Can you remember a time in history when corporate employees decided which firms their company would do business with? Probably not, because for well for over a century the only real way employees could influence their firm’s corporate business decisions was indirectly through their union. But recently an alternative and powerful influence approach “employee sentiment power” has emerged. This trend is where employees influence corporate decision-making by expressing their sentiments on customer and product corporate decisions using internal social discussion platforms.
I find it startling that few executives and talent leaders have yet to realize that we are entering a new era where employee sentiment can literally dictate a firm’s customers, products and even who can work at the firm.
Examples of how employee sentiment is changing corporate decision-making
Recent illustrations of this new “employee sentiment power” and its impact over business decisions include Google backing away from a Pentagon AI software contract and Amazon rethinking whether it should offer facial recognition products to law enforcement. Employees at Salesforce and Microsoft have also openly and vigorously complained on their internal social media about whom their firm does business with.
Expanding their influence even further, employee sentiments have also begun to influence employee retention. For example, one Google engineer was let go because of the negative employee reaction to his inflammatory post on gender inequality. And of course, numerous executives have been forced out of their firms by employee and customer pressure resulting from sexual harassment allegations. The common thread among these incidents is the emergence of employee sentiment power that is directly and undeniably usurping executive power.
The origins of employee sentiment power
It’s no secret that the growth of social media has facilitated the public sharing without boundaries of a wide range of opinions on almost every topic. However, many corporations that have openness as a corporate value have facilitated the growth and sharing of employee sentiment internally. They have done this by creating internal electronic forums and interest groups. Employees that have grown accustomed to sharing unbridled opinions on public forms can now, internally, share opinions on almost any topic, including their approval or disapproval of the firm’s product offerings and whom they do business with. And because many of these discussion threads are leaked to the public, these sentiments can end up damaging a firm’s product brand and its relationship with its customers. When these forums become popular, many firms struggle to achieve a balance between openness and tolerating conversation streams that might end up damaging the firm’s culture.
Employee sentiment can impact productivity, recruiting, and retention
Executives need to realize that employee productivity is the first area that is negatively impacted by a high volume of employee sentiment. Viral employee discussions often turn out to be a significant distraction from the daily work of a considerable percentage of a firm’s employees.
The next significant talent impact that results from this new exercise of employee sentiment power is the negative impact that it can have on a firm’s recruiting. For example, the range of employee complaints on these forums now covers business processes like recruiting. In my 40+ years of recruiting, I have never heard of a group of employees publicly complaining about their firm’s hiring results. But that recently happened at Facebook, where employees openly complained first internally and then on external social media about how the firm’s hiring of a large number of “weak employees” was damaging the company’s business results.
Obviously, criticism in this area can directly negatively impact the company’s ability to recruit future talent. Further damage is most likely to occur in technology firms during low unemployment times where potential applicants have multiple job choices. Potential applicants with strong political or environmental views may refuse to apply to a firm whose actions they disagree with. However, potential applicants and employees can also cause further damage if they spread the word to their colleagues on external social media that this firm is not a politically or socially desirable place to work.
There is also an impact on retention. If issues are not resolved (especially in low unemployment times) employees that don’t agree with the way the firm reacts to their expressed sentiment will quit and take others with them.
Another impact: Previously, “private” HR and business decisions are now made public
Perhaps the most startling of all the consequences from this public display of employee sentiment power is the fact that previously, extremely private personnel decisions are now publicly revealed. For example, “The Top Dog” restaurant chain felt compelled to let the world know that one of its workers that protested in Charlottesville was no longer an employee. Google’s firing of James Damore, the engineer that posted his outrageous manifesto on the inequality of the sexes, went public. And, of course, it has become common for firms to now publicly announce the departure of executives and employees accused of sexual harassment to demonstrate their firm’s responsiveness to employees and the public.
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Contracts with controversial public law enforcement and military agencies have not always been widely announced. Employee sentiment power has now forced many companies to openly acknowledge that they are doing business with (or that they have stopped doing business with) controversial government agencies. Allowing employees to influence who the firm’s customers should be is indeed a new trend that should startle both executives and shareholders.
I am predicting that over time this new form of influence will supplement, and in some cases, even replace historical influence options. Here are several illustrations covering the ways in which the power of employee sentiment will likely increase. For example, though it failed to pass, a group of Alphabet employees and shareholders recently worked together in unison to push a corporate initiative on diversity that executives opposed.
A group of McDonald employees transformed their sentiment into a public display of dissatisfaction. This month they physically demonstrated on the previously internal-only issue of how the company formally responds to sexual harassment.
But what is likely to come next should be considered scary by corporate executives. What if employees at several different major firms decided to work together in unison on a critical sentiment issue? That would cause the impact of employee sentiment power to be multiplied many times over. I also predict that this influence will be further expanded into new decision areas including diversity, environmental issues, pay equity, income inequality and the countries in which firms decide to do business.
Once the genie is out of the bottle, and assuming that unemployment rates stay low, you can expect corporate sentiment power to influence almost every major corporate decision area that was historically a 100% executive prerogative.
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