Managing a Ceo on Social Media Board Governance

What the CEO should be telling the Board most social media and online reputation direction

Early on this year nosotros posted this web log about the role of the Lath in relation to social media. We're reposting it today in response to increasing interest from clients regarding governance obligations relating to social media.

It's now axiomatic that even for the most reluctant organisations – many in fiscal services being among them – when it comes to social media information technology's a instance of not if, just when. Because the truth is, if your financial services organization is still at the 'if' phase, so it's not just seriously dragging the chain. It is putting itself – and its Lath of Directors – at pregnant risk.

Social media and its powerful potential role (both positive and negative) in many organisations' fortunes are now well established. As such, it should be straight recognised and addressed in a visitor's governance arrangements.

ASX and ASIC requirements

Financial services organisations seeking testify of this need look no farther than contempo guidelines and regulations issued past peak regulatory bodies such every bit ASIC and the ASX.

The ASX'south release late concluding year of a substantially rewritten typhoon Guidance Note 8 Continuous Disclosure: Listing Rules 3.1 – 3.1B , is just one example in point. I of the key messages from this new guideline, drafted in close consultation with ASIC, is that to achieve compliance with continuous disclosure requirements companies should be monitoring both traditional news and data sources and significant social media sites that regularly include information and posts well-nigh the company. The GN8 highlights the importance of having adequate monitoring and response systems in place 'especially in the age of social media'.

In cases of breaches of continuous disclosure requirements, under department 674 of the Corporations Act 2001, both administrative sanctions and, in serious cases, ceremonious and criminal penalties may apply.

A question of effective governance

More widely, in terms of corporate governance and a Board's responsibility for hazard management in general, a mounting body of legal decisions clearly shows that companies whose policies and procedures neglect to specifically address utilize of social media – permit alone ignoring its existence – do so at their ain peril.

The 'line in the sand' case on this is the Fair Work Australia conclusion on Linfox, which establish that the company non having a social media policy was only 'non sufficient' in the 'current electronic age' when so many other large companies accept 'taken pains to acquaint their employees with these policies'. Bottom line: when it comes to social media it really is a example of 'keeping upwards with the Jones'south'.

Hit home even more directly for Board members are problems such as privacy and confidentiality in relation to important financial (and other) announcements. Energetic boardroom tweeters accept more once institute themselves at the business terminate of a stern regulator when they've released information well-nigh Lath proceedings via social media – before the appropriate public disclosure is made. It'southward articulate that constructive policy and guidance on social media use applies to every fellow member of an organisation.

More recently case, the Federal Courtroom plant in Sea Folly v Madden that Facebook posts on a personal folio almost a corporate competitor may nonetheless be considered comments made 'in trade or commerce' – and institute misleading or deceptive comport nether section 52 of the Trade Practices Deed 1974 (superseded by the Competition and Consumer Deed 2010).

Cases such equally these make information technology articulate that the line betwixt personal and corporate identities are blurring. This is a situation that, unless appropriately addressed, brings with it a broad and, for many company directors, unfamiliar range of risks that more than than warrant the attention of a company'south highest officers.

It's all about reputation

If the straight legal and regulatory situation weren't enough to persuade a heel-dragging Board that it'south by time to tackle social media head on, there'southward also a spectacular selection of reputation fails to cull from.

The Alan Jones Twitter lashback and consistent withdrawal of programme sponsorship dramatically reduced both the revenue and share value from Macquarie Radio. Then in that location's the great Qantas 'luxury pyjamas' fiasco, the McDonald'south 'McFail' #McDStories case and countless others. It would exist very difficult in the face up of these instances for any Lath facing a serious social media crunch to maintain that they failed to protect shareholder value because they had no fashion of seeing it coming.

Getting social media on the Board

It'southward perhaps unfortunate that the about immediately compelling reason for many financial services organisations to appropriately accost social media – and that is, at Board level – is purely for the purposes of take chances management or, more than specifically, online reputation management.

Why? Because the other side of the social media coin spells serious value for companies that get it right. Edifice make and reputation that converts to bottom line performance; improved stakeholder engagement that leads to ameliorate products and services; the ability to leverage a de facto 'workforce' of make ambassadors and the opportunity to tell your company'due south story without the duchessing and expenditure associated with using traditional media are just a few.

However, the reality for a Board that'south committed to all-time practice governance is that risk management frequently comes beginning. For a CEO seeking to guide his or her Board on the vexed issue of social media, these pointers should be more than plenty to find social media a regular spot on the Lath agenda.

Of course, once social media is firmly where it should be on the Boardroom agenda, a range of other issues and questions arises. These include, among others, the questions the Board should be request about social media as it relates to reputation; information transparency and disclosure; crisis policy; strategy; and company culture and leadership.

In futurity blogs in this series, we'll comprehend more than of these Lath level issues.

In the meantime, if you need further persuasion – and some topline guidance on answering some of the questions cited above – this article from the Global Corporate Governance Forum offers a denoting and persuasive summary:

BlueChip Advice has also developed a useful step-by-step checklist to help organisations seeking to protect their online reputations. To receive a re-create, email us at social@bluechipcommunication.com.au.

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