The Water Cooler Is Now On The Web

With a nod to Facebook, large companies are starting in-house social networks

Like many twentysomethings, the workers at Starcom MediaVest Group spend a portion of their workday on a social network. So in April, executives of the ad-buying firm figured, why fight it? They launched a network of their own, for employees only, called SMG Connected. Today, a little more than a third of the company's workers, or 2,060 people, have signed up for their own pages where they can create profiles that outline their jobs, list the brands they admire (Nike (NKE )? Starbucks (SBUX )?), and describe their values by choosing from words such as "creativity" and "humor."

The service even winks at how people use (NWS ) or Facebook to put themselves at the center of the universe: Search for someone--say, with digital experience in Mexico--and you show up as a pushpin in the center of a bull's eye, with surrounding pushpins representing people who fit the bill. Says Starcom Vice-President Pam Daniels: "Giving our employees a way to connect over the Internet around the globe made sense--because they're just doing it anyway."

Plenty of big, mainstream companies look at the fast-growing social network scene as a place to market their products. But many are also adopting the same Web technology to create internal networks. It turns out to be an efficient way to mine for in-house expertise, discover new recruits, and share information within their own walls. Setting up a corporate version of a social network has its own challenges, as well. Companies have to build in safeguards to ensure that they can track the discussions and document sharing, to be certain that employees comply with government regulations and don't tumble into legal hot water.

Corporations are being nudged along by employees, and not just the digital-savvy Generation Y that's now entering the workforce. More 30-plus employees are signing up with Facebook to trade daily updates with colleagues and friends. They're also building lists of contacts from among the 13 million professionals on LinkedIn. At Ernst & Young alone, 11,000 workers now have Facebook accounts.

That translates into a juicy new sales opportunity for tech companies that sell networking products. Everyone from IBM (IBM )toMicrosoft (MSFT ) and on down to startups like introNetworks, Awareness Inc., and Jive Software, are offering applications and services. One company, SelectMinds, has created social networks for 60 companies, including Lockheed Martin and JPMorgan Chase. And SharePoint, the Microsoft software that lets companies set up MySpace-like profiles, blogs, and collaborative Web sites known as wikis within the confines of their firewalls, is one of the fastest-growing server products in the company's history. "At first people were slow to adopt this; they were nervous. But now we're seeing a bunch of adoption," says Rob Curry, director of the Microsoft Office SharePoint Server software. Both Microsoft and IBM are using their own offices as labs for their products.

Executives have legitimate concerns about spending time and money on something that could be just the latest techno flavor of the week. Remember knowledge management software? That product, designed to handle a lot of the same tasks as today's corporate social networks, was one of the hot buzzwords of the late 1990s. But the systems proved overly complicated and demanded hours to transfer information into databases.


Executives also worry about losing control of information or opening up their networks to security breaches. The whole "open" ethos of the social Net--sharing pictures and music and letting "friends" know your every activity--goes against the instincts of big-company chief information officers. That has led some, especially financial institutions such as Citigroup (C ) and Lehman Brothers (LEH ), simply to block employee access to those public social networks. In an online survey in July of 600 workers by security firm Sophos PLC, 50% said their companies block access to Facebook.

Regulatory or disclosure issues put a crimp on openness. Accounting firms, for instance, have to ensure that members don't provide tax or accounting advice through their networks. Some software lets management limit who can see what data, and tracks who looks at certain documents. Awareness, a company that creates networks and blogs for 100 companies, including Northwestern Mutual Financial Network, tracks network posts and sends any potentially inflammatory words into "moderation boxes" to be reviewed by a manager.

But companies also see a chance to harness the positive aspects of social networking--especially where it opens a door to a new demographic. Dow Chemical Co. (DOW ) faces a shrinking workforce as baby boomers start leaving the labor market en masse: About 40% of Dow's workers will be eligible for retirement in the next five years. So the 110-year-old company is pushing hard on hiring and retention. It plans to open four internal social networks in December for women, retired workers, current employees, and alumni who have left for other jobs. In an alumni network, for instance, current and former employees can create profiles and get information about full-time job openings. Another Dow social network is aimed solely at helping the company stay in contact with female employees as they leave the workforce for maternity leave or cut back their hours. "We want to keep in touch with the brainpower of past employees, and frankly, it's also a great group to consider for new hires," says Julie Fasone Holder, a corporate vice-president for human resources and marketing at Dow.


Some of the new social networks look a lot like the old company Web sites. KPMG set up an alumni network this spring, signing up around 10,000 former and current employees. The front page lists company news, networking events, and job openings. But look closer and you can see some social-network DNA: On the right-hand side, each member has a profile box, just like on Facebook, which they update with photos, information about their job or home life, and a list of contacts. Each member builds a contact list by searching on the service for people who are already signed up or eligible to join. KPMG credits the network with helping it hire 137 former employees, or around 14% of the company's total hires, since the service started, up from 72 people in the three months prior.

By luring employees into a network, companies hope to leverage their skills and contacts. But they also hope that all that collaboration will cut out time that's now spent mailing documents and e-mailing comments. In Los Angeles, the Film Foundation is using Lotus Connections, an IBM product, to help manage an educational film program. Workers can archive research documents, share calendars, chat, and blog. A team of 60 researchers, writers, teachers, and filmmakers is putting together a curriculum, distributed free to schools across the country, that teaches students how to understand the visual language of films. By having members brainstorm, review each other's work, and prepare budgets on the network, the Film Foundation believes it can cut by half the amount of time it takes to create the materials.

By Heather Green

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