Boards and Social Media, From a Directors Perspective - Directors & Boards Q1 2013

1. 34 DIRECTORS & BOARDS
BOARD PRACTICES
D
, 100,000
tweets will appear on Twitter,
684,000 pieces of content will be
shared on Facebook, 48 hours of
fresh video will be uploaded on
YouTube, and 3,600 photos will be shared on
Instagram. Social media is the leading reason peo-
ple visit the Internet — and
the implications for business
are profound.
But according to theso-
cialskinny.com, 40 percent
of companies admit to hav-
ing no training on or gov-
ernance of social media. By
adding social media as a topic
for management oversight
and strategic input, boards
can help their organizations
capitalize on a powerful force
that’s here to stay.
Social media
know-how is a distinct skill set needed in
the boardroom. But should such exper-
tise be bolted on or baked in? Research
indicates that less than 5 percent of di-
rectors admit to having ever used social
media.Although no one skill should be a
litmus test for board membership, savvy
boards should seek access to social media
expertise — either through knowledge-
able board members or outside experts. Currently,
social media proficiency is a welcome addition to
any director’s skill portfolio. Eventually, I believe it
will become a de facto requirement.
In the meantime, boards can begin a necessary
dialogue with management by asking some key and
perhaps inconvenient questions:
• Do we understand
social media's vast potential
to transform our business?
• What is our strategy for
protecting and creating value
via social media?
• Do we have mandatory
training for our people and
a well-articulated policy for
mitigating risk?
• Who owns the respon-
sibility for social media? If
shared across organizations,
is there strong collaboration?
• Have we allocated the
resources needed to ensure an effective social media
presence?
While these issues relate to oversight and
strategy, two other aspects of social media merit
special consideration:
Talent: Understanding how and when to engage
employees through social media is important and
also different from your external strategy. A recent
survey found that 78 percent of respondents would
prefer to work for organizations whose leadership
is active on social media. However, another study
sponsored by Deloitte found that significantly more
executives than employees believe that social media
has a positive impact on workplace culture.One pos-
sible conclusion: business leaders may be using social
media as a crutch merely to appear accessible.
Measurement: Social media is personal in nature.
Outcomes such as awareness, sentiment, and trust
Lead or be
left behind
A chairman’s perspective on social media. By Punit Renjen
Punit Renjen is chairman of the board of
Deloitte LLP. He has 26 years of experience
with Deloitte. Throughout his career, he has
helped clients in various industries address a
range of issues, including merger integration,
operations improvement, and corporate strategy. He is a frequent commentator
on the attributes of exceptional organizations, including the importance of a well-
articulated workplace culture and a high-functioning board of directors.
Standing idle
while others advance
their social business
capabilities
presents enormous
competitive risk.

2. FIRST QUARTER 2013 35
BOARD PRACTICES
By Kayla Hamberg
For better or for worse, social media is here
to stay. Social media outlets like Facebook,
Twitter, and Google+ have become primary
channels to communicate about products,
culture, politics and everything in between.
Even companies with minimal social pres-
ence must be aware of and wrestle with the
complex issues that can arise in this vast and
freewheelingenvironment.Unmanaged,even
seemingly innocent social media activity can
quickly morph into an embarrassing reputa-
tional issue or even a major threat.
Not surprisingly, social media has become
an important area of risk management for
directors, requiring thoughtful engagement
with executive teams and knowledgeable
outside experts. All directors should familiar-
ize themselves with their company’s social
media presence and policies, regularly
review corporate social media activity, and
ensurethatthereisroutinemonitoringoftheir
company’s “digital reputation” as well as a
robust social media response component to
the company’s crisis communications plan.
All directors should consider the following
whenevaluatingandadvisingonacompany’s
social media policies and practices:
• Managing Appropriate Social Media
Use: Doesthecompanyhaveanofficialsocial
media policy? Is it consistent with existing
confidentiality policies? Has it been reviewed
and signed by all employees, or just employ-
ees with social media responsibilities?
Effective social media policies make clear
that social media is just another communica-
tion channel and the same rules that govern
other communications apply in this context.
Boards should ensure proper implementa-
tion measures are in place so that all parties,
including outside consultants and other ven-
dors, comply with the policy and have appro-
priate oversight.
• Business Use vs. Personal Use: How
can a company be sure that employees are
adhering to relevant policies and conduct-
ing themselves appropriately in their private
interactions on social media?
In some cases, business and personal
activity maybe difficulttoseparate. Whileitis
not possible to police individual social media
accounts or impose blanket restrictions on
employees’ ability to freely express personal
opinions on social media, employees must
understand that they do so at their own risk.
There are numerous examples of the unfor-
tunate consequences of an errant personal
“tweet”sentfromacorporateTwitteraccount
oraprivatemessageunwittinglybeingposted
to a company’s Facebook wall.
Effective social media policies make clear
that employees must maintain corporate and
social media accounts separately and clear-
ly define appropriate communications, with
examples of what is acceptable and what
is not. For example, the kind of information
that is appropriate for use on LinkedIn, where
employees can make professional connec-
tions, market services, or recruit new talent,
may be different from what would be appro-
priate on a personal Facebook account.
• Crisis Management: Is a social media
crisis plan in place? Have proactive, preven-
tative measures been put in place and imple-
mented?
Beforeacrisiseverhits,companiesshould
optimize their online reputation and social
media presence by building favorable corpo-
rate “digital images” on major sites such as
Facebook, Twitter and LinkedIn, and actively
monitor important blogs, online media and
corporate Wikipedia pages. Preventative
measures such as these are the best defense
against a negative social media campaign,
ranging from vandalizing Wikipedia pages, to
creating“fake”Twitteraccounts,toanall-out
attack upon a company’s reputation. If gone
unchecked, then these activities quickly can
spread to traditional media and cause long-
term reputational damage.
Is the company prepared to engage in
social media during a crisis? Every company
should have a methodology and mecha-
nism in place for real-time engagement as a
crisis unfolds, and all relevant departments
should have input into and ready access to
the plan.
Any crisis requires streamlined decision
making and rapid, proportionate responses.
Often occurring simultaneously with very
serious, substantive crises such as environ-
mental spills or product recalls, activity in the
social media realm still tends to be ignored
until late in the game. Preemptive planning,
the establishment of a credible online reputa-
tioninadvance,andthedesignationofofficial
social media “first responders” will help con-
tain collateral damage in social media.
• Investor Relations and Corporate
Disclosure: Does the company engage in
social media for investor relations or corpo-
rate communications purposes? Does it have
a sanctioned “point person” or team, includ-
inglegaloversight,reviewingallfinancialand
material disclosures made via social media?
Compliance and legal should be involved
in these activities to ensure that all applica-
ble rules and regulations are followed when
using social media for corporate purposes.
Once appropriate measures are in place,
the probability of a social media mishap, such
as an employee confidentiality breach, a dis-
closure misstep, or a crisis that spirals out of
control, can be minimized.
Kayla Hamberg is an associate in the Digital
Communication Group at Sard Verbinnen,
a strategic corporate and financial com-
munications firm. She can be contacted at
khamberg@sardverb.com.
How boards can avoid a social media mishap
Kayla Hamberg: Response activity in the
social media realm still tends to be ignored
until late in the game.

3. 36 DIRECTORS & BOARDS
BOARD PRACTICES
may be hard to quantify. Developing metrics that
matter — such as a consistent measurement for
ROI — can help organizations assess social media’s
potential for risk and reward.
An exciting era has arrived. A few years ago,
boards greeted social media as a source of continu-
ous concern. Today, we’re at a hinge point where
boards can also embrace social media as a source
of ongoing opportunity.
Yet, like time, social media waits for no one.
Standing idle while others advance their social
business capabilities presents enormous competi-
tive risk. In an emerging market where valuable
relationships can evolve with each passing minute,
boards have a straightforward choice to make about
social media — lead or be left behind. !
By David J.P. Meachin
Until recently, it has been too easy for cor-
porate directors to ignore social media. As
noted author Dave Kerpen points out: “Social
media is still in its infancy, and many business
executives and boards of directors still don’t
understand how to leverage it for the benefit
of their organizations, large or small. In many
cases they are too focused on the talking and
not focused enough on the listening.”
But social media has earned a spot on
the board agenda. According to Nielsen, the
total time spent on social media in the U.S.
increased by 37% to 121 billion minutes in
July 2012 from 88 billion minutes in July 2011.
Internet users spend more time in social
media than any other site. That’s a lot of
opportunity to enhance a company’s brand
or impair its reputation.
A recent survey by CEO.com showed a
significant gap between the use of Twitter,
Facebook and LinkedIn by Fortune 500 CEOs
and the CEOS of smaller fast-growth com-
panies. Major companies without an effec-
tive social media presence are limiting their
potentialforagilityandgrowth.Thisofcourse
creates a more level playing field for the
goods and services of smaller companies.
In major companies, information flows
up and is filtered through numerous layers
of management. The end result may bear
little relationship to reality. Social media
cut through those filters to give executives
a customer’s-eye view. Never has it been
easier to connect with customers and other
stakeholders to understand what they are
truly thinking.
So, against this rapidly changing land-
scape, what should directors know and do
to further the fortunes of the companies on
whose boards they sit?
Let’s look at risks first. Social media mis-
takes can be expensive. When the Internet
attacks, which it often does at lightning
speed, a company needs to be ready. Tactics
for directors to consider:
• Establish internal policies and proce-
dures on how to use social media appropri-
ately and how to react to bad news. CEOs
and other executives who interface with the
media should avoid off-the-cuff remarks. Vet
all comments before posting.
• When responding, don’t criticize. Where
possible, listen, empathize, and be authentic.
Customers value authenticity.
• Don’t try to hide unflattering posts on
social media — it will be seen as censor-
ship.
• In some cases not responding is the
correct response — particularly when the
dialogue may become heated.
The benefits of embracing social media
are likely to outweigh the risks. They include
the following opportunities:
• To directly and immediately respond to
customer concerns/complaints/recommen-
dations.
• To gain low-cost publicity for the
company’s brand and products among a base
of engaged followers who communicate with
the company.
• Torewardthemostloyalcustomers(who
follow the company on social media) with
discounts and deals.
Increasingly, companies are making use
of analytics to empower their marketers with
insights into what works with their existing
social media strategy, what engages their
mostloyalcustomers,andhowtokeepahead
of the competition.
Social media is a way of life for an ever-
expandinguniverseofcustomers.Fortunewill
favor those companies and their boards who
take the time and effort to understand social
media and embrace what it offers. Informed
directors can ask the right questions and
better assess whether their companies are
appropriately positioned for marketing in the
21st century.
David J.P. Meachin is the chairman and CEO of
Cross Border Enterprises L.L.C., a New York-based
investment bank (www.crossborderent.com). He
has served on major public company boards for 15
years and currently serves on two private digital
media company boards.
Boards and social media, from a director’s perspective
David Meachin: Never has it been easier to
connect with stakeholders to understand
what they are truly thinking.