How Social Media Creates Risk for CEOs
With great interest, I read Mashable's recent interview with Forrester Research CEO, George Colony, in which he discussed some of the main reasons CEO's aren't active in social media. Not surprisingly, CEO's feel they don't have enough time to blog, tweet, or connect (who does?), they don't have the skills (apparently they can only use Wite-Out), and social media creates risk for CEOs and corporations. Now, the first two explanations aren't wholly convincing. They sound easy enough to overcome. There is always time for strategic action, like using social media to align employees and execute corporate strategy, and surely these guys can put together 140 characters or words. But risk is a critical business issue. Here is what Colony said:
"The CEO has risk that they're going to offend customers, partners, the Board of Directors. Then you have risk around litigation. I won't say who this is, but a very prominent CEO of a large company was told he could not become more social because he was in too many courtrooms already. So the risk of litigation is a big issue."
Business writers, like myself, talk freely and passionately about embracing social media in corporate America. We don't have to worry about damage to our personal brand primarily because our brands don't represent other people's money. In a faultless world, we might value transparency and connection over corporate earnings and brand damage. But in this world we don't do that. We can sue the CEO for risking these things. So, yes, absolutely, it is important to weigh the risk against the benefits.
Benefits of Social Media: Risk Management
Firms reject or adopt social media for myriad reasons. The key is to understand the benefits and weigh them against potential costs. Leaders are starting to perceive many benefits, though primarily limited to marketing and sales functions. A company may adopt social media to be perceived as cutting edge. Or, perhaps leadership sees social media as a way to increase efficiency. Then again, maybe the leadership simply recognizes that social media is becoming part of our daily lives. One thing that is for certain: the core demographic of all firms will inevitably and soon be digital natives.
As the number of Generation Y - almost 100% on social networks - is set to surpass the number of Baby Boomers in 2010, the social media trend will only strengthen. As many organizations face the "wave of retirement" when Baby Boomers begin to bow out of the workforce, it is of strategic interest to those firms to prepare for the work habits of the new generations, who have grown up working and communicating in virtual, shared environments.
Businesses must begin to examine how this shift will impact its internal functioning. It is simply a case of risk management.
CEOs can't just say no to social media when there are so many strategic reasons to say yes. If external communications pose too big a risk, why not start with an internal platform? Then, at least, CEOs will start to understand social media first hand. Then, and only then, they can decide whether the risks outweigh the benefits.