SOCIAL MEDIA AND IR

Social media is being widely used by companies across Canada, but what impact is it having in the boardroom? This topic is explored in Korn Ferry’s report The Impact of Social Media on Boards and Directors Today. Korn Ferry surveyed 171 Directors on their views of social media, including the extent of personal knowledge, perceived impact on businesses and potential risks and opportunities. Simplistically, the Korn Ferry findings signal that the majority of Boards surveyed do not feel that they have the skills and information necessary to provide adequate oversight of their company’s social media activities. For any IR department charged with the social media program, the report highlights the necessity for social media education in the boardroom.

This need is demonstrated in the finding that while 53% of Directors surveyed believed that a company cannot be competitive without social media in today’s business environment, 73% did not consider themselves very knowledgeable on social media. Considering the high risk associated with a poorly managed social media program and, conversely, the great opportunity from a well-executed program, this knowledge gap may be putting Boards at a disadvantage. The challenge for IR is deciphering what information Directors need to provide oversight and how best to deliver it. 

Social Media 101

My mom called me the other day to tell me that she was interested in using Instagram and was wondering if she could borrow my camera to take the pictures. This, of course, was met with an eye roll and a chuckle. (If the humour is lost on you, call someone under 30!) I don’t tell this story to pick on my mom (honest), but to illustrate a dynamic that likely exists on many Boards today. There is a general awareness and excitement around the many opportunities that social media provides, while at the same time there is often a critical knowledge gap about how it is used. This knowledge gap may surface as hesitancy and fear of the risks, or overzealousness as to how and to what extent social media should be implemented.

Directors do not need to be social media whizzes to provide adequate oversight, but they do need to have a general working knowledge of social media. The Korn Ferry survey shows that the top three activities identified by Directors as preferable for social media education are: exposure to senior management responsible for social media; director education on trends in social media; and summary reports on corporate social media metrics. All of these activities would undoubtedly be useful, but before Boards can begin asking the right questions and interpreting metrics, a social media crash course providing a basic overview may be a good starting point. Below are some topics to consider including in social media education. 

• Overview of Platforms and Use:  Review the main platforms that matter in your universe. These are likely Facebook, Twitter, YouTube and LinkedIn. Go beyond a description of each platform and aim to develop an understanding of how each platform is effectively used. For example, the type of content that is successful on Twitter is different from Facebook or LinkedIn.

• Rules of Engagement:  Social media missteps are quite often the result of a lack of understanding of the culture and communication norms in the space. Educate on items such as language, tone and customs and, critically, how these differ from traditional media. Understanding the culture of social media can be compared to visiting a foreign country with a different language and culture. To a native speaker, social communications that are ‘accented’ or out of step with the culture of the platform are glaringly apparent. It is critical for Directors to understand the nature of social communication, as it will inform how they advise platforms be used and monitored.  

Moving from the macro to the micro, Directors should be aware of your current social media program and strategy, and how this strategy supports your broader corporate objectives. 

• Company Social Media Landscape:  Review the platforms on which you are currently active. For each platform, information such as the type of content posted, frequency of posts, number of followers and follower demographics is valuable information that helps paint a picture of a company’s social footprint. 

• Strategy:  Articulate your strategy for each platform. Explain how this strategy relates to your wider communications strategy and how social media complements or expands on traditional communication initiatives. Additionally, explain how your social media activities support wider corporate objectives.  

• Benchmarking Information:  Compare your program to those of your peers. This information will aid Directors in understanding trends and best practices.  

• Review Internal Processes and Policies:  Equally as important as what you are doing is how you are doing it. Review the internal processes and policies in place around social media use for both corporate accounts and employee use. What are your processes for approval and posting of content? Who has access to the accounts? Do you have a policy for employee use of social media and what does this govern?

• Monitoring:  Briefly explain what approach you take to monitoring. Do you use a monitoring tool? How frequently do you monitor? What is the procedure for reporting? Are there guidelines in place for timing of responses? A detailed account of how each mechanism works is not necessary, but by reviewing these processes you will provide comfort that risk is being managed and open the conversation to identify improvements to processes.  

Risk Management and Future Opportunity

The risks and opportunities of social media are discussions that should be occurring at the Board level. The three most significant risks identified by Korn Ferry were: security or disclosure of non-public information; lack of control over messaging; and reputational risk. Assist the Board by reviewing these risks and how they relate to your company.

• Outline Key Risk Factors by Platform:  As content and tone are different across the platforms, so are the types of risk. Identify key risks for each platform and outline the measures currently in place to mitigate these risks. Include a classification of risk levels for each platform, as some platforms will inherently impose higher risk than others. For example, a Twitter feed that solely advertises job postings will have less risk exposure than a Facebook page dedicated to community engagement. 

• Crisis Communications Tool:  While being active on social media undoubtedly exposes a company to certain risk, it can also work to mitigate risk. The best example of this is from the BP Deep Horizon incident, where fake accounts drew far higher numbers of followers than the official BP account, causing the spread of misinformation and reputation damage. Had BP been in front of social media and worked to build an engaged audience prior to the incident, Twitter could have been an effective outlet for critical messages and a site of reputation management. Help the Board understand how you currently are using, or can use, social media as a crisis communications tool. 

• Identifying Future Opportunity:  Korn Ferry found that 55% of respondents felt that the potential benefits of social media outweighed the risk. As a highly engaging and evolving tool, the benefits of social media can have applications across an organization. However, the relevance given to social media at Board meetings is likely playing a part in how effectively Boards can identify future opportunity. Of the total respondents in Korn Ferry’s survey, 46% said that social media issues are added to the agenda as they arise, and only 11% cited this as a regular topic at meetings. In order to successfully identify future opportunities, Boards will need to take a more proactive approach to reviewing social media issues.

Findings from the Korn Ferry report identify challenges for Boards, as well as great opportunity. I am encouraged that the conversation is alongside a review of general governance practices. Social media has changed the way we communicate with investors, employees and stakeholders, no matter your industry. It has a meaningful impact and no doubt will continue to play a role in how companies communicate.  Discussion of social media deserves a place in the Boardroom – even if it is still at the kids’ table. 

Megan Hjulfors is Investor Relations Advisor at ARC Resources Ltd. in Calgary.