Each minute there are more than 4.1 million "likes" on Facebook, 347,000 tweets being posted on Twitter, 300 hours of new video being uploaded on YouTube. It's important that Boards appreciate the role social media plays. Twitter was launched in 2006, YouTube in 2005 and Facebook - the oldest of the three - in 2004. Given that the average age on the Indian Board is just over 59, this can be a difficult bridge to cross. But "socialise" they must.
Let me cite a recent example. Kiran Mazumdar-Shaw posted a tweet, disparaging an equity report that had put a sell call on her company. This immediately drew fire from analysts and investors, who quickly lined up behind one or the other. On Twitter you could then read what each of them said, what others thought of what each one said. It does not stop at this: You can view what others are saying about what was said on what was originally said. This was then picked up by the print media - which is why you are reading about this exchange. Communication is suddenly no longer one-sided, with companies telling the world about how they will change it, but receiving instant feedback about why they just cannot, since the company employs… I'd rather not repeat this here.
The exchange described here was rather harmless, but it is not difficult to imagine a situation where it can quickly turn ugly - because just about anyone can thrust themselves into a public conversation, and that may even require the Board to step in.
It's wrong for Boards to assume that social media is only about an individual being connected to their friends or family: Technology has blurred the distance between work and home. Nor must they assume that social media is only for retail customer-facing companies or customer services. Today, it extends to recruitment and human resources, investor relations, corporate social responsibility, corporate reputation, business-to-business… pretty much everything. It is important that Boards find time to discuss social media initiatives, understand the potential of social media and its risks for their company. The risk of assuming that social media is "not for our company" is that when companies do need to deal with social media, they are ill-prepared. This holds true not just for listed companies, but others, too: Unlisted, not-for-profits, large, small, educational institutions, public sector undertakings….
I am not for a moment saying that companies are not present on social media. They overwhelmingly are. The question is, how much of this do the Board members really know or understand.
Happily there is now a playbook for Boards to follow.
One, ask whether the company has a social media strategy. This includes knowing the social media platforms the company is occupying, who maintains these accounts, who has the passwords - and whether they are secure. Ask if the company has a Facebook page and if it owns a Twitter handle. This also includes knowing if the company is ready to use social media as a tool for transparency and information dissemination. Also, if there is a budget for the social media strategy.
As part of this, the Boards should keep themselves updated by "googling" (Google, founded 1998) the company's name and noting what information, news and images show up. What pops up when you key in the names of key management personnel?
Two, ensure that your company knows if its employees are present on social media under the company's name or their own. For example, the Power Grid Corporation of India Limited (PGCIL) does not have its own Twitter handle, but a number of its employees tweet using their @
Three, how does the company manage social media data analytics? Who undertakes this analysis, how often is it done, what do the results show and what is the company's action plan around key findings of the data analytics?
Finally, the Board should think about crisis planning. Given the immediacy and the speed with which information and opinions are disseminated on social media, having a quick and forceful response can prevent damage to the company's reputation. Ensure a point person is identified for proactive damage control.
While Boards should ask these questions, individual directors, too, need to keep themselves updated. My advice: If you are under 60, have studied in an engineering college and are present on a Board, remember, change is closer than it appears. If you are over 60, have held a government job and are present on a Board, remember, if more than two billion people use social media, so can you.
The writer works with Institutional Investor Advisory Services of India Limited. The views are personal