Rewarding the Right Connections

Connections have always proved valuable. Now, the Internet is making them more valuable.

Consider the power of Klout. A Klout score measures how many followers you have on social media and how often your online postings are shared. In a sign of how seriously these scores are taken, according to an article in Wired, a candidate for a vice president position at a marketing agency said he was rejected due to his low Klout score.

An interconnected global economy requires organizations, employees and customers to be linked through social networks, global social movements and permeable organization boundaries, as well as collective and outward-focused leadership.

Talent management illustrates this trend. Candidate sourcing routinely taps the network of employees to identify and attract candidates. LinkedIn serves as a main source of this. Because individuals are more likely to have careers that span multiple organizations, the best development strategy may be to track employees who leave, use your network to keep them connected and then hire them back.

Or there are entrepreneurs who suggest the future of employment will be so-called “tours of duty,” where an employee who networks, keeps his or her LinkedIn profile up-to-date and thinks about other opportunities isn’t considered a liability, but the kind of entrepreneurial, forward-looking person companies should want.

If the future is the network, then should a person’s connections be a key factor in your hiring, development and reward decisions? The answer requires rethinking some traditional assumptions and illustrates the increasingly important external role of HR leaders.

China provides a vivid example. Chinese society relies on social ties and networks, or guanxi, that are often informal and family-related. A review of 53 studies in Management and Organization Review showed that government and business ties are related to organizational performance, and that business ties help operational performance while government ties help economic performance.

So it’s not surprising that senior executives at JPMorgan in Hong Kong employed a “sons and daughters” hiring program that took account of the family ties of candidates. A recent New York Times article reported that JPMorgan executives in Hong Kong emphasized that the father of a job candidate was the chairman of the China Everbright Group, and noted that hiring such sons and daughters had “almost a linear relationship” with winning advising assignments to Chinese companies.

Employees apparently saw their successful family connections as job- and reward-related, as one junior banker in Hong Kong resigned by writing in an email that he did not think his family could bring its business to the firm.

The article reports that such practices are pervasive with firms doing business in China. Based on the evidence, such practices would seem justifiable as a legitimate candidate qualification to increase the guanxi of the bank. Yet these practices are under investigation by the Securities and Exchange Commission.

JPMorgan has not been accused of wrongdoing, but does hiring the son or daughter of a government official improperly trade jobs for business? Does it matter whether the son or daughter is legitimately qualified for a “real job” at the bank, or should his or her “real job” be the family connection?

The answer rests on the complex relationships between economics, social values and regulatory and government processes. Who should help the organization navigate these relationships? Who should advise on this question if not HR and talent management leaders tasked with understanding the nexus between talent, organizations and success? Are HR leaders qualified to help the SEC understand why family connections are job-related?

For talent managers, this is an important trend. Future HR leaders will be expected to see beyond the boundaries of functional expertise or even the HR profession and operate with constituents that include governments, shareholders and industry watchdogs.

Yet to make good on this opportunity, future talent managers will also need skills well beyond traditional competency models. Are you and your organization preparing future talent management leaders to step up?

John Boudreau is professor and research director at the University of Southern California’s Marshall School of Business and Center for Effective Organizations, and author of “Retooling HR: Using Proven Business Tools to Make Better Decisions About Talent.” He can be reached at