By Amanda Peters – Amanda.Peters@EthicalBoardroom.com
Board members and senior executives are falling behind when it comes to taking part and capitalising on the opportunities available from social media. Board directors are not present in the social media space, and the few that are, are not sufficiently active. Many board directors and executives in major corporations have openly admitted, in relevant research studies that they lack understanding and competency of this online area of the market. The generation gap is especially wide when it comes to online presence and participation in social media environments. Online corporate governance and social media are relatively new trends and those market participants who act early will make the most of the opportunities on offer in the online arena. But many board directors currently remain only at the very beginning of the learning curve involved in acting in this online space.
Participation in social media is akin to other new modes of communication and interaction have they have emerged through the ages. Board directors must fight the urge to be cautious and averse when broaching this new area and they need to put presence and action in the virtual world higher up on the list of priorities in order to facilitate improved business growth and investor returns. A generally instinctive reaction from many board members is to restrict and control – especially when it comes to the company employees and their online presence. However, the internet age does not lend itself easily to this kind of restriction and board directors need to embrace an online existence of both staff and the company going forward. The new dynamics of business mean that information, change and communication can be executed at the touch of a button and the lines between public and private, personal and professional are becoming increasingly blurred especially in regard to online forums and social networks. A strong online presence and aptitude within online groups and social networks can lead to improved connection within a corporation in addition to other corporations and customers and clients. By taking control and action in this area relevant and engaging content can be transmitted to the relevant parties almost immediately. It is imperative that board directors take the reins of this changing movement and do not stand by as others direct the flow of online information.
On the other hand, becoming overly involved may lead to the risk of a company becoming too prescriptive – to the point of being counterproductive. Millennial generation consumers, shareholders and employees want an open discussion and engagement not a pre-shaped and forced sentiment imposed upon them. An overly managed approach to social media presence can risk hampering a company’s progress by causing brand and reputational damage.
The board of directors ultimately has a duty and responsibility for ensuring a profitable and sustainable corporate strategy is developed that is in the best interests of shareholders. They must ensure that proper risk management processes are in place and in today’s electronic age this involves online and social media. They must engage in these arenas actively and take proactive and remedial action as and when required in the online domain where relevant parties are increasingly interconnected. In some cases companies have developed online crisis communication plans for interacting online with relevant parties in the case of emergencies. Increasingly, consumers and shareholders are demanding instant responses to crisis situations and a company must be able to communicate the details and seriousness of the crisis in a timely manner – i.e. almost immediately in the case of the online age and environment. If the company does not properly utilise their website and social media in these kinds of circumstances other parties will direct the online discussion. This may have damaging consequences for the business into the future.
Further to this, the Securities and Exchange Commission has recently provided guidance that companies may communicate financial information through social media – within certain guidelines and this should further encourage boards to engage with social media and online spaces.
The possibility that companies fail to capture some social media based opportunities or face considerable reputational risk online is often not properly prioritised or missed altogether by board members. The ability to innovate in this area will be vital to business success into the future.
