CRISIL YOUNG THOUGHT LEADER -2014

'Outside-In' - Cultural shift in Human Resource Management in

Corporate India in the age of the social media

SURBHI SHARMA
Final Year, IIM Kozhikode

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EXECUTIVE SUMMARY -

The world is becoming glocal from global and has transcended all economic, social and political boundaries
thus generating a common platform for development and sharing information. This has been facilitated and
made possible because of the advent of disruptive technologies like internet and particularly social media.
Social Learning is a phrase which reflects the idea of learning by enhanced sharing of information. The
exploding growth of social media has significantly changed the way people communicate at work and it offers a
lucrative platform that can be leveraged by organizations to improve the performance of their workforce and
attain a sustainable source of competitive advantage. The most critical factor governing the success of
organizations is the strength of the human and social capital. The hiring and retention of employees is becoming
difficult with the rising level of competition between the organizations to source best candidates and provide
them a healthy work environment to increase the likelihood of stay with the organization. This problem
becomes grave particularly in the context of family owned businesses which are inherently plagued with issues
such as feud within the family members, losing the non-family members, nepotism, no clear succession plan,
lack of transparency and running the business with emotions as against following rules and regulations
particularly by the top management. These can be characterized as Human Resource Management problems . A
high degree of correlation has been observed between the HR practices and the success of a family-owned
business/performance of the non-family members. India is dominated by family owned businesses and they
have strengthened the backbone of Indias economy. Keeping this in light, the issue becomes critical and needs
to be analyzed using a multi-pronged approach to identify the gaps between policy discourse and
implementation.
This paper therefore focuses on the importance of social media in managing human resource practices in India,
particularly in the context of family owned businesses. The scope of the paper can be summarized as follows1. It analyzes the challenges faced by family owned businesses and the present role of social media in
2.
3.
4.
5.

managing HR issues.
It highlights that although family business contributes majorly to the economy yet they are short-lived.
What could be the possible HR interventions in this scenario?
Primary research findings to analyze how performance of non-family employees can be enhanced using
Social media.
Conceptualization of a framework to plot the HR practices that can be made more visible using social
media.
It examines the challenges and the way forward for the use of Social media for inclusive and sustainable
growth of company.

1. CURRENT SCENARIO OF FAMILY BUSINESSESFamily business is a traditional way of conducting business in the private sector and it inherently differs from
non-family business. Recently family businesses have been attracting a lot of attention in the public and policy
discussions. The drivers for this enhanced attention are increasing contribution made to economic and
social/societal development, rising concern for succession policy in the context of unsuccessful business
transfers over generations and high degree of academic interest to understand the intricacies involved. An
important objective of organizations is managing their workforce and channelizing their energy to improve the
performance of each and every personnel. The corporate veil is gradually coming down with outsiders readily
being able to access information and therefore it is imperative for the companies to maintain a transparent
disposition in their practices. A transparent disposition leads to positive signaling about the company and results
in the promulgation of share price and greater brand equity.
Social media, that includes applications including Facebook, Twitter, YouTube, Wikipedia, Flickr, Wordpress,
Google+, Yelp and Zoominfo, has revolutionized the way people interact and communicate in the society.
Business is a subset of this larger social structure and hence cannot remain oblivious to the facets of social
media for long. The impact of human resource management through social media in enhancing the performance
of employees, building the credibility and trust of external actors is being understood, particularly in the context
of family owned businesses. There are a plethora of problems being faced by the family-owned businesses in
India like double standards, lack of communication, no succession plan, role conflict and religion based
problems. Research has also shown that most of the family-owned businesses phase out and the growth
becomes stagnant after the third generation. A prevalent perception is that all decisions are centralized and lack
transparency. The three qualifying combinations of ownership and management are- (1) family owned and
family managed (2) family owned but not family managed (3) family managed but not family owned. The
above research has greater relevance for family owned and family managed business.
The functioning, hierarchy, values and practices of family-owned businesses are unique. These practices shape
the norms of the business, become ingrained in the organization and gradually develop into organizational
culture. The values should be passed over to the non-family members so that they feel connected to the
organization. Many outsiders also regard business organizations as a black box because of information
asymmetry. This results in the loss of trust and credibility

2. HUMAN RESOURCE MANAGEMENT IN FAMILY BUSINESSESDyer (2003) and Schulze et al. (2003) pointed out that although family is a neglected variable in organizational
research it has been confirmed that a negative relationship exists between family firm governance and the use of
professional HRM practices. This can be explained by agency theory and resource based view. Westhead and
Cowling(1996) suggest that it may not be family ownership and/or management per se that influences firm
practices and performance, but indirect effects due to the fact that such firms often have more limited resources
and thus are more constrained vis--vis resources available for company growth The resource based view is
applicable for the small family owned businesses that are in the growth stage.
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Jan de Kok and Lorraine Uhlaner (Zoetermeer, 2003) conducted a research to test the hypothesis: In family
owned businesses the HRM practices are not strong because of an overlap between the management and
ownership or strong influence of owner. Direct effect of family firm variable on professional HRM practices
exists, more strongly in the case of family owned and family managed businesses. The agency problem helps in
explaining the lack of HR management in large conglomerates where the ownership and management overlaps.
In recent empirical research, human resource practices and systems have been linked to increased productivity,
organizational competitive advantage, and higher quality of work life and greater profitability of the
organization (Cascio, 1992; Schuster 1985). A study conducted by Joseph H. Astrachan, Thomas A. Kolenko
aimed at finding out these three questions- (1)What are the frequently employed HRM in family owned
businesses? (2) Do human resource practices contribute to the success and survival of family owned businesses?
(3) What business owner characteristics can explain the HRM practices in family owned businesses? It was
concluded that family meetings are used significantly more often than written business plan or board meetings.
HRM practices play a key role in the survival and success of family owned businesses and highly educated
CEOs are more likely to use proper governance practices in their organizations.
Statistics show that 63% of the CXOs use social media in their respective organizations, though this is not
indicative of the extent of usage. Majority of the CXOs are in agreement that the use of social media is relevant
in organizations and the usage should be increased to reach the customers and employees, who constantly
follow social media for getting more updates about the company.

3. INTERNATIONALIZATION AND SOCIAL MEDIAChallenges that are faced by family owned business when they try to globalize can also be negated by using
social media. Sheila M. Rioux and Paul R. Bernthal in the paper Development Dimensions International (2000)
have identified recruiting high quality employees as a top priority for both domestic and international
organizations with 46% and 40% of them recognizing the same. Social media can be leveraged as potential
employers use this platform for improved sourcing of high quality candidates and maintaining consistency in
HR practices. MNCs like Uber Cabs, Twitter India and Loreal are using Social media to recruit candidates
because of the greater pull effect of this platform.

4. CREATION OF SOCIAL CAPITAL Proper HR practices help in the creation of Social capital. Selection, training and development are related to
human capital but the use of collaborative HR activities is related to social capital. Human capital and social
capital have a strong relationship with organizational performance. Researchers have concluded that the
hypothesized mediated relationship was supported. Social capital can be built by engaging the employees,
focusing on team building activities and increasing the interaction with top management.

5. SOCIAL MEDIA ACCEPTANCE ACROSS GENERATIONSSocial media is a new territory for both employees and employers which is depicted by the level of acceptability
and familiarity at workplace across four generations: The Gen Y, Gen X, Baby boomers and Traditionalists.
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Generation Y has a high degree of acceptance for the social media whereas Traditionalists believe that social
media is not professional and the use should be restricted to maintain efficiency at workplace.

6. PRIMARY RESEARCH A primary research was conducted to find the relevance of social media in fortifying the Human Resource
practices, particularly in the context of family-owned businesses. A questionnaire was floated and responses
were collected from 90 professionals. Constructs were rated by the respondents based on their understanding of
how social media can be used to improve and manage the HR policies at workplace. The second step attempts
to find correlation, if any, between enhanced performance of employees and improved HR policies using social
media.
1. Ease of information availability/ Recruitment tool
The underlying questions of the construct measured the relevance of social media in facilitating the
availability of information both to the employees and customers about hiring drives, recent updates
about the company, recent product launches and social service initiatives taken by the company.
2. Transparency
In family-owned businesses the transparency of decision making is an issue because it is believed that
critical decisions are taken within the four walls and the employees are oblivious about the recent
developments. The questions under this construct measured the visibility of HR policies of an
organization to the outside world using social media, consistency in internal and external feedback and
change in employee perception when decision making process is made transparent.
3. Increase in communication flow with non-family members
The non-family members are not much aware of the proceedings and relevant policies. Communication
with the non-family members can be increased using social media , activities on social media makes the
non-family members feel more associated with the organization and sharing information increases the
productivity and retention of employees in the family business are some of the questions that are put
under this construct.
4. Grievances Redressal
It has been reported that customers prefer using social media platforms over the official website for
stating out their problems. This construct measures if the customers feel that the response to their
grievances by the organization is more prompt on social media because of greater visibility to external
world.
5. Opinion seeking
The questions gauge if employees and customers can freely express their opinions and
recommendations. Social media tools can be used for real-time feedback on the services provided by the
organization and it provides a platform to the employees to give suggestions.
6. Understanding values of the family and overcoming the perceived bias
One major deterrent in making the non-family members feel a sense of belongingness in the
organization is the ingrained belief that certain religions or ethnic groups are given preferential treatment
in certain business organizations. Respondents expressed the degree of affirmation to the above
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statement and then answered if visibility on social media be used to understanding the culture and values
that drive the family business
7. Employee motivation
Felicitating the employees on social media for their achievements increases their morale and in turn
enhances the productivity.
8. Overcoming the Glass ceiling
Instilling confidence in the female workforce by making women-friendly policies visible on social
media can increase the retention rate in organizations and also efficiency by increasing transparency.

7. RESULT AND ANALYSISThe following table shows the average score given by the respondents to the below mentioned six constructs,
depicting the likelihood of acceptance for implementation via social media. The respondents were required to
rate each question on a scale of 1 to 7(Strongly Disagree=1, Strongly Agree=7).
Construct

Average
Inference regarding the usage of Social Media
Likert
Scale
Rating
Ease of information availability/ 6
Recommended for dissemination of information
Recruitment tool
regarding recruitment and other updates about the
company
Transparency
6
HR policies for employee welfare and relevant
information can be made transparent using social
media
2
Decision making being a critical aspect should be
retained as an internally oriented practice
Increase in communication flow with 6
Activities on Social Media for enhancing
non-family members
communication with the non-family members
Grievances redressal of customers
7
Highly recommended for customer grievance
redressal
Opinion seeking
6( Customers) Recommended for customer opinion seeking
Not recommended for seeking opinion from
1(Employees)
employees. Formal emails to be preferred
Understanding values of the family 3
Not recommended due to lack of personal touch
and overcoming the perceived bias
Disclosure of unique culture which might be a source
of competitive advantage
Employee motivation
6
Felicitation on Social Media increases the
performance of employees
Overcoming the glass ceiling
5
Communicating the pro-female employee policies
increases the retention rate and performance of
women employees
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The impact of following factors on increasing the performance of employees was analyzedHR practice

Percentage of
respondents
agreeing

Social media policy is necessary to prevent breach 78%

of conduct by the employees
Social media helps in building professional 89%
reputation and contacts with others in the 21st
century
Increase in communication with the non-family 95%
members increases the efficiency at work
Opinion seeking and employee engagement 93%
improves the performance at work
Performance improves when policies and decision 84%
making process is transparent

Female respondents feel that the organization is 93%

viewed as a healthy place to work when the prowomen policies are made visible on Social Media
Maintain social media profile because they feel 53%
that recruiters
monitor the profile as a
background check
YouTube can be used for training employees
83%

Work-life becomes difficult because the 50%

employees are connected 24*7 on Social media
Team building activities and collaboration with 97%
fellow employees enhances performance

Remarks

Recommendation to implement social

media Policy
Encourage the use of social media
among employees for enhancing
business contacts across organizations
Inclusion and enhanced communication
with the non-family members increases
their performance
Encourage employee engagement via
social media to improve the
performance of employees
Dissemination of information related to
decision making should be done via
formal emails. Social Media not
recommended
Health
benefits,
transportation
facilities, maternity benefits, flexible
timings
and
protection
against
harassment to be highlighted
It will encourage the adaption of this
platform among potential employees
Training could be replicated by
competitors and therefore training via
social media is not encouraged.
It might cause the revelation of best
practices.
Training for the use of Social media to
avoid stress related problems in the
employees
Social Media to be used to encourage
team building as better collaboration
results in enhanced performance
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8. FRAMEWORK FOR IMPLEMENTING HR PRACTICES VIA SOCIAL MEDIA-

The potential benefits and risks of using Social Media for managing different hard and soft aspects of HRM are
listed belowYes to Social Media
No to Social Media

Organizational
Potential Benefits
Use
Recruitment and Improved sourcing of potential candidates
selection
Cost and time efficiency

Potential Risks

Employee
discrimination
(those who are not active on
social media; some racial
groups are underrepresented)
Socializing and Greater organizational commitment
Circulation of inappropriate
onboarding
Improved job satisfaction and stress information. Creation of
reduction
resulting
in
enhanced division (subgroups) rather
performance
than inclusion
Training
and Reduced training cost
Transferability of skills to the
development
Continuous skill enhancement and greater area of application might not
efficiency
be strong
Might
reveal
the
best

Social Media
usage
Yes
(Externally
oriented
practice)
Yes
(Externally
oriented -soft
practice ;)
No
(Internally
orientedHard
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Knowledge/Infor
mation sharing

Quick dissemination of information about

latest policies. Departments can hold
brainstorming sessions or maintain
ongoing conversations on a blog; CEO can
record a podcast and deliver news to the
employees
Employee
Collaboration improves teamwork, latent
engagement and communication and relationship building
Team building
Novel aspect is the conversational tone
Inputs from employees resulting in
innovative recommendations
Organizational
Reinforcement and proper communication
culture
of culture to the employees

Employee
felicitation

practices of the organization

Breach of norms while
information sharing
Leaking
of
private
information and best practices

Consensus process
decision making

practice)
Yes
(Externally
oriented-soft
practice)

slows

Yes
(Externally
oriented-Soft
Biased towards the frequent practice)
users of social media
Promotion of undesirable
No
subcultures by employees
(Internally
Culture
might
give oriented-Soft
competitive advantage to a practice)
firm
Acknowledgement and felicitation on Discriminatory against those Yes
social media acts as a motivating factor for who are not active on social (Internally
the employees
media
oriented-Soft
practice)

9. CONCLUSIONSBased on the primary and secondary research the framework is designed to identify the externally oriented
practices of an organization that can be made visible using social media. The internally oriented practices are a
source of competitive advantage and therefore cant be publicly revealed e.g. culture and training could be
imitated by the competitors. Brand building, employee branding, employee felicitation and engagement,
employee welfare schemes, recruitment and customer grievance redressal mechanisms are the identified
practices that can be managed on the social platform to increase the performance of employees. The negatives
associated with the use of Social media for human resource management are revelation of the best practices of
company to the competitors, data privacy breach due to lost personal identifiable information, damage to
companys reputation or desired brand image. Creation of a social media policy is necessary to avoid breach of
conduct by the employees. Organizations should also use analytics or reporting tools to measure the ROI for
their social media efforts so that they can formulate a long term social media strategy. Finally, the positive
impact, due to enhanced collaboration using social media with the non-family members, on the overall
performance of employees and profitability of the organization is also evaluated. Social media is an
indispensable tool that should be used by businesses in the 21st century for providing an impetus to the
performance of their most valued employees, who are also a source of sustainable competitive organization.
The problems plaguing the growth of family businesses can be addressed to a great extent by social media.
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10. REFERENCES

Joseph H. Astrachan, Thomas A Kolenko- A neglected factor explaining family business success:
Human Resource practices
Darrel Beck-HR can help ensure the success of family businesses,2009

Karen Isaacson and Sarah Peacey- Human Resources and Social Media

Gersick, K.E., Davis, J.A., Hampton, M.M., & Lansberg, I. (1997).

Generation to generation: Life cycles of the family business Boston: Harvard Business School
Press.Lee, J. (2004) The Effects of Family Ownership and Management on Firm

Paisner, M.B. (1999) Sustaining the Family Business and insiders guide to managing across
generations, New York. Persens Books.

Sharma, P. Chrismann, J.J. and Chua, J.H. (1997). Strategic Management of the Family Business: past
research and future challenges. Family Business Review.10(1): 1-35.

Jan de Kok, Roy Thurik , Lorraine Uhlaner- Professional HRM practices in family owned- managed
enterprises( December, 2003)

Legge, K., 1995, Human Resource Management; Rhetorics and Realities, London: Macmillan Business.

Asher, J. J., 1972, The Biographical Item: Can it be Improved? Personnel Psychology

Barney, J. B., 1991, Firm Resources and Sustained Competitive Advantage-Journal of Management

Dr. Ekta Sharma- HR issues in family

Sandra W. King, George T. Solomon and Lloyd W. Fernald Jr. -Issues in growing a family business: A
strategic human resource model

Nick Bacon, Kim Hoque & Stanley Siebert(2013) -Family Business People Capital

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