Less than a third of companies today use social media to support their corporate strategy and risk management practices, according to new research conducted by Stanford University's Rock Center for Corporate Governance, the Center for Leadership Development and Research at Stanford GSB, and The Conference Board.
In a report titled "What Do Corporate Directors and Senior Managers Know about Social Media?" the authors detail the results of a survey of more than 180 senior executives and corporate directors of North American public and private companies. The findings reveal a disconnect between companies' understanding of social media and the actions they are taking to apply it to their business. The report appears in the latest Directors Notes published by The Conference Board.
"Companies appreciate the potential that social media can have to transform all aspects of their business: branding, reputation, communication, outreach, and identifying strategic risks," says Professor David F. Larcker of Stanford GSB and lead author of the study. "They also realize the serious threats that it can pose. They're just not doing very much about it."
"The world has changed, and consumers, employees, and stakeholders now expect to engage with companies and their brands through social media," says Matteo Tonello, managing director of corporate leadership at The Conference Board. "That is why we are so pleased to be partnering with Stanford to support this research and help our membership better understand these evolving platforms."
Conducted this summer, the survey included CEOs, senior executives, and directors across all major industries in the United States and Canada. Unlike most surveys on social media, which rely on a demographic of mostly young practitioners, the survey sample included only representatives from the highest levels of their respective organizations, with the average age of survey respondents in the mid-50s. Key findings include:
- While 90% of respondents claim to understand the impact that social media can have on their organization, only 32% of their companies monitor social media to detect risks to their business activities and 14% use metrics from social media to measure corporate performance.
- Only 24% of senior managers and 8% of directors surveyed receive reports containing summary information and metrics from social media. Approximately half of the companies do not collect this information at all.
- Nearly two-thirds of respondents (65%) use social media for personal purposes, and 63% for business purposes. Of those who use social media, 80% have a LinkedIn account and 68% have a Facebook account, demonstrating that executives and board members are familiar with this medium.
- Still, only 59% of companies in the survey use social media to interact with customers, 49% to advertise, and 35% to research customers. Approximately 30% use social media to research competitors, research new products and services, or communicate with employees and other stakeholders.
"We know that executives and board members are using social media. However, familiarity with social media is just not translating into systemic use at their companies," Larcker explains. According to Larcker, the most frequently cited explanation for this gap is a lack of knowledge about how to set up a system to collect and distill information from social media into a useable form.
"The majority of those we surveyed don't have social media guidelines in place at their companies, haven't had a social media expert consult with their company, and don't have systems in place for gathering key information. They are putting themselves at serious risk by not taking action," Larcker concludes.
The study's authors recommend that companies take the following steps to implement a social media strategy that integrates with their corporate strategy and risk management program:
- Assess their current capabilities with social media
- Determine how social media fits with their strategy and business model
- Map their companies' key performance indicators and risk factors to information available through social media
- Implement a "listening" system to capture social media data and transform it into metrics
- Develop formal policies and guidelines for employees, executives, and directors
- Consider the legal and behavioral ramifications that could be involved if the company's board receives summary data about social media