Social Media What is social media

Why is it important to business

Why is it associated with reputational risk

The immediacy of social media can be effective in handling reputation risk, when a company gets in front of an issue, but to do this effectively requires understanding the nature of social media communication

Critical Background

Define social media

Discuss its role in business

Outline the defining characteristics of social media

How do these characteristics contribute to reputational risk

Business executives fear reputational risk

Negative feedback on social media

Pace at which social media issues unfold

It is recommended to deal with reputational issues proactively

Public relations

How PR departments dealt with crises in the past

Differences between social media and traditional media

The company cannot respond with old school PR techniques

Social media requires new techniques

A new approach is required

How to use social media to manage reputation risk is not entirely known

Reputation is part of a complex narrative web

Social media cannot be entirely controlled

Reputations are seldom destroyed in the short run, and risk cannot be eliminated quickly either

Companies need to guide the conversation instead of trying to control it

Conclusion

Restate key concepts and thesis

Introduction

Social media is an essential communications platform, and every business today operates on multiple social media platforms. Yet, there is tremendous risk associated with social media. First, social media is immediate and fluid. This means that interactions with customers are in real time, so situations good and bad can develop rapidly. Second, everything on social media is a matter of public record. While a company has the ability to delete a post or tweet, there will always be a record or screenshot of that post or tweet somewhere. Compounding the problem is that it too many cases companies leave their social media accounts to people who are not properly trained in social media etiquette. Inexperienced young interns lack tact and understanding of the gravity of social media communications, while there have been too many examples of senior managers who are utterly clueless about the damage their actions on social media can cause. There are also situations were social media is not at the root of the risk issue, but is a platform by which news of the issue spreads rapidly, and the company loses control of the conversation quickly (Spanier, 2015). In either case, effective management of social media is required in order to control damage to reputation, and to restore the damage that occurs. The immediacy of social media can be effective in handling reputation risk, when a company gets in front of an issue, but to do this effectively requires understanding the nature of social media communication.

Critical Background

Social media can be understood as a set of software applications and interfaces that are used to communicate (Investopedia, 2015). Some of the social media applications used by business include Facebook, Twitter, YouTube and Instagram. Social media is a relatively new phenomenon, beginning in earnest only around 2005. Its usage patterns and risks for business are therefore evolving, and many businesses unfortunately are behind the curve with respect to their social media knowledge and aptitude. This only serves to exacerbate the risks that companies face. Social media has a unique defining characteristics that define the risks associated with reputation. First, it is a two-way communications tool, meaning that the company has direct interaction with members of the public, and members of the public can have direct interaction with each other about the company. Second, social media works in real time, and there are records of each interaction via screenshots. Thus, everything a company does on social media is recorded for posterity. The last critical defining characteristic of social media is anonymity. This last aspect is challenging, because interactions on social media between a company and members of the public often involve anonymity on the part of the public individual, which allows them to say and do things that they otherwise might not; they are not bound by normal social conventions when on social media. The company, because its name is out there, remains bound by normal social conventions.

Analysis

Most business executives find that social media creates or heightens reputational risk. A survey by Deloitte found that 88% of executives felt that reputation risk was a key concern with their company's social media presence (Deloitte, 2015). On average, companies attribute around 25% of their market value to their reputations. Negative feedback that arrives via social media is not necessarily bad -- companies can learn about particular trends early via social media and address those complaints at an operational level -- but failure to handle complaints, or to handle them poorly,...

Compounding the issue is the pace at which reputational issues can escalate, particularly if a company finds itself targeted by an organized campaign (Serafin, 2015). Experts therefore recommend that a company deals with reputational issues proactively, but as this is an emerging area, there remains some confusion as to what exactly this entails.
Traditionally, companies had public relations departments that would manage the company's interactions with the outside world. These departments would be staffed by trained professionals, who would carefully craft messages, and disseminate them via traditional media outlets. Even when a scandal was headline news, the news cycle was long and members of the general public were typically independent of one another, and independent again of the company. Social media changes these dynamics. People communicate with each other in real time, which allows narratives to be created more quickly and spread more quickly than was possible prior to social media. The company, moreover, cannot rely on a public relations department that works nine-to-five, because there is an expectation of immediacy with social media. Furthermore, most social media forms are not conducive to an extensive telling of a company's story. This creates significant challenges for companies in dealing with what would traditionally be known as public relations crises.

Getting in front of reputational crises in social media thus requires an entirely new approach. Social media, when used effectively, can facilitate the conversation between an organization to help recover the organization's image in a time of crisis (Scudder, 2012). What is missing from both academic and non-academic study of the issue is precisely how to go about this. One of the issues, as expressed by executives, is that the risk lies in the fact that social media reaction to the company is viewed as being out of the control of the company -- risks that can be controlled are not nearly as feared as those over which the organization lacks control (Serafin, 2015). The first step is to understand that social media is, simply, a different form of communication. Reputation itself is the result of a complex narrative web, which means that no short-term remediation can act as panacea for reputational damage, but that reputational damage over the short run is seldom damaging in the long run. Companies that have faced substantial reputational attacks in the pre-social media age, such as Nike and McDonalds -- still lead their industries. The most important concept with social media is that it is passive, ambient publicity. The company inherently cannot control it, and would be foolish to attempt to. Navigating this is more complex because the company cannot apply blunt force in the way it would have prior to social media. Instead, corporate responses need to be subtler -- they can address the issue head-on, but should not seek to eliminate the problem in one post or tweet. Rather, the company needs to use social media to shift the conversation, recognizing all the while the fluidity of the medium for communication (Aula, 2010).

Conclusion

Social media is a unique communication form. Business leaders often fear its impacts, particularly on corporate reputation, for the simple reason that they mistrust any communication form over which they lack full narrative control. Yet, understanding the fluidity and ambient nature of social media communications is precisely the key. Managing reputational risk via social media is not about exerting control over the conversation, but about managing the directions of the conversation, and ensuring that the company is visibly set to deal with legitimate issues that arise. This is more complex and nuanced than corporate communications of the past, but reflects a need for companies to get in front of issues on social media, and steer the conversation in ways that are less reputationally destructive.

References

Serafin, T. (2015). Reputation risk leading company concern in 2015. Forbes. Retrieved November 20, 2015 from http://www.forbes.com/sites/tatianaserafin/2015/01/05/reputation-risk-leading-company-concern-in-2015/

Spanier, G. (2015). Reputational risk in the social media age. Raconteur. Retrieved November 20, 2015 from http://raconteur.net/business/reputational-risk-in-the-social-media-age

Investopedia (2015). Definition of social media. Investopedia. Retrieved November 20, 2015 from http://www.investopedia.com/terms/s/social-media.asp

Deloitte (2015). Managing social media risks to reputation: A hot topic on the board agenda. Deloitte Retrieved November 20, 2015 from https://www2.deloitte.com/content/dam/Deloitte/lu/Documents/risk/lu-managing-social-media-risks-reputation-risk-03032015.pdf

Scudder, V. (2012). Lessons from the Susan G. Komen Planned Parenthood debacle. The Public Relations Strategist. Retrieved from doi:http://www.prsa.org/Intelligence/TheStrategist/Articles/view/9721/1047/Lessons_from_the_Susan_G_Komen_Planned_Parenthood#.UIa61tp3cgc.gmail

Aula, P. (2010). Social media, reputation risk, and ambient publicity management. Strategy & Leadership. Vol. 38 (6) 43-49.