Find Social Media's value

The platform’s return on investment often eludes measurement.

By Dave Zielinski Aug 1, 2012
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August CoverRigorously tracking and measuring performance has become intrinsic to the corporate culture of United Parcel Service (UPS). So it's not surprising that the company's talent acquisition arm leaves few stones unturned in gauging the impact of social media recruiting.

When data showed that more people were seeking jobs through online channels, officials at the Atlanta-based delivery company created new accounts on Facebook, Twitter, LinkedIn and Google Plus. The accounts provide a place to post job openings and information about what it's like to work at the company.

To maintain its worldwide workforce of 398,000, the employer tracks the return on investment (ROI) from these social media recruiting initiatives in multiple ways—but that is not necessarily the norm at most companies.

How to measure the ROI of social media initiatives remains a challenging and hotly debated issue in human resource circles. Much discussion centers on what constitutes meaningful or credible measures of social media use for recruiting, employee training, internal communication or employee engagement.

Furthermore, many HR professionals don't yet possess the software or know-how to handle the vast amounts of unstructured, difficult-to-analyze data generated by the popular social media sites. While monitoring social media has become commonplace, employers struggle mightily with how to create actionable reports from HR's social media data.

A Society for Human Resource Management survey found that 55 percent of responding employers planned to increase the use of social media in the next 12 months. But only 21 percent indicated that they use analytics or reporting tools to measure ROI.

To measure the return, Matt Lavery, UPS's director of talent acquisition, starts with reports provided through an applicant tracking system and Google Analytics. The reports detail click-through rates from job ad links on social media channels to the company's careers website, www.UPSjobs.com. These metrics capture how many candidates create or complete applications, as well as how many are interviewed or hired.

Those returns are measured against costs such as the $7,500 each required to develop Twitter and Facebook careers pages, as well as ongoing labor costs for UPS recruiters to monitor and interact with potential candidates on social media channels.

Labor represents Lavery's biggest cost. "In social media, the investment is more about the time and effort of your recruiting staff than it is about other dollars," he says. "It's about putting quality content online, but equally important is how well and how often your recruiting staff engages candidates in two-way conversations about what it's like to work at the company."

His talent acquisition staff members track metrics such as their influence on social media, their volume of followers, and whether candidates access company- or job-related content from social media channels. Lavery follows his group's score on Klout, a website that professes to measure how well individuals and companies influence others on the Internet in terms of "engagement" factors such as retweets on Twitter or "likes" and comments on Facebook.

He uses additional reporting tools from vendors Radian6, TMP Worldwide, Sprout Social and Kred—as well as Facebook's Insights dashboard and Twitter's analytics tools. These tools measure the "influence" or "reach" of www.UPSjobs.com via social media, as well as how information provided about the UPS work culture is perceived online. Some of these tools "listen to" and categorize comments made by social media followers about the employer's hiring processes.

These measures help Lavery fine-tune social media recruiting and are paying growing dividends. Annual hires originating from social media channels have mushroomed from 100 in 2009 to 2,900 in 2011, Lavery says. Those hires include salaried and hourly employees. "Social media is now competing with the amount of hires we get through major job boards," he says.

Metrics show a 200 percent improvement in the conversion-to-hire ratio of those applying through social media outlets vs. traditional channels, Lavery says. That means social media recruiters have to review fewer applications and conduct fewer interviews before making hiring decisions.

Increased Expectations

HR professionals sinking time or dollars into social media campaigns may soon be required to demonstrate payback, says Susan Etlinger, an industry analyst with the Altimeter Group, a technology research firm in San Mateo, Calif.

She points to a 2012 study conducted by Altimeter analyst Jeremiah Owyang. For the study, A Strategy for Managing Social Media Proliferation, he surveyed social media professionals in 144 companies with more than 1,000 employees. Respondents had an average of 178 social media accounts, including branded Facebook pages; Twitter, LinkedIn or YouTube accounts; blogs; forums; and the like.

"As these social media professionals were seeking budgets for the new year, more were experiencing pressure to justify how they were receiving value from all of those social media sites," Etlinger says. "These professionals were being asked to show concrete business benefits."

In a 2011 study, A Framework for Social Analytics, Etlinger identifies one pitfall: "the tendency to report activity-based metrics without demonstrating a corresponding result."

Etlinger cautions HR leaders about using what she calls "shaky" performance metrics such as influence, participant engagement and reach when measuring the ROI of social media. While useful, these measures have limits.

For example, do additional "fans" or followers on Facebook correlate with additional new hires? Is there a Y percent increase in new hires for every X percent increase in followers? A recruiting executive would be hard-pressed to convince a chief financial officer that accumulating a certain number of fans on a Facebook careers page, or tracking retweets on Twitter, constitutes return on investment. But if she can show how many followers were cost-effectively converted into high-performing hires, it would garner the CFO's attention.

There is a perception that social media platforms are free or don't require substantial business costs, owing to the ease of online entry. But creating meaningful results from social media-based recruiting or employee knowledge sharing programs requires ongoing labor costs.

Consider it "a cost shift," Lavery advises. "Instead of spending money on job boards or other placements, you'll have to shift some of those dollars to pay for people to monitor social media channels. Because if you're not having recruiters regularly engage with candidates to answer questions about jobs or your work culture, you simply won't bear fruit from those efforts."

Collaboration Networks

The need to demonstrate the ROI of social media extends beyond recruiting. Business leaders are increasingly investing in internal social networking platforms to spur informal or casual employee learning, to communicate programs or policies, or to build a sense of community among virtual employees.

Private, cloud-based networking services such as Yammer, Chatter or Jive are supplementing or replacing e-mail, intranet sites or wikis in some organizations. They give employees an outlet to make collaborative decisions across distances, to share lessons learned or simply to feel more connected to colleagues.

Employers gauge value from these networks by measuring whether they are achieving faster organizational problem-solving, more-efficient communication or cost-effective learning. Interactions on these networks can also offer advantages of scale, because the solution to one person's problem is visible to many.

In three years, the use of Yammer has grown among Pitney Bowes' 28,000 employees. Eileen Springer, vice president of human resources for the mail processing hardware and software company in Stamford, Conn., taps Yammer to connect 60 global participants in an early-career leadership development program. Participants share lessons learned, collaborate on projects, post book reviews and more.

"It enables this global group to come together and feel like a team," Springer says.

Pitney Bowes opted for a Yammer business plan that costs $5 per user per month. The fee includes administrative controls, security tools, customer branding services and client support.

Adam Pisoni, co-founder and chief technology officer at Yammer, says a year ago Yammer faced regular challenges from potential customers to justify return on investment. But Pisoni says that resistance has diminished.

Potential clients recognize that "operating successfully in today's business world is being transparent and innovative, and that the networking platforms they have in place don't always support the level of communication they need or the ability for employees to self-organize around important topics," Pisoni says.

Multiple Metrics

To help calibrate social media efforts and use recruiting resources efficiently, business leaders at Rackspace consult a recruiting analytics dashboard from vendor Jobs2Web in Minnetonka, Minn.

The dashboard helps Michael Long, Rackspace's head of culture branding, track the return from diverse recruiting sources for the 4,300-employee hosting and cloud computing company in San Antonio.

"We are able to get good line of sight on what works and what doesn't with every recruiting source that sends candidates to our jobs website," Long says. "We can see who starts and finishes job applications, our conversion rate, and even the dollar cost per hired applicant from different sources."

Other metrics have helped prove the recruiting power of the "culture" side of the Rackspace careers website, where employees share what it's like to work at the company through blogs and videos. In 2011, about 60 percent of external, nonreferral hires originated from the culture side of the site. It's "the highest quality source of hiring," Long says.

Others say the ultimate measure of social media recruiting is how hires from those sources perform. Trisha Zulic, SPHR, director of human resources for Efficient Edge, a human resources outsourcing company in San Diego, uses Jobing.com to push job openings out to Facebook, Twitter and LinkedIn.

Jobing.com sends Zulic a Google Analytics report detailing how many people apply for jobs from the social media channels. But the most accurate gauge of ROI requires a bigger picture, Zulic says.

"The true measure of the quality of your social media recruiting is longevity," she says. "Are those hires still in the job and performing well in year two or three?"

Limits of Tracking

With the proliferation of social media, there are now commercially available measurement and monitoring tools for many purposes, although there is "no one tool to rule them all," Altimeter's Etlinger says. To tie social media initiatives to corporate objectives, HR professionals must often patch together inconsistent data points from different tools and business units.

The eventual cure for what Etlinger calls this "Frankenmetrics" will be the maturation of the market. Providers of measurement tools will eventually integrate social data from disparate parts of an organization into a single, integrated dashboard, she predicts.

The author is a freelance writer and editor based in Minneapolis.

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