Directors need social media strategies
By RICHARD HARTUNG
The Business Times, 5 May 2023
SOCIAL media is ubiquitous and pervasive. Globally, studies have found that, on average, people spend more than two hours a day on Facebook, Twitter, LinkedIn, YouTube and other forms of social media.
Many companies have strategies and teams to best position themselves in the social media space. However, company executives and directors are often less conscious of the impact of their personal activity in social media on the company – and themselves.
Analytics firm Social Sprout found in its 2022 survey that 63 per cent of people say CEOs who have online social profiles are better representatives for their companies than those who do not.
A social media presence that “personalises” leaders can help their companies gain a competitive advantage and garner support from employees and investors.
AirAsia’s CEO Tony Fernandes gained considerable praise for his open approach on Twitter following the loss of AirAsia Indonesia flight QZ8501 in 2014. And personal posts by Microsoft’s chairman and CEO Satya Nadella have gained him 10.4 million followers and helped build the company brand and its relationship with stakeholders.
However, social media can also damage reputations. In 2018, Tesla’s CEO Elon Musk was fined US$20 million (then S$27 million) by the US Securities & Exchange Commission for falsely claiming in his tweet that he had “funding secured” to take Tesla private at a premium when a buyout was not close. He was also forced to step down as chairman of the company.
In general, employees would like to have a connected leader, someone who is social media savvy. Advisory firm Brunswick Group’s Connected Leadership Report in 2022 found that 73 per cent of employees globally expect company leaders to use social media to communicate. This compares with 85 per cent of employees in Singapore. All else being equal, employees prefer to work for a CEO who uses digital and social media as part of their work more than a CEO who does not. Globally, the ratio is 4:1, while the ratio rises to 9:1 in Singapore.
The reality is quite the opposite. Research in 2022 by advisory firm Influential Executive showed that only 70 per cent of CEOs of US Fortune 500 companies have a profile on at least one social media platform. Anecdotally, corporate leaders of smaller companies, and especially in Asia, tend to take a lower profile on social media.
Why is this so?
Legal and reputational risks
For one, it could be their lack of familiarity with the technology, which is much more natural and appealing to the younger generation.
Another is their preference to be prudent, especially with reputational and legal risks. Asian culture places a lot of weight on “face”. What is once said on social media cannot be taken back. So, most veer towards saying nothing.
In Singapore, as in many countries, there are few laws that specifically address social media. Only the Protection from Online Falsehoods and Manipulation Act (Pofma) refers to social media. While other laws, such as the Copyright Act, Defamation Act and Protection from Harassment Act, govern acceptable behaviour, they do not expressly mention social media.
As seen in the Elon Musk/Tesla case, directors can be liable for making materially false or misleading statements on social media in the US. In Singapore, prosecutors could probably use the Securities and Futures Act, as well as other laws (such as the Defamation Act and Protection from Harassment Act) to bring to account those who are reckless in their pronouncements.
What directors should do
The Code of Corporate Governance requires companies to have “arrangements in place to identify and engage with its material stakeholder groups and to manage its relationships with such groups”. An important part of that engagement could be on social media, and thus there would be a need for a strategy to do so.
To ensure that companies use social media effectively and responsibly, three practices are especially important.
First, CEOs and corporate directors should ensure that their company establishes a clear strategy and well-defined policies for how employees and leaders should use social media. These policies should include goals, expectations, guidelines, processes and best practices. Directors should also ensure that comprehensive monitoring programmes are in place to look for positive or negative social media posts by internal and external stakeholders.
Second, these policies should include everyone from the most junior employees to the board and CEO. Social media can be complex. Directors and staff need to understand the potential benefits and risks of their posts, including the legal liabilities.
Finally, companies should conduct scenario planning. Management should be prepared for cyber attacks, lawsuits or false accusations. A response team should be trained and ready instantly to analyse the situation, develop a plan and deliver well-considered responses.
Ubiquitous as social media may be, it is hardly straightforward. Good corporate policies can help firms gain advantages and avoid pitfalls. Directors need to be proactive regarding social media so they can exercise their responsibilities for the company effectively.
The writer is a member of the Advocacy and Policy Committee of the Singapore Institute of Directors.