HR in the Social Era The Power of Community

Consult, Create, Transform

Consult, Create, Transform

By any measure, on a global, regional and local basis, the world of business is in a

state of flux. We are rapidly moving away from the Industrial Age with its rigid

structures, stable business models, formal processes and functionally siloed

organisations into a fluid and flexible environment that fundamentally changes the

way value is created, the meaning of work, and the structures for our institutions.1

This has huge implications not only for how HR fulfils its purpose but indeed whether

HR will survive as a function without undergoing an appropriate transformation to

meet these new realities.

The Social Era

Nilofer Merchant first coined the term “Social Era” in her book “11 Rules to Create Value in the

Social Era” as a way to capture the key shifts in how the world is changing. In her own words, the

term "Social Media" was limited by its connection with marketing and communications. "Enterprise

2.0" was too technological. And "Social Business" simply added an overlay to the existing framework

rather than challenging the premise of an organization. Instead "Social Era" captures two distinct

power shifts:

1. Organizational. Connected individuals can now do what once

only large centralized organizations could. This fundamentally

alters the structural core and role of "the firm", and of working

people. As more and more freelancers and solopreneurs enter

the market, work is increasingly freed from jobs. The shift is

from "value chain" to "value flows."

2. Individual. Anyone can be a game changer by using the power

of their ideas. They need not first be vetted or chosen to be

powerful. These previously unheard voices are essential for

solving new problems, as well as for finding new solutions to

old problems. Without celebrating what anyone — quite

possibly everyone — can offer, people are simply cogs in a

machine: dispensable and undervalued. By celebrating each

person and the value only they can create, economic power is

unlocked. And it's not that everyone will, but that anyone can. 2

Welcome to the Social Revolution, where everything is changing, where there are seismic shifts in

how and more importantly why people work, and where businesses with a clear social purpose and a

community aligned to that purpose will be, and are, outperforming those without one.

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Why You Do That Voodoo That You Do So Well

It all begins with Purpose. That simple reason for being that can inspire employees, excite

customers and create vibrant communities. With it, everyone understands what they need to do

and why they need to do it. Without it, we are unlikely to experience consistently innovative

thinking, high employee engagement, true market differentiation or great customer loyalty.

Deloitte’s Chairman of the Board, Punit Renjen, recently wrote that

“corporate culture is increasingly becoming a critical anchor that

underscores the importance of maintaining core beliefs and

values…(yet)…the majority of employees and executives believe businesses

are not doing enough to create a sense of purpose and deliver meaningful

impact.”3

Think about it; which is the more inspiring? A multi-national company that

says we are “a diversified technology company serving customers and

communities with innovative products and services. Each of our six

businesses has earned leading global market positions.4” Or one, equally

large, that says our “people worldwide are dedicated to turning

imaginative ideas into leading products and services that help solve some

of the world's toughest problems5”. Or how about the one you will

probably be most familiar with, to “organize the world's information and

make it universally accessible and useful6”?

The most successful businesses will have a Corporate Social Purpose that ties into something bigger

than them, that is focused on creating something for the good of the entire community that

surrounds it, not just increasing the EPS for shareholders. How much better is that than having a

mission statement that gets stuck above the photocopier and forgotten until the Annual Report is

published or when it gets dragged out again for the Performance Management cycle?

It’s Not What You Know, or Even Who You Know; It’s Who They Know.

If industrialisation, as Karl Marx put it, “rescued a considerable part of the population from the

idiocy of rural life.”, then the Social Era has connected the intelligence of the individual with the

power of community. Connected individuals can now do what once only large centralized

organisations could do, which changes organisational structures and individual power. 7 The key to

business success in the Social Era will therefore be the ability to proactively create deep social capital

through the development of, and interaction with, a strong and diverse Community of Interest that

leverages both the strong and weak ties of its members’ networks for the success of the Community

as a whole.

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Whilst we could equally call them Communities of Purpose, I define a Community of Interest

network as the product of shared interests that may converge within a shared geographical region or

be independent of spatial boundaries and is where individuals are linked through a social network by

one or more activities or factors covering a range of business, environmental and cultural elements;

and where all members and actions are aligned with a common purpose and shared identity.

When we talk about community, we shouldn’t misinterpret it as a nostalgic metaphor for some rural

idyll where everybody knows your name. It should instead be welcomed as a concept that embraces

diversity, creativity, engagement, conflict and dynamism. And for that to be realised, information

must flow through the networks that connect individuals both within those communities as well as

to other communities.

A network is “a set of interconnected people or things that can

communicate with each other, share information and achieve results

that would not be possible if the network did not exist. Every part

(or member) of the network is connected to all the other parts”8. As

Koch and Lockwood suggested, it helps to visualise the network by

thinking of something like the map of the London Underground; with

each station or “node” being the individual member and the lines in

between each being the “links”. Some stations or members may

have very few links whilst others have many. These links may be

created by communications technology, such as Facebook, LinkedIn

or Weibo, or by true social connections such as face to face meetings.

The links within a network were first categorised as either “Strong Ties” (close friends and family) or

“Weak Ties” (acquaintances) by Mark Granovetter, in his seminal 1973 work; The Strength of Weak

Ties. Whilst strong ties are useful at a local network level, the strength of weak ties is that they

provide people with access to information and resources beyond those available in their own social

circle.9 However weak ties for all their value are most important to the success of a community

when they connect at least two networks; each with strong ties along which ideas, innovations,

information and artefacts can flow10.

The links between people in a network vary in strength and what matters is not the number but the

nature of the connections. For example, a community network with many strong ties and few or no

weak ties will have limited access to new ideas, reducing the chance for innovation in the business,

creating a stronger tendency for potentially damaging “groupthink” to become prevalent and

limiting mobility for workers to change roles. For the damage that “groupthink” can cause, we need

look no further than the Global Financial Crisis.

According to David Putnam, a strong community contains high levels of coordination and

cooperation for reciprocal and mutual benefit11. So by adopting a formal focus on Community and

the networks and ties between them, businesses and HR in the Social Era can take advantage of both

the ‘hidden wealth’, namely the non-financial resources comprised of local skills, trust and know-

how, useful contacts and care-based exchanges12 as well as leveraging the positive effects of ‘social

contagion’13, the spreading of behaviours and values, to create success.

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Of Coins and Cops and Cones

A Community of Interest network (COIN) is the broadest form of community and, at a macro level,

encompasses the whole eco-system that facilitates the act of business in the Social Era. Because of

this; the really interesting, as well as highly complex, aspect of looking at businesses as COINs is that

they are really only “bubbles“ within which there are a number of different types of communities

that interact and engage with each other, shrinking, growing and changing all the time, to ultimately

create the overall Community of Interest. These communities comprise a wide ranging, far reaching

and, in many cases, global population covering current employees, employee alumni, customers,

customer alumni, suppliers and their value chains, vendors and their sales chains as well as at all

levels of interaction, each individual’s personal network of family and friends.

There are three key networks that we need to consider from the viewpoint of a business COIN in the

Social Era. These are the Community of Practice, Community of Action and Individual Personal

Network.

Etienne Wenger defined Communities of Practice (COP) as groups of people who share a concern or

a passion for something they do and learn how to do it better as they interact regularly.14 They each

share three core characteristics; Domain, Community and Practice. A COP has an identity defined by

a shared domain of interest where members engage in joint activities, help each other and share

information and, most important of all, where members of the community are practitioners,

developing a shared repertoire of resources; experiences, stories, tools and ways to address

recurring problems. Project Management and Change Management are quite clearly COPs whilst

Human Resources is itself a COIN with multiple COPs inside it such as Generalist Business Partner,

Compensation & Benefits, Learning & Development, IR, M&A, Recruitment, etc.

A Community of Action network (COAN. Pronounced “Cone”)

can be defined as a group of individuals from multiple COPs

who are brought together, or voluntarily come together, to

effect change under a common purpose, independent of

geographical or organisational boundaries; with that change

being defined by outcomes, time, budget as well as other

constraints. A project team is, quite clearly, a COAN but so

too are Design, Product and HR teams. For example, in HR

terms, an organisational change will be managed by a COAN

consisting of individuals from different COPs; e.g. HR Business

Partners, OD, IR, Compensation & Benefits, Recruitment,

Payroll and Business Leaders as well as other key

stakeholders.

In any Social Era business, there will be multiple COANs, forming and reforming, linking different

COPs, undertaking change activities all the time and whose actions will be self-defined as a result of

their alignment to, and understanding of, the Social Purpose of the business.

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As more and more individuals see the benefits of leveraging the power of their communities and the

portability of their skills, knowledge and experience, we will see a rise in the number of portfolio

workers. These are those people who will work across a variety of communities (Action, Practice and

Interest) at the same time, using their skills, knowledge and experience in the way that interests

them most. One of Granovetter’s key findings was that

weak ties were more likely than strong ties to result in a

new role being obtained; therefore the ability of portfolio

workers to leverage the strong links within, and particularly

the weak links outside, their networks will be critical to

their personal and continuing success in a portfolio career.

Bridging, Bonding and Linking

The World Bank defines Social capital as not just the sum

of the institutions which underpin a society – it is the glue

that holds them together15.

There are three main types of social capital that need to be

considered in the Social Era; Bonding capital which is

created through the quality of the links between people

based on a sense of common identity (“people like us”) –

such as family, close friends and people who share our

culture or ethnicity.16 Bridging capital defined by the

quality of the connections between people or groups who

are unlike one another and previously did not interact with

one another.17 And, finally, Linking capital shown through

the quality of the vertical links or trusted relationships

from within the community to people in positions of

authority or power, both inside and outside the

community.

Just as a screwdriver (physical capital) or a university

education (human capital) can increase productivity (both

individual and collective), so does the quality of social

contacts (social capital) affect the productivity of

individuals and groups18. So it is not the fact of the

creation of COINs, COPs, COANs or even individual

networks that matters but it is in how they are all enabled to interact and generate social capital for

the business. The solution, as Aristotle said, is indeed that the whole is greater than the sum of its

parts.19

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Turn the Valve

One of the best examples of a true Social Era business,

which I know of, is Valve. A software company

formed in 1996 and based in Bellevue, Washington,

they produce award-winning games such as Half-Life®,

leading-edge technologies and, Steam®, a ground-

breaking social entertainment platform.

Nowadays, it is almost axiomatic that most software

companies like to be viewed as “Great Place(s) to

Work” and “Best Employer” or, perhaps even having

the “funkiest workplace”, but very few have taken the

step that Valve has to creating a self-determining,

completely non-hierarchical workforce. In March 2012, Valve published its employee handbook20

and, on page 4, tells the employee exactly how the company runs.

Welcome to Flatland

Hierarchy is great for maintaining predictability and repeatability. It simplifies planning and

makes it easier to control a large group of people from the top down, which is why military

organizations rely on it so heavily.

But when you’re an entertainment company that’s spent the last decade going out of its way

to recruit the most intelligent, innovative, talented people on Earth, telling them to sit at a

desk and do what they’re told obliterates 99 per cent of their value. We want innovators, and

that means maintaining an environment where they’ll flourish.

That’s why Valve is flat. It’s our shorthand way of saying that we don’t have any

management, and nobody “reports to” anybody else. We do have a founder/president, but

even he isn’t your manager. This company is yours to steer—toward opportunities and away

from risks. You have the power to green-light projects. You have the power to ship products.

Michael Abrash, a Valve employee, elaborates further on the model in a blog post21. “How could a

300-person company not have any formal management? My observation is that it takes new hires

about six months before they fully accept that no one is going to tell them what to do, that no

manager is going to give them a review, that there is no such thing as a promotion or a job title or

even a fixed role (although there are generous raises and bonuses based on value to the company,

as assessed by peers). That it is their responsibility, and theirs alone, to allocate the most valuable

resource in the company – their time – by figuring out what it is that they can do that is most

valuable for the company, and then to go do it.

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That if they decide that they should be doing something different, there’s no manager to convince to

let them go; they just move their desk to the new group (the desks are on wheels, with computers

attached) and start in on the new thing. (Obviously they should choose a good point at which to do

this, and coordinate with both groups, but that’s common sense, not a rule, and isn’t enforced in any

way.) That everyone on a project team is an individual contributor, doing coding, artwork, level

design, music, and so on, including the leads; there is no such thing as a pure management or

architect or designer role. That any part of the company can change direction instantly at any time,

because there are no managers to cling to their people and their territory, no reorgs to plan, no

budgets to work around.”

While Valve is an almost utopian example of a self-determining set of COANs in a business, it is likely

that such examples will be on one end of a spectrum of Social Era businesses with the majority

looking to adopt a model that leverages and links the power of community with the intelligence of

individuals whilst maintaining more structured governance mechanisms.

HR: Dodo or Phoenix?

So where does all this leave HR?

If HR is to be successful and meet these challenges, it firstly needs to unite behind a Social Purpose;

that core reason for being with which it can align everything that it does. Whilst there are numerous

examples along the lines of “to maximise the contribution of people (in) delivery of the

organisation’s goals”22, they don’t really inspire or excite the reader. So, given a lack of current

examples, I propose that HR’s Purpose in the Social Era is to build a better world through creating,

linking and managing relationships and engagement across all communities in a business.

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If we accept that purpose, then the responsibilities of the HR community must align with it, and

evolve to include the following:

The Community Curator acting as a ‘superconnector’ to bring together disparate networks to

enhance the flow of information, both internal and external, to benefit the core business while

leveraging the bonding, bridging and linking capital existing within those networks to manage the

flow of people in the communities; from resources in through attraction and recruitment, to COANs

and COPs delivering solutions to develop and enhance efficiency and effectiveness and, finally,

resources out through separation and alumni management.

The Co-Creator influencing the development of the corporate strategy through their knowledge of,

exposure to, and experience with the commercial operations

of the business, then developing HR solutions aligned with

the agreed strategy and purpose to develop and transform

the people, process, tools and technology to achieve success.

The Expert Guide providing a flexible framework of policies

and procedures related to employment and engagement of

all types of staff and implementing the tools to do this

effectively providing guidance, support and advice as

required. The framework must be crafted in such a way that

it allows for global consistency and alignment with the social

purpose, but local autonomy in application by multiple and

diverse community groups.

The Communicator connecting people by creating and

maintaining relationships of trust and value through open,

honest, transparent and timely communication focused at

targeting the creation of bonding, bridging and linking social capital.

The Guardian of the Social Purpose; using community visioning to articulate “why we do what we

do” and embodying the concept through the development and implementation of the employee

value proposition.

The skills currently valued and promoted by HR practitioners will also undergo a change in emphasis

with additional skills coming to the fore to support these new responsibilities in the Social Era. They

will include:

1. Community Curation - The ability to design and implement a community management

strategy that enhances connectivity, reflexivity and redundancy across the networks.

2. Network Weaving - The intentional practice of helping people to build and connect to more

relationships of trust and value, by virtue of being genuinely interested in building and

connecting oneself to more relationships of trust and value.23

3. Solution Design and Integration - The ability to design and integrate holistic HR solutions

based on input from all communities as well as through insight fed by “big data” analysis.

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4. Transformation Management - The ability to effect transformation through a synthesis of

Project Management, Change Management, Business Consulting and Data Analysis skills.

5. Strategic Thinking - The ability to perceive issues at micro and meso levels and create

solutions at the macro level to address.

6. Business Acumen – the ability to define and deal with a business situation by employing a

thorough understanding of what drives profitability and cash flow, a market focused

approach to the business, and an overall big picture understanding of the business and its

interrelationships.

7. Data Analysis/Interpretation – The ability to use disparate data sets to generate insights

about the business and provide data based inputs for refining HR and corporate strategies.

Treating itself as a Community of Interest, with an agreed social purpose, evolved responsibilities

and skills, HR will eventually find that it no longer needs to sustain a large and permanent

organisational structure. Using a fluid community model, it will maintain a small core team with two

main groups; generalist business partners for strategic co-creation with business leaders and

management of HR Communities of Action, and individual subject matter experts to act as

relationship managers with the various Communities of Practice such as Recruitment.

Surrounding the core, interacting and engaging with each other will be outsourced HR Communities

of Practice and Action, populated by Portfolio Workers providing subject matter expertise, forming

and dissolving as required. HR can finally become the business enabler that it has aspired to be for

so long.

However, if we don’t adapt to the new realities of the Social Era, we may well see the extinction of

HR as we know it, perhaps through the merging of Corporate Strategy, Marketing Communications

and core HR generalists into one function that will have the necessary capabilities to deliver the

required services by leveraging current skillsets and supported by outsourced HR Communities of

Practice.

In the Social Era, the power of community coupled with the intelligence of the individual

fundamentally changes the way value is created, the meaning of work, and the structures for our

institutions.24 It is an exciting time to be in business and HR has a great opportunity to be the agent

of change to a new way of working across all industries but, to do that, we need to seize the

moment and choose to transform.

We can be the Phoenix or we can be the Dodo. We can’t be both. Which will you be?

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Author

Jim Lefever

Managing Director HR2BE

+61 417 652 936

jim.lefever@hr2be.com.au

About HR2BE

HR2BE work with businesses to put in place really simple, really effective and pragmatic Human

Resource strategies and actions that will save you money, minimise your risk and increase

productivity.

Our fully qualified and experienced team can be engaged to deliver a simple policy or single project,

such as a new performance management system, through to acting as your strategic HR partner.

Whatever your industry, HR2BE will add true value to your business as a trusted partner. We pride

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understanding of the unique commercial needs of our clients.

To find out more, go to hr2be.com.au

This publication contains general information only and is based on the experiences and research of employees of HR2BE. HR2BE is not, by means of this publication, rendering business or other professional advice or services. This

publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your

business, you should consult a qualified professional advisor. HR2BE shall not be responsible for any loss sustained by any person who relies on this publication.

As used in this document, “HR2BE” means HR2BE Pty Ltd.

Copyright © 2013 HR2BE Pty Ltd. All rights reserved.

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References 1 Nilofer Merchant. What we talk about when we talk about “Social”.

http://blogs.hbr.org/cs/2013/02/what_we_talk_about_when_we_tal.html 2 Nilofer Merchant. What we talk about when we talk about “Social”.

http://blogs.hbr.org/cs/2013/02/what_we_talk_about_when_we_tal.html 3 “Culture of purpose: A business imperative”. (2013) Deloitte.

4 http://solutions.3m.com/wps/portal/3M/en_EU/About3/3M/

5 http://www.ge.com/au/company/factsheet_au.html

6 http://www.google.com.au/about/company/

7 Nilofer Merchant. What we talk about when we talk about “Social”.

http://blogs.hbr.org/cs/2013/02/what_we_talk_about_when_we_tal.html 8 Koch, R. and Lockwood, G. “Superconnect. The power of Networks and the Strength of Weak Links” Little,

Brown, 2010 9 Granovetter, M. “The Strength of Weak Ties: A Network Theory Revisited”, Sociological Theory, Vol.1 (1983),

pp 201 - 233 10

Clark, A. “Real Life Working Papers: Understanding Community” May 2007 11

Putnam, R. (2000), “Bowling Alone: the Collapse and Revival of American Community”, New York: Simon and Schuster. 12

Halpern, D. “The Hidden Wealth of Nations”, 2010, Polity Press 13

N.A. Christakis and J.H. Fowler, "Social Contagion Theory: Examining Dynamic Social Networks and Human Behavior," Statistics in Medicine 32(4): 556-577 (February 2013); doi:10.1002/sim.5408 14

Wenger, E. “Communities of Practice; A brief introduction” June 2006 15

http://web.worldbank.org/ “What is Social Capital” 16

Keeley, B. (2007) “Human Capital: How what you know shapes your life”, OECD 17

Cuers, S. Hewston, J. (2006) “Strong Communities Handbook”, Queensland University of Technology 18

Putnam, R. (2000), “Bowling Alone: the Collapse and Revival of American Community”, New York: Simon and Schuster. 19

Aristotle, “Metaphysics”, Book H 1045a 8-10: "... the totality is not, as it were, a mere heap, but the whole is something besides the parts ..." 20

Handbook for New Employees, (2012), Valve http://media1.gameinformer.com/images/news/valve_handbook_lowres.pdf 21

Abrash, M. Valve: How I Got Here, What It’s Like, and What I’m Doing, 13th

April 2012. http://blogs.valvesoftware.com/abrash/valve-how-i-got-here-what-its-like-and-what-im-doing-2/ 22

http://purplelineconsulting.co.uk/site/what-is-the-role-of-hr.html 23

Traynor, B. “The Essence of Weaving” (2010) http://valueofplace.wordpress.com/2010/05/24/the-essence-of-weaving/ 24

Nilofer Merchant. What we talk about when we talk about “Social”. http://blogs.hbr.org/cs/2013/02/what_we_talk_about_when_we_tal.html