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Formalizing Employee Networks

February 19, 2009

A colleague (@blibert) recently sent me a link to an outstanding article by McKinsey on the importance of employee networks: “

Harnessing the power of informal employee networks.  Some of it’s key findings are very similar to the findings in Six-Degrees: The Science of a Connected Age which I also think is worth a read.  The authors in the McKinsey piece note that most the real information in large organizations does not flow through traditional employee hierarchical structures, but rather through ad hoc or standing employee neworks that exist outside traditional structures.<!—-><!—->


One of the interesting concepts in the study of social networks (and a big focus in the Six Degrees book) is the idea of social clusters and shared memberships or proximity.  It’s one of the core concepts underlying the “six degrees of Kevin Bacon” idea.  Typically, people self-organize into groups around shared interests.  Of course, since people typically have mutliple interests, they actually participate in mutliple groups.  With a relatively small number of highly connected people, it’s possible for information to flow quite fluidly across multiple disparate groups.<!—-><!—->

Here is a real world example:  my indoor soccer team is run by a guy named Francis.  I play with him on Sundays.  He also plays on different teams on Tues, Wed, and Sat.  That’s four different teams with at least 10 players each — 40 people.  He also skis, typically with a group of 10-30 different connections, some of whom are friends from soccer, some of whom are new.  So we have another 10-15 unique connections.  He also rides a motocycle and is part of an online BMW biking community where, given his nature, he is has over 20 strong connections to other members, none of whom are part of his other groups.  And of course, he works and has at least 15 strong work connections.  In the course of a single week, Francis is strongly connected to roughly 80 different people across 7 different “groups.”  So if I know Francis, I’m one connection from these people.  In turn, he is one connection from my group members, like my Facebook contacts, my buddies in <!—-><!—->California<!—-><!—->, or the guys I lift with at the gym.<!—-><!—->

These connections, even in our personal world, enable us to be more productive and efficient.  When I was doing yard work and needed some specialized work, I reached out to my buddy Rob, who in turn, reached out to his connections, who put me in touch with the right contractor.  The McKinsey argues that this same exact thing happens in a work environment.  Take the following diagram they present:

McKinsey Informal Network Graph

McKinsey Informal Network Graph


In this diagram, it seems clear from the formal strcuture that Jones, the SVP, would probably know the most about what’s going on in his organization.  Of course, the network version of these relationships reveals this to be false.  In fact, it’s probably Cole who is the most plugged in to what’s going on, by virtue of his more extensive network and interconnections.  More importantly, Cole is the only one connecting the Production group to Exploration and Drilling.  He is a lynchpin in the network and is in some ways, a lot more valuable to the ongoing smooth operation of the business than any of the people above him.<!—-><!—->

In the McKinsey piece, the authors argue that this actually a bad thing.  While it’s great that Cole is holding everything together, it’s not so great that the organization is this dependent on one individual.  What if Cole is a problem child, and uses his position to gain power or horde information?  What if Cole gets hit by a bus or decides to move on?  What if Cole gets way too busy for a period of time and doesn’t have the cycles to share information?  On the one hand, Cole is a gateway between the groups, but on the other, he’s a potential bottleneck.<!—-><!—->

One of the main suggestions of the article is to overcome this fragility by formalizing this ad hoc network into a standing employee community.  In this model, there is still a hierarchical structure, but there is a parallel network structure that is independently managed by a formal “network” manager.  Both the network manager and the traditional “boss” would be equally responsible for the success of team members.  As with more informal, ad hoc networks, members could join multiple groups and thereby act as conduits between disparate groups within the organization.<!—-><!—->

Interestingly, one of the main benefits to this formalization is not explicitly addressed by the McKinsey authors, namely the strengthening of otherwise “weak” ties between groups.  And the elimination of “control.”  In the Exhibit above, one the biggest problems is that there is a very low level of independence between members of the Exploration and Production teams or between Drilling and Production.  In both cases, Cole alone has a very high level of control or centrality.  For all the reasons mentioned above, this is a bad thing.  One of the main goals of any formal employee network should be to increase both strong and weak ties among members.  Strong ties increase the overall independence of the connections and decrease the centrality of any individual member.  This enables the network to better sustain the loss of any individual member and avoid any information bottlenecks or hoarding.  Weak ties enable teams to better connect outside the core group and to tap into extended expertise among a more heterogenous network.<!—-><!—->

These issues should be of particular importance with regard to retention and the impending waves of Boomer retirement.  How do companies prepare for the loss of information and exertise that is rapidly approaching?  Establishing a formal network that is inherently structured to withstand the loss of indvidual members is certainly a step in the right direction, as is an ability for this network to tap into extended expertise from a variety of unique sources.

<!—->Where else in our HR world might these more formal networks provide value?  Maybe talent management?  Look again at the Exhibit referenced above.  In the formal hierarchy, Cole is at the bottom of the hiearchy, just another cog in the machine.  But in the network structure, he is a lynchpin, holding together disparate groups and connecting multiple people within his own group.  Why?  Maybe he’s a natural leader?  Maybe he has expertise others need?  Maybe he is a great listener or facilitator?  Whatever the cause, it’s clear that Cole is worth considering somehow, whether that’s for a leadership training program, succession planning, or just promotion and compensation.<!—->

What about recruiting?  Or learning and development?  How might formal networks help with these issues?  What are some of the negatives?  Does anyone have any direct experience with these sorts of formal employee networks?

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