Social media, reputation & IR

There’s a gap in many corporations – and among investor relations people – between recognizing the growing influence of social media (on one hand) and hesitating (on the other) to engage proactively to support company reputations.

In a guest post today on the “Full Disclosure” Big Fat Finance blog, Sharon Allen, Chairman of Deloitte LLP, talks about the firm’s recent “Ethics & Workplace” survey of 500 executives and 2,000 employees. Bosses and workers take different tacks:

  • Although 60% of executives believe companies have a right to know what employees are saying about themselves and their employers, the majority of workers say posts on networking sites are none of management’s business.
  • While most employees recognize that online posts affect their companies’ reputations, a third say they don’t consider bosses or customers’ possible reactions before posting on social networking platforms. 41% of employees say they wouldn’t change their online behavior “even if there were a clear corporate policy about social networking use.”
  • In any case, only 17% of the companies “have programs in place to monitor and mitigate the possible reputational risks related to social network use.”

Allen comments:

As we’ve seen all too often recently, offensive Internet postings and viral videos can race across networks at the speed of light. Left in their wake are damaged brands and shattered reputations …

Establishing policies — or assuring that existing core policies extend to include employee behavior on social networking sites — is crucial to helping everyone understand what constitutes acceptable behavior, especially when our survey results indicate that so few companies have addressed the issue.

Because of the reputational risks, boards of directors should be addressing social media, the Deloitte exec suggests. She says companies should establish policies on use of social networking – and integrate new media into their cultures.

Allen doesn’t address potential risks in investor relations – such as employees leaking financial information on Facebook or tweeting about business trends (whether optimistically or negatively) on Twitter. These risks are good reason for IROs to help management incorporate social media into disclosure policies, implement monitoring of chatter, and develop a strategy for active engagement to support corporate reputation, in addition to individual brand marketing online.

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2 Responses to “Social media, reputation & IR”

  1. Joann Sondy Says:

    Excellent article. I was surprised that 60% of executives surveyed think they have a right to know what their employees post on SM sites! Wow, forget telling your mom about your vacation.

    This post is very timely, since my conversation yesterday with an IR consultant revealed that many companies are on maintenance mode right now are are not interested in social media as a tool for investor relations. “What is the ROI?” and “Is my target audience on these sites?” are common question from public companies right now.

    It’s going to be a slow integration…..

  2. Dick Johnson Says:

    Thanks for commenting. I’m afraid you’re right about slow adoption. Brand and product managers seem to be driving SM participation, especially in consumer-oriented businesses. Only a minority of companies are taking an integrated corporate approach. Most IROs I talk with are interested, but too busy or hesitant to confront the issues around active engagement. Many IR people also see SM as a retail phenomenon, not for professional investors. Institutional investors’ monitoring of social media for “unofficial” information may eventually drive IR to greater involvement. The minimum companies should do now is add standards for employees’ posting of corporate information on SM to corporate conduct policies.

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