Assessing the Impact of Social Networks on Organisational Performance

Essay, 2010

10 Pages


Table of contents

Utilizing the Power of Social Networking

Your company – an e-shop

Effects of Social Networking
Knowledge Management
Alignment and Commitment of Employees.
Reputation Management.
Marketing / Branding / Public Relations.
Business Continuity and Disaster Management

Suggestions - your company
Challenge employees to innovate.
Use experts.
Allow employees to “take over” the governance.

Reference List

Utilizing the Power of Social Networking

Companies are often slow to find the way to use a new technology without

" strangling" it through excessive control. In the first years of the Internet up to the late 1990s, many companies feared that workers would waste their time surfing aimlessly, so they tried to control their access to it. While some employees were surfing aimlessly indeed, many of them have found ways to exploit the power of the Internet to improve their work, and the Internet quickly evolved as a valuable source of information, an excellent research and competition monitoring tool.

The latest technological innovation that occurred in the workplace is the social media - Facebook, LinkedIn, Twitter, Ning, Plaxo, Hi5 and Second Life – which they revolutionized the way we communicate, create networks and exchange information.

Your company – an e-shop

The online stores are changing the traditional approach to consumers by using less expensive solutions like social networking sites and e-mails, in their effort to retain their customer base according to a market research published recently (Forrester Research 2009).

The study found that business people/traders believe that electronic commerce can handle the economic crisis better than the physical stores and catalogue shopping. This survey of Forrester Research (2009) included 117 online stores.

The companies mentioned in particular that traditional marketing strategies such as paying for search engines to get a favourable display in their pages, are particularly expensive. "The online stores are seeking the greatest possible efficiency and better price performance for their investment," is mentioned in the study (Forrester Research 2009).

The development of marketing strategies that include the so-called social media, requires some investment in personnel. However, according to the survey, the retailers recognise the benefits of such lower cost practices. At the same time, a growing number of shops and manufacturers encourages consumers to publish in blogs their experiences with their products.

Although the average consumption has shown a decline, consumers increasingly turn to Internet for their shopping needs, taking advantage of the low prices and its many other advantages. Forrester predicted in January that U.S. online sales for 2009 will grow 11% to 156.1 billion U.S. dollars. For 2010, an increase of 13% is predicted, while for 2011 and 2012 the company expects a growth in electronic commerce of 10% and 9% respectively.

Approximately, 30% of the stores surveyed said that they intend to reduce their spending in their online business, while 24% said that they intend to support financially their online activities.

The online stores have reported that they rely on email as a key marketing tool (90%). As it is highlighted by the survey, the dealers use more effective ways to email, mainly to inform their existing customer base with targeted ad campaigns, based on recorded purchasing habits of consumers.

Finally, among the stores that will reduce the cost of their online activities for this year, only 24% intend to stop advertising on social media, revealing the willingness of the companies to try this new way of publicity and promotion of their products.

Effects of Social Networking


Social networking can provide a real boost to productivity. According to the public relations firm Burson-Marsteller (2009), more than half of Fortune 100 companies in Fortune 100 have an account in Twitter, and from these the two-thirds use it for operations that enhance productivity such as customer service. A typical example is the retailer of electronics Best Buy, which created The Twelpforce, a group of employees from the customer service department who answer customer questions via Twitter. The system is not perfect and many have criticized it (Burson Marsteller 2009) as another means of self-promotion. However, there are those that claim that it has actually helped the customer service department to provide more effective assistance to the customers.


The working world has changed significantly due to the increasing need for cooperation and the many technologies that promote teamwork (Scott 2002). More than 91% of companies that responded to a survey of Palo Alto Networks, in 2009, use some kind of company partnership platform.

As the proliferation of working groups is increasing and the possibility of cooperation in the same physical space is reducing, so the use of virtual-meetings applications and online collaboration will be expanded.

"Social networks will become the new operating system of businesses”,says says Don Tapscott, author of Grown Up Digital (2008). He notes, that the younger generation, who will soon be the large percentage of the human resources, is determined to use social media wherever it is and will require these tools to work. Employers who will be reconciled with the idea of this new relationship with their employees, will be the ones to exploit the great potential for cooperation offered by the social media.

Knowledge Management

For long time companies seek ways to 'pull' knowledge and ideas that are locked in the mind of their employees (Cross & Prusak 2002).

The entrance of social media in our lives offers modern and creative ways to systematise this effort. The Capgemini (Infoworld 2009), a consultancy and IT services company, launched an ambitious project which, through blogs and wikis aims to interconnect its 90.000 employees. The public sites have been developed to interconnect 'communities of common interest '- i.e. groups of people that are connected due to personal or professional interest in a particular subject that can be anything from online marketing to pharmaceutical research. The sites can be particularly valuable for knowledge transfer to all company levels.


The companies that are focused on innovation are in search of new ideas, beyond their formal research and development teams and the traditional procedures that follow them (Dhanaraj & Parkhe 2006). The rise of social media is to support these efforts of "open innovation" allowing companies to develop channels of communication with customers, academics and specialists, which they could never reach before. IBM has launched dozens of new initiatives and improved existing practices based on ideas generated in the «Innovation Jams», i.e. huge online brainstorming sessions, involving employees, partners and customers worldwide. Procter & Gamble is already benefiting by open innovation and communication practices, drawing not only proposals to improve specific products but also ideas for whole series of new products.


Excerpt out of 10 pages


Assessing the Impact of Social Networks on Organisational Performance
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ISBN (eBook)
ISBN (Book)
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social media, networking, work
Quote paper
Fotini Mastroianni (Author), 2010, Assessing the Impact of Social Networks on Organisational Performance, Munich, GRIN Verlag,


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