When it comes to Evaluating a Social Media Recruiting Strategy, Consider the Non-Linear Benefits

Social Media is quite the buzz in the Recruiting Industry today . . . as it should be.  Seeding conversation and setting the stage for community can offer a competitive advantage when it comes having more efficient access to the niche talent pools that most drive company
performance.

However, we must be careful in how we're selling Upper Management on the importance of moving forward with a Social Media Recruiting Strategy.  To that end, I've written recently about the futility of ROI as a metric to justify investment, notably here and here. 
Simply, ROI = (Gain from Investment - Cost of Investment)/(Cost of
Investment).  It's the most simple metric to calculate when it comes to
financial conversations, yet it only accounts for the "what" (i.e.
"What expected return will we see?"), while ignoring the "time" (i.e.
"How long will it take to see the expected return?") and "risk" (i.e.
"How sure are we that we're going to see the expected return?")  Andrew
Rudin does an outstanding job of refuting ROI as the panacea of
financial justification in his post, "ROI Hype: Finance for Fools?"  It's certainly worth a read.

Of course, I've caught some heat for challenging the institutionalized and reductionist thinking that favors ROI as the illuminating metric for financial justification when it comes to a Social Media Recruiting
Strategy.  Notably, my favorite and most amusing pro-ROI comments were,
"If we define ROI as you do, then there is no value whatsoever. Fortunately, I define it differently." (Note: I say there is one definition and it's listed above; there are not multiple definitions), and "I haven't yet met the CEO or CFO who is easily persuaded with tales of wishes and fantasies."

To the latter comment, I suggest that there are often non-linear benefits that often result from Social Media initiatives.  Very few, if any, people in our industry are speaking about this.  For example, consider that Vitamin Water's newest brand, "Black Cherry and Lime" was created by the company's Facebook fans.  That's right - the company has empowered fans to create flavors, design packaging, and even name products.  Fans are now part of the R&D process itself, so we must ask ourselves what benefit this provides
when it comes to brand loyalty and engagement.

Through the above, we have an example of non-linear benefit.  First, the company tapped their fans for R&D . . . and second, I suggest that doing so will translate quite favorably to not only brand loyalty and market share, but also brand resiliency to competitive
attacks.  For example, let's say a consumer gets a just-in-time coupon
to purchase a Vitamin Water competitor's product - will they exercise
the coupon or remain loyal to Vitamin Water as a result of their
engagement and appreciation?  Ask yourself the question: Would you
purchase a brand you helped develop, or would you purchase another
brand just because you have a coupon for $0.25 off?

And further, who claims the ROI?  Is it Marketing?  Is it New Product Development?  Is it a combination of the two?  Or, would ROI for the Marketing unit show a negligible return, while ROI for the New Product Development unit show highly positive?  If we see our organization as an extended
network (which it is), we must move beyond the shadow of linear
thinking and ROI calculations.

Now let's switch gears for a moment and let's talk Talent Strategy.  If all we look at is ROI, meaning we expect to shave a few points off of Cost-Per-Hire, or we aim to reduce Executive Search fees, we'll come to a highly linear ROI expectation.  And if you've been in a meeting
where all that mattered was short-term ROI, you know that there are
almost always alternatives that can trump your ROI calculation.  For
example, you expect a short-term ROI of 15%, yet IT is recommending an
initiative that shows an expected ROI of 18%.  In a linear world, who
wins?  Yep, the IT Department.

So today, I ask you to consider not only the linear benefit, but also the non-linear benefit.  Think beyond ROI.  Ask yourself what it would mean for your organization to have a 'first-dibs' advantage over the competition when it comes to high-performing niche talent.  By strengthening your own position,
you're weakening theirs, and this is not something that shows up in ROI
conversations.  And in that same vein, what would it mean for our own
organization to be more proactive, and subsequently, more selective, in
our hiring practices?  Does non-linear benefit like this show
up in linear ROI calculation?  No, it does not . . . but that doesn't
mean that the benefit isn't real or tangible.

I'll be following up soon with a Game Theoretic approach to presenting a Social Media Recruiting Strategy, but for now, I ask you to think beyond the
box of predictable, linear returns.  There is much more to the picture
than meets the eye.

P.S. To RBC fans: Sorry for the fragmented text in this post.  It didn't port over from Typepad well.