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Crowdsourcing vs. Employees: How to Benefit from Both

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Outsourcing tasks to a network of people, commonly known as crowdsourcing, has recently been quite popular in the world of business. According to a study by the research firm massolution, crowdsourcing has shown a growth rate of approximately 75% in 2011 in comparison with 2010.

One could say that crowdsourcing is becoming one of the most important decision support schemes in the modern world of business.

Crowdsourcing vs. Employees

Despite the growing significance of crowdsourcing within the Enterprise 2.0 world and good intentions of using the collective intelligence of a crowd to aid your company, a recent case has shown that this approach can also be prone to misuse.

According to several media reports (Reuters, Techgig) IBM is planning a big restructuring of their workforce, resulting in a massive job reduction.

Through a Fire & Re-Hire strategy IBM is planning to release about 70% of its worldwide workforce — up to 300,000 employees — and then get them back on board as freelancers. This would allow IBM to save on fringe benefits and other labor costs.

However, for the employee all of this might not be good news. Firstly, this could mean long times of unemployment for former workers. Secondly, the loss of medical and social benefits would mean an extra burden for employees. Additionally, all of this could increase work-related stress levels.

Crowdsourcing with Employees

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An alternative to traditional crowdsourcing approaches is employee-based crowdsourcing using people from within the organization.

Traditional crowdsourcing is usually about outsourcing minor tasks or creative tasks to external consumers or freelancers. To increase the quality of the contributions these external crowdsourcing initiatives, employees are given incentives in the form of fame and/or prizes (coupons, discounts, material prizes).

Employee-based crowdsourcing is taking crowdsourcing inside the company. The main difference is that you cannot ask your employees to do minor tasks or creative tasks because that’s what you are already paying them for anyway. You are going to crowdsource the knowledge, experience and opinions of your employees.

Social Forecasting uses your existing workforce as experts in their fields and also as a consumer relevant group. This is often underestimated, as employers often see their staff only as workers, coming in and going out. But what happens after work? Each and every employee is a consumer himself, even if not always of your particular products. Your employee knows more about the market, competitors and trends than you might suspect.

If all of this is considered and combined, what you get in result is your own Social Decision Support, your own oracle and information database. And since you will not have to crowdsource so much outside the company anymore, this will also save you a lot of money, that you otherwise would have spent on traditional crowdsourcing or forecasting. Additionally, employees keep their jobs and company loyalty is maintained.

Does it Work?

Social Decision Support systems have been used by various companies. The projects were of different sizes and regarding different topics — however, strategic goals have been accomplished in every single one of them.

Social Forecasting has shown impressive results in Henkel’s sales forecasting. Henkel is a manufacturer of fast-moving consumer goods with operations in over 120 countries. Using Social Forecasting, Henkel reached a 22% higher forecasting accuracy than the previous method. Thanks to this, EBIT has improved by tens of millions per region.

At Deutsche Telekom Social Forecasting was used to gather the knowledge of 240,000 employees simultaneously, which wouldn’t be possible without Social Forecasting. With this method, it took only 3 days for management to receive quantitative estimates and forecasts of topics ranging from demand forecasting, innovation, new products, HR and marketing.

Tchibo, who’s one of Europe’s leading retailers for clothing, consumer electronics, jewelry and home accessories, achieved a 90% cost reduction in the demand planning process of new products. Within a few weeks Tchibo outlets of all types were connected to the Social Forecasting tool and giving their sales predictions for upcoming products.

There are a few simple rules one has to consider when implementing Social Forecasting. First, the topics need to be both relevant for the managers, who are the benefactors of the results, but also for the crowd — the employees. This crowd must be precisely selected, since what you need is not a huge crowd, but a wise crowd. Participants must be familiar with the subject and have some knowledge about the things you want them to forecast. What is not needed in Social Forecasting is a representative sample. Also, there is a nice rule of thumb when it comes to the numbers of participants needed:

 

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