Senior executives need to embrace social media

Lilian Mugo, a blue chip organisation’s executive director was was enjoying herself at the company’s evening cocktail party. during the course of the evening, she had lively discussions with her colleagues on various topics.

The following day, photos from the cocktails were posted on the company’s Twitter page. With some of  the memorable comments used as tweets and captions on the photos.

Lilian, who is not very conversant with  social media, invited one of her junior staff to shed light on some of the jargon used. She had no idea what a Tweet was, a Retweet, a Direct Message  among other terms used on the social media platform were supposed to mean.

A new report released this year titled ‘What do Corporate Directors and Senior Managers Need to know about Social Media’ revealed a disconnect between executive directors a social media knowledge.

The report further goes on to find out if there is a relationship between use of a social media in a company and its returns on investment.

Prof David Larcker of Stanford, a lead author of the study, said that most companies despite appreciating the potential social media can have in transforming all aspects of their business — from branding to reputation, communication, outreach and identifying strategic risk — senior executives are just not doing very much about it.

Branding through social media

Social media has become an accepted part of business but many business executives still see it as a secondary part of the day to day operations of the company.

The study was done by Stanford University Rock Centre for Corporate Governance in conjunction with Conference Board. Matteo Tonello the managing director of Conference Board said, “the world has changed, and consumers, employers and employees and stakeholders are now expected to engage with companies and their brand through social media.”

They surveyed 180 senior executive and corporate directors of America’s private and public companies.

Only 32 per cent of the directors interviewed said they monitor social media to detect risk of their business activities and 14 per cent use metrics from social media to measure corporate performance.

The report shows that social media can be used to follow up on what competitors are doing, research new products and services or even communicate with employees and other stakeholders.

Those surveyed confirmed that they recognise that social media has revolutionalised the way businesses communicate with their customers and staff. Prof Larcker of Stanford says the research revealed that the executive and board members are using social media. However, for some, their familiarity with social media is not translating into systematic use in their companies.

“The majority we interviewed do not have systems in place for gathering key information on social media and its effects, they are putting themselves at a serious competition risk by not taking action,” he notes.

But this could be because most marketing experts have been struggling with the question of how to measure social media’s impact on profits. This is because, social media realm is a complicated web of channel interactions and determining the profit of loss that is a direct result of social media effort is no simple matter.

Therefore, the executive directors must take it upon themselves to assess the value of a relationship-building tool

such as social media, with a broad analysis of the company’s profits compared with its social media activities.

Most companies employ social media in their marketing campaigns thus, it is more than just a medium for advertising, it could be said to be a platform for two way interaction between a company and its customers.

The researchers say businesses new to social media might be eager for evidence of a financial return on their investment in a social media presence.

But what they need to know is that at any given time, there will be numerous variables affecting a company’s net profit, but comparing profit before and after the company’s foray into social media might provide insight into the value social media brings.

One might also consider taking into account the cost of any social media management software and staff.