How Employees Predict Their Organization’s Future

In my previous blogs, I discussed how employees help create strategic value in top-performing companies. The strategic value of employees lies in them becoming “self-fulfilling oracles,” and encouraging this transformation. Employees are not only keen prophets for their organization’s future but also agents who help actualize it in favor of their home organization. As a follow-up study, I conducted additional analysis with Soo Park, Arunima Krishna, and Valentina Martino specifically about “scouting,” an activity that may enhance (cyber) risk management for organizations; when employees become active signal scouters their communicative actions create informational assets from organizational environments. Such assets are then fed back into the organization to help understand and predict risk. The study is one of the first to extend the new concept of “scouting” to employees’ information behaviors in cyberspace and discuss the ways for organizations to capitalize on such phenomena as part of corporate management and risk management.  I summarize key findings in this blog.

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In this digitalized, networked society, signals and indicators of organizational turbulence, strategic opportunities and important information take digital form. Employees’ informal, routine communicative behaviors to search the signals help organization anticipate emerging threats and further opportunities. Mining further the dataset we used in the previous blog, my research team further investigated the possibility of and conditions that motivate individual employees to increase voluntary cyberscanning activities or online scouting of digitalized communicative environments. The findings are summarized in the following tables.

Summary Tables: Means of Online Scouting (DV) of the Three Two-way ANOVA Tests

Scouting By Size/Resource of Company and Quality of Organization-Employee Relationship (OER)

Scouting By Stock Ownership and Quality of Organization-Employee Relationship (OER)

Scouting By Stock Ownership and Corporate Size/Resource

Standard Deviations in parenthesis.

As is evident from the tables, the test results indicate that employees at organizations of greater corporate size or more resources (such as revenue) are more likely to engage in online scouting or cyberscanning. We believe that these organizations should expend more financial assets and resources for their employees on activities such as selection and training of competitive or motivated employees in the effective use of cyberspace so that such employees are more likely to search for and share environmental signals. Besides, employees who reported higher quality of relationships with their working organizations are more motivated to search for and share information from their routine working processes. This study also found a significant interaction effect between the corporate size/resources and organization-employee relationship quality. We further examined whether employees’ stock ownership influences their voluntary cyberscanning efforts. The study showed the main effect of stock ownership and also a strong interaction effect between stock ownership and relationship quality. Yet, there was no interaction effect between corporate size/resource and stock ownership.

Overall, the findings indicate that relationship between organization-employees is the most important condition that encourages individual employees to engage in scouting for their companies. Interestingly, stock ownership alone cannot motivate employees for active scouting. Coupled with good Organization-Employee Relationship (OER), stock ownership can motivate employees substantially to engage in scouting. Likewise, with good OER, larger companies with more resources are more likely to induce their employees to voluntarily search for and share strategic signals from cyberspace.

L’argument clé (Key Argument)

It is important for managers to recognize the potential value of employees’ routine communicative behaviors, especially considering the unique skill-set and responsibilities of each individual employee. As Stoffels noted, about two-thirds of critical business intelligence comes from informal ways (Stoffels, 1994). In fact, employees can span and catch signals from most critical segments of organizational task/social environments through their routine contacts. They are able to create meaning out of signals, and further can judge and distribute the signals or information to the right members in the organizations. In this way, risk management of an organization can be supplemented by non-PR members of the organization. Finding ways of enhancing corporate cyber-risk management through employees is a rising area of research in public relations and business management.

This study also expands research on stock ownership research in human resource management. In previous research, employees’ stock options were considered to have relatively small attitudinal effects (e.g., Klein, 1987). In the present study, however, we hypothesized non-attitudinal consequences of employees’ stock ownership (i.e., scouting). The tests bring evidence that stock options or stock ownership can generate values from employees by increasing strategic information behaviors among employees. Further, the study identified and provided evidence that the positive effects will be greater as stock owning policy is accompanied by relationship cultivation efforts. Good compensation systems and employee participatory efforts can generate more important communicative and behavioral effects of employees and corporate risk management.

The results of the study also show that Fortune 500 companies, who are considered better performing and more successful organizations, are capable of utilizing and capitalizing on employees’ relational assets and informational assets into the managerial processes. It is intuitive to assume that larger organizations would have a higher financial stake and would have a better or more effective risk management process or system. However, a specific mechanism utilizing employee relations has received little attention in previous research both in public relations and business management.

Stock options, and the reward of spending resources for better OER (internal communication) and other cultivation strategies of relationship will make organizations more ready to deal with cyber risks and environmental turbulence. For some corporations, the absence or lack of employee-reward systems may be a source of losing competitiveness. Notably, the large corporate resources/size and multiplicative effect with good OER worked to increase online scouting of employees. Our study shows that smaller or less resourceful companies should make an extra investment for better employee relationships to compete with larger, resourceful competitors. In fact, the test findings indicate that the small size of the organization is more punishing – losing (cyber) risk management capacity when it has poor OER, especially arising out of its relative lack of financial compensational measures (e.g., stock options).

Jeong-Nam Kim is an associate professor in the Brian Lamb School of Communication and Department of Political Science (courtesy) at Purdue University.

References:

Kim, J.-N., Park, S., Krishna, A. & Martino, V. (2015). Risk management through employees: Testing employees’ voluntary scouting and corporate readiness for cyber risks. In E-J. Ki, J. Ledingham, & J.-N. Kim (Eds.). Public relations as relationship management: A relational approach to the study and practice of public relations (2^nd Edition) (pp. 199-213). New York: Routledge.

Klein, K. J. (1987). Employee stock ownership and employee attitudes: A test of three models. Journal of Applied Psychology, 72, 319–332.

Stoffels, J. D. (1994). Strategic issues management: A comprehensive guide to environmental scanning. Oxford, OH: Pergamon.

[1] This blog is excerpted and summarized from the chapter, “Risk Management Through Employees: Testing Employees’ Voluntary Scouting and Corporate Readiness for Cyber Risks” (Kim, Park, Krishna, & Martino, 2015, pp. 199-213). Readers can find more detailed discussion and test results in the new edited book from Routledge, “Public Relations as Relationship Management: A Relational Approach to the Study and Practice of Public Relations” (Ki, Kim, & Ledingham, 2015).