Ensuring social media is on the board's agenda
Social media networks add and link customers, employees, investors and other stakeholders to your business every second of every day.
Most directors are concerned primarily with the growing reputational risks that such a channel can generate — for example, when an event or headline “goes viral” on social media and propagates, creating a disproportionate impact.
Listen. Engage. Persuade
The best way to mitigate this type of reputational risk is by monitoring social media chatter and ensuring the company is well-placed to respond rapidly. This can pose a challenge when companies have time-consuming approval processes.
As one former digital activist said: “Whether you like it or not, people out there on social media are talking about you, reading about you and making up their minds about you…If you are not part of these conversations, guess who’s in charge of public perception and brand reputation? The consumers you have angered, your competitors and the activists that hate you.”
Tracking social media conversation allows a company to understand which topics are provoking discussions. It also allows them to intervene when needed to sway the discourse in their favor. Organizations should listen, engage, and persuade – in that order, and quickly.
Opportunities often remain underexploited
Companies active in social media conversations often lead the way with customers and employees. They don’t only turn to social media when things go wrong, but regularly engage and build loyalty. They may generate revenue growth through better targeting and reduce costs by eliminating less effective advertising.
Many audit committee chairs remain skeptical of the benefits of employees’ use of social media. However, research indicates that employees trained on the proper use of social media channels actually become highly effective ambassadors for their companies.
In addition, with investors and analysts increasingly drawn to social media for both communication and research purposes, investor relations departments have found social media an effective communications channel. A 2012 survey revealed that 32% of Western European companies use at least one form of social media to communicate with investment professionals.
Boards should take an active oversight role
Forward-thinking audit committee chairs and advisors suggest that given the gravity of the reputational risks involved, social media should be a full-board issue, rather than one limited to an audit or risk committee.
Some board directors receive updates about policies regarding social media use by employees and management. However, they remain unaware of the full extent of how different areas of the business actually use it.
Boards may wish to consider adding a director with digital expertise (though they may be tough to come by). As part of increasing awareness, directors who use social media as a personal source of news and market intelligence are better able to ask management more pertinent questions.
Questions for audit committees
- What are the most significant risks our organization faces from social media?
- What is our strategy for mitigating reputational risk?
- How are we monitoring our organization’s reputation in social media and how quickly can we respond to issues?
- Does the board receive the appropriate briefings on social media policies and issues as they arise?
- Does the board have “digital” members or executives with the necessary skills and experience to co-ordinate social media programs?