LIKE it or not, use it or not, social media is here to stay - and its digital tentacles are fast encroaching into unprepared boardrooms.
Prevalent social media platforms include Facebook, YouTube, Google+, Twitter, LinkedIn, Instagram, Pinterest, WhatsApp, and an exploding plethora of instant, real-time communication channels reaching random, specific and connected communities everywhere, anywhere, anytime.
Last year, eMarketer noted that out of 2.48 billion global Internet users, 1.86 billion are active on social media.
The estimate is probably modest and growing by the minute. Just the digital communications tools developed by Facebook and others alone - including blog posts, status updates, tweets and online petitions - pose new and unexpected challenges for senior management and boards.
Increasingly, what happens online can be a critical element in any corporate governance strategy.
Where directors fear to tread
Most directors are still inclined to leave the unwieldy realm of social media to management, if at all, with many boards preferring to stay aloof from the chattering fray.
Often, and usually too late in the day, boards are slapped with nasty surprises such as online posts threatening to damage a company's reputation, or critical disclosures of confidential information to all and sundry.
Businesses simply cannot afford not to engage, leverage or manage social media.
"The social media phenomenon has made the leap from the consumer world to the boardroom," declared PwC in its report, Social Media: The New Business Reality For Directors.
"Directors are faced with sorting out how social media impacts the firms that they oversee and their own roles on the boards."
The signals are unavoidable: directors are responsible for corporate oversight, and this includes establishing a process for collecting, analysing and responding to the flood of information in the social media space.
A survey by Stanford University's Rock Centre for Corporate Governance revealed how a vast majority (91 per cent) of directors said their companies had not assigned oversight of social media monitoring to a board committee.
Yet, nearly 76 per cent of the respondents' companies used social media to support business activities.
In the face of such inertia, Starbucks, the global coffee company, decided that digital expertise at the board level was of strategic importance. It recruited social media entrepreneur Clara Shih to its board.
Ms Shih was chief executive of a social media company, and held previous positions at Google, Microsoft and Salesforce.com.
She was just 29 when appointed to the Starbucks board in December 2010.
Company, know thyself
The Rock Centre's survey also found that a sizeable 75 per cent of its senior corporate respondents said they did not have social media guidelines for their boards.
This is despite the considerable number of companies which were concerned with information leaks and the potential for reputational crises arising through social media.
The basic precautionary parameters are left unaddressed: Is there a social media policy for employees? Are employees being coached and trained on what is right and what is not?
Boards fare no better in questioning management about social media policy. Is management "listening" to social media chatter about the company? Which sources are they monitoring? Where does social media fit in the company's risk profile?
The market has been quick to provide several off-the-shelf software services that can scan blogs, tweets and social media sites.
These summarise online conversations and convert them into quantitative and qualitative metrics that boards and management can use to customise their social media policies and internal practices.
Most importantly, the question must be: Does the company have a response plan if a digital crisis erupts? And who will manage such a crisis?
To "like" or not to "like"?
An example of a social media storm and response was BreadTalk's recent soya bean crisis.
In the evening on Aug 3, a blog post showed a photo of an employee of the bakery chain pouring soya bean milk from a package made by Yeo's, a commercial supermarket brand, into a BreadTalk bottle that was marked "freshly prepared".
The post went viral.
Amid the consumer backlash, BreadTalk pulled the bottled drink off the shelves of its 46 outlets that same evening, and issued an apology to customers on its Facebook page the very next day.
Three weeks later, BreadTalk said it would give away 50,000 of its famous pork floss buns, donate S$50,000 to the Community Chest, and sign a Voluntary Compliance Agreement with the Consumers Association of Singapore.
In the meantime, it had to defend the quality of its bread and cakes after consumers started questioning their freshness as well.
Social media is not a passing fad; it is not far-fetched to say companies can live and die, based on how they deal with it.
Directors would benefit from a Social Media 101 course - to move them from the discomfort of the unfamiliar to a willing responsibility to understand the huge impact of social media on businesses.
While companies are exposed to social media's vagaries and uncertainties, there are also opportunities.
After all, it has proven to be a low-cost source of steady, ready flows of information for companies to collect on stakeholders, the market, and all other communities relevant to their businesses in the digital age.
The social media revolution can be a powerful, strategic corporate ally. Is your board a "friend"?
The writer is a member of the Governing Council of the Singapore Institute of Directors.
This article was first published on October 12, 2015.
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