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Q8-3 How Do SMIS Increase Social Capital?

industry-related news, posts interviews with experts, and comments on new product innova-
tions. They can also create a YouTube channel and post videos of product reviews and testing and
factory walk-throughs. Facebook and Twitter accounts are useful to promote positive consumer
stories, announce new products, and follow competitors. Retailers view manufacturers who
engage in such SM efforts as industry leaders.
Operations can use social media to improve communication channels within the organization
and externally with consumers. For example, an enterprise social networking service like Yammer
can be used to provide managers with real-time feedback about how to resolve internal operational
inefficiencies. Externally, a retailer could monitor its corporate Twitter account and respond to
product shortages or spikes in demand for new products around holidays.

Social Media and Human Resources

The last row in Figure 8-5 concerns the use of social media in human resources. As previously
mentioned, social media is used for finding employee prospects, for recruiting candidates, and—in
some organizations—for candidate evaluation.
Organizations use social media sites like LinkedIn to hire the best people more quickly and at a
lower cost. For about $750 a month, recruiters can search through 350 million LinkedIn members
8
to find the perfect candidate. That $750 a month may sound like a lot to you, but to corporate cus-
9
tomers, it’s peanuts. The cost of hiring just one new employee runs around $4,000. If an indepen-
dent recruiting company is involved, that cost can be as high as 10 percent of the new employee’s
salary. LinkedIn also gives employers access to passive candidates who might not be looking for a job
but are a perfect fit for a particular position. Once the employee is hired, the employer can leverage
that new employee’s social network to hire more candidates just like him or her.
Reppler, a social networking image management company, reports that 93 percent of
employers it surveyed used social media to screen candidates. Furthermore, 55 percent of survey
respondents reported that they had reconsidered a candidate because of what he or she had on
social media sites. The good news is that 39 percent of those were positive reconsiderations. The
bad news is that 61 percent were negative reconsiderations based on finding profanity; spelling or
grammar mistakes; and references to sex, drugs, alcohol, or guns. 10
Social media is also used for employee communications, using internal personnel sites such
as MySite and MyProfile in SharePoint or other similar enterprise systems. SharePoint provides a
place for employees to post their expertise in the form of “Ask me about” questions. When employ-
ees are looking for an internal expert, they can search SharePoint for people who have posted the
desired expertise. SharePoint 2013 greatly extends support for social media beyond that in earlier
SharePoint versions.
The risks of social media in human resources concern the possibility of error when using
sites such as Facebook to form conclusions about employees. A second risk is that the SM site
becomes too defensive or is obviously promulgating an unpopular management message.
Study Figure 8-5 to understand the general framework by which organizations can accom-
plish their strategy via a dynamic process supported by SMIS. We will now turn to an economic
perspective on the value and use of SMIS.

Q8-3 How Do SMIS Increase Social Capital?

Business literature defines three types of capital. Karl Marx defined capital as the investment of
resources for future profit. This traditional definition refers to investments into resources such as
factories, machines, manufacturing equipment, and the like. Human capital is the investment in
human knowledge and skills for future profit. By taking this class, you are investing in your own
human capital. You are investing your money and time to obtain knowledge that you hope will
differentiate you from other workers and ultimately give you a wage premium in the workforce.