Social Business Needs Social ManagementSocial business has the potential to change the way we work, but for the most part it has not. The social enterprise is not yet here, though many talk about it, and confuse it with using social tools. For that, we can blame management. 

As many people, from W. Edwards Deming to Gary Hamel have observed, management is what really differentiates organizations. It was better management that allowed Japanese automobile manufacturers to dominate the North American market, using the same raw materials and work force. Most management practices have changed little since the beginning of the millennium. We still have many vestiges of early 20th century industrial management -- hierarchies; work standardization; job specialization; planning; and control. Extrinsic rewards are then dispersed by management based on these principles.

Compensation is Broken

The first elephant in the social room is compensation. As Gary Hamel describes:

… compensation has to be a correlate of value created wherever you are, rather than how well you fought that political battle, what you did a year or two or three years ago that made you an EVP or whatever."  -- Leaders Everywhere: A Conversation with Gary Hamel

If compensation was really linked to value, then salaries, job models and other ways of calculating worth would have to be jettisoned. As it stands, in almost all organizations, those higher up the hierarchy get paid more, whether they add more value or not. It is a foregone conclusion that a supervisor has more skills and knowledge than a subordinate. This has also resulted in the requirement for more formal education as one goes up the corporate ladder, whether it's needed or not.

Social Business is a Hollow Shell without Democracy

The other elephant in the room is democracy. For management to work in the network era, it needs to embrace democracy, but we are so accustomed to existing structures that many executives would say it is impossible to run a business as a democracy. But hierarchy is a prosthesis for trust, according to Warren Bennis, and trust is what enables networked people to share knowledge and innovate faster. A key benefit of social tools is to share knowledge quicker. Trust is essential for social business but management can easily kill trust. Democracy is the counterweight to hierarchical command and control.