McKinsey: Social tools to reshape organisational structures

The process of digitalisation is generating additional ways in which to perform transactions or operate processes and social tools. It is, however, also set to transform internal relationships between employees – from ground staff to management. A new report considers the relationship between social tools and digitalisation, as well as the effect these tools are having on organisational structures and operations.

Companies are seeking ways to reduce costs as well as improve efficiency. The recent rapid expansion of social tools, from social media to communications platforms, has added a whole new landscape in which engagement and collaboration can take place internally to an organisation. In a new report from McKinsey & Company, the firm explores the way in which social tools are transforming those internal relationships as well as the interplay between social tools and digital transformations more widely.

The report, titled ‘How social tools can reshape the organisation’, is based on 2,427 respondents representing a full range of regions, industries, company sizes, functional specialties, and tenures. To adjust for differences in response rates, the data is weighted by the contribution of each respondent’s nation to global GDP.

Potential improvements
The research finds that most businesses (93%) use at least one social tool, up from 82% in the previous year’s survey. The majority of respondents also have at least one tool on mobile devices, and 74% say social tools are at least somewhat integrated into employees’ work.

The research also found that there is a growing demand for the use of social tools internally to the organisation. Tools that support collaboration between employees are the most valued. The social tools most responsible for adoption include those that facilitate real-time interactions, collaboration tools and tools that extend accessibility. These tools are also perceived to improve how people work at the respondents’ organisations.

Digital correlation
The research also finds that there is a correlation between respondents that are using next generation tools and the share of the organisations’ business activity that is digital in nature. The most integrated companies, in terms of social tools, are rated very integrated to extremely integrated at 36% and 21% respectively, while across those surveyed, 11% keep all of their business activity in a digital environment, while 34% keep most.

The consultancy firm notes that “while most companies tend to use social tools in external-facing processes, such as marketing activities and public relations, adopters of new-generation technologies report broader use of social across the organisation. They are much likelier than average to use social in internal processes, such as R&D and IT management.”

Adoption correlation
To digitise all processes, both internal and external, the results suggest that social tools can help. For every process where their companies are digitising and using social tools, respondents agree that social technologies have enabled their use of digital overall.

The areas where the largest correlation occurs, according to the executives, are order to cash, demand planning, new-product development/R&D, supply-chain management and procurement. Other results support the notion that, when a company looks to technology to improve its processes, the benefits are greater when social and digital tools are used together.

Reshaping organisations
The continued development, and integration, of social tools is set to reshape the organisations, according to many of the executives. The largest change (cited by 66%) will be that social tools will allow employees to communicate more often with others in different teams, functions and business units. The second biggest development is set to see day-to-day work become more project based, instead of team or function based, because of the tools, as cited by 48%. The tools will also, according to 40% of executives, allow teams to self-organise.

Additional changes that can arise are blurred boundaries between employees, vendors, and customers; the organisation’s formal hierarchy can become much flatter or disappear completely, and individual performance can be evaluated by peers rather than by managers.

Leading changes
The greater the number of processes involving social tools, the more likely executives are to expect more dramatic organisational changes. The same is true at fully networked companies, which are reaping the greatest level of benefits from using social. It’s true, too, of companies using next-generation team-collaboration tools.

Those using next generation tools are much firmer believers that social tools will bring about certain changes in the coming three years. This is particularly true for self-organisations, at 72% vs 40% of all respondents, and more projected based day-to-day work, at 66% vs 48% of all respondents.