so long as the negatives are kept in check.

Social Networking for Marketing

Social networking levels the playing field for small to medium sized businesses and it can possibly increase the bottom line for large businesses. That’s because unlike traditional venues for marketing such as hiring Public Relations firms and investing in costly advertising, the costs of social networking is measured in time and not necessarily dollars. A business owner can do all of the social networking herself for free or pass on the responsibility to an employee for a fraction of traditional marketing costs.

For example, ACME Widgets, a small family run business with 20 employees in Walterboro, SC has been manufacturing and selling their Widgets to local and regional customers for the past 40 years. Recently, a large department store set up shop in Walterboro and has a cheap Chinese version of Widgets which has deeply cut into ACME Widgets sales.

The daughter of the owner of ACME Widgets just returned from college and has introduced a new social networking plan that consists of creating a Facebook page, a MySpace page, a Twitter account, an account on Youtube.com, and a new company website with a blog. Her plan allows for six months building social relationships, increase brand recognition, and develop new retail outlets for the company product, including Internet sales.

Social Networking for Public Relations

A 2008 Cone Business in Social Media Study found that 60% of American consumers regularly participate on online social networks and of those 93% want businesses on social media sites. Specifically, Americans believe:

• Companies should use social networks to solve my problems (43%)

• Companies should solicit feedback on their products and services (41%)

• Companies should develop new ways for consumers to interact with their brand (37%)

• Companies should market to consumers (online or on social media sites) (25%)

This data may be a couple years old but it still resonates with today’s consumers. Following the above example it would be wise for ACME Widgets to actively send out product updates on Twitter and their Facebook page, encourage social contacts to comment on their brand, and possibly create a contest that will engage its current contacts and encourage new contacts to join its network. They would also be wise to track any and all comments made on behalf of ACME Widgets so they can actively counter any perceived negatives that may occur.

Social Networking for finding Talent

Social networking has made it much easier for businesses to find and recruit top talent for the positions they are hiring for or even to replace individuals that are not performing at the levels expected of them. They can also use these networks to find individuals and groups that can bring their businesses to the next level or open new avenues of commerce.

Before, companies had to post help wanted ads and request resumes to be sent to their human resource departments, or they hired the services of outside recruiters or headhunters to find and recommend talent for them. But now social networks such as LinkedIn and Monster.com allow its members to add complete resumes to their profiles which are searchable by potential employers, at least in Monster.com’s case. On LinkedIn members use this service like a personal rolodex and network with colleagues with similar professions. These are just two of the hundreds of social networks that are specifically designed to allow its members be found by potential employers. No longer do companies have to “fish” for employees through their local help wanted ads and wait for the talent to come to them. Companies can pick and choose from the crème of the crop.

ACME Widgets can log onto Monster.com and search the resumes of thousands of potential employees to and continue with plans to add a second shift. They can network on LinkedIn and find professional buyers from WalMart, Sears, and Target, to name a few, and pitch them the value of adding ACME Widgets to their stocks. Without the use of these social networks it would have been almost impossible to physically network with these sorts of individuals. But with them, they can develop relationships with potential candidates long before they need them and establish a large pool of talent when positions become available.

Social Networking to Start a Business

Six degrees of separation refers to the popular idea that everyone is just six steps away from everyone else on Earth. Well, with the rise and popularity online social networks these degrees of separation are even smaller. LinkedIn, the professional networking site, operates on this concept and encourages its members to pass messages to people in their “first-degree” connections, who then pass the message on to people in their “first-degree” list, and so on. Eventually, the message will get to the people who can and want to use the information.

Jake Swearingen, writing on bnet.com which is the CBS Interactive Business Network, discusses a real occasion where the use of social networks created helped create a business from scratch:

“When Nick Kellet got in touch with a former co-worker through LinkedIn, he was interested to hear that she was teaching Chinese to the inventors of the board game Cranium to help them work with their factory in China. Kellet had recently left his job to publish a board game of his own, called GiftTRAP. His friend arranged an introduction to the factory owners in Shanghai, and soon Kellet had a manufacturer for his game.”

Swearingen then discusses how Kellet used social networks to find buyers at Wal-Mart and Toys “R” Us and how he used popular blogging sites to solicit reviews of his new game. As a result of Kellet’s networking, the popular Games Magazine declared Kellet’s GiftTRAP the 2008 best party game.

The above example is not the norm; it’s an extraordinary situation where many hours of purposeful social networking really paid off.

Loss of Productivity

According to a Pew Internet survey of teens and adults nearly three quarters, 73% of teens and 72% of adults, use social networks regularly.  Any of those users can tell you just how easy it is to get distracted, like how a quick log in to a Facebook account to check or respond to messages can easily turn into a half-hour or more.  And why not, social networks are designed to engage their users. 

Matt Richtel, reporter for the New York Times, wrote that “The fractured attention comes at a cost. In the United States, more than $650 billion a year in productivity is lost because of unnecessary interruptions, predominately mundane matters, …… that a big chunk of that cost comes from the time it takes people to recover from an interruption and get back to work.”

Online technology provides a seemingly endless amount of workplace distractions but a recent Bloomberg report suggests that social networking can, “enable companies to respond efficiently to changing demands. It can provide the platform for scaling and amplifying connections and tapping into the knowledge flows within a company. The potential result: better meeting customer needs, increasing the knowledge of participants and sustained performance improvement.”

It’s now widely believed that social networking is good for productivity and shouldn’t be feared by company executives.  As echoed by John Chambers, the Chief Executive Officer of Cisco Systems Inc., “the global economy is on the verge of a productivity increase, driven by collaboration and social networking.”  According to Forbes, Cisco Systems Inc is ranked 75^th on their Global 2000 list for 2010.

Consumption of Bandwidth

Bandwidth is a measure of internet traffic and companies are allotted a finite amount by their service providers.  As much as 15% of available corporate bandwidth is used visiting websites that are probably not business related.  Facebook and Youtube.com are the biggest culprits. 

Bandwidth is important especially for companies that have a large Internet presence and deal with clients online.  Consumption of bandwidth slows down the information that can be transferred and this can reflect badly on the company. 

A solution to this problem is for companies to institute policies that regulate to which sites employees can visit and for how long and to install software that can track and even block unnecessary uses of the Internet.

Breaches of Data Security and Privacy

The main purpose of social networking sites is for its members to socialize.  In the course of socializing it is common for members to divulge information about themselves that would otherwise be left personal.  Information such as full birth dates, children’s names, high school and college information, and past and present residencies is shared among members who mostly believe this information is common knowledge. 

The fact is, this is just the type of information that most companies with an online presence require to retrieve lost passwords.  Those that are savvy with identity theft and other cybercrimes know this and implement the use of specialized software called “bots” that mine social networks for this information and create dossiers that can later be exploited.

Businesses should be concerned with data loss and exposure of confidential information. A recent survey, conducted by a California-based email security firm, of 261 decision makers from organizations with more than a thousand employees found that “20 percent of companies polled had investigated the exposure of confidential, sensitive or private information via a post to a social networking site. In many instances, the events have been severe enough to lead to job loss or disciplinary action, with seven percent of companies reporting termination of an employee for social networking policy violations. Another 20 percent disciplined an employee for not following social networking policy.”

Employees do not normally speak on behalf of their companies.  They often do speak about their companies on social networks and sometimes they let confidential information slip, such as an up coming product launch or even a pending recall. They may even let financial information slip if they are privy to that sort of data.  And this is further cause for companies to institute social media policies that raise awareness to privacy and security issues and to use data security software that tracks and monitors social media usage.

Social networking is a tool that businesses can use to effectively create, strengthen, or market their brand; find the best talent from a much larger pool of candidates; conduct public relations; and build a business from complete scratch.  Like all tools, they need to be properly maintained and users properly trained.

Business social networking is fairly new but will ultimately become commonplace and integral to the future growth and success of those companies that use this media.  The benefits of businesses using social media far outweigh the negative byproducts especially if preventive security policies are implemented and adhered to.