The Conference Board and the Stanford University's Rock Center for Corporate Governance recently published its 2012 Social Media Survey, entitled "What Do Corporate Directors and Senior Managers Know about Social Media?" What is the bottom line from the survey of 180 senior executives and corporate directors of North American public and private companies? Senior executives and directors appreciate the power and the risk of social media. But they are not engaged from a governance perspective. The majority of organizations do not monitor social media to detect risks. Only a minority receive reports containing summary reports and metrics from social media. More disturbingly, the majority of companies did not have social media policies in place.
In Canada, the Canadian Institute of Chartered Accountants' Risk Oversight and Governance Board published a helpful Director Alert in January 2012 providing directors with some basic questions to ask. The publication is a helpful primer on the basic issues.
In addition, here are 10 topics that Directors may wish to review from a governance perspective:
1. Social Media Plan. Does the organization have a social media plan identifying the purposes of the organization's social media, the persons accountable for implementing the social media plan, and the metrics by which the time and effort spent on social media will be measured?
2. Type of Social Media Strategy. Will the social media be simply one-way promotion of the organization or will it truly be "social" in the sense of engaging with stakeholders? How does the strategy fit with the organization's social media plan and other public relations efforts?
4. Advertising Compliance. Does the organization's social media plan comply with the Competition Act (Canada), Competition Bureau Guidelines, the Canadian Code of Advertising Standards and other legal restrictions that may affect the use of social media to promote the organization? Is the organization providing benefits to "influencers" (persons who have large followings on social media and who influence people to take actions, such as clicking on a link or signing up for a promotion)? Is this appropriately disclosed?
5. Contests. Will social media be used to engage in contests? How will the organization ensure compliance with the Criminal Code and the Competition Act in respect of those contests?
6. Criticism. How will the organization respond to criticism in social media platforms? Does the organization have clear guidelines on how to handle a disgruntled stakeholder or a negative social media report? How will criticism be elevated within the organization?
7. Confidentiality. How will the organization ensure that postings through social media do not result in the inadvertent disclosure of non-public material information, confidential information or trade secrets of the organization or a third party to whom the organization owes a duty of confidence, or personal information of employees, customers or others?
8. Employee Engagement. Does the organization have a social media policy in place for employees? Does the policy balance the right of employees to engage in free speech while educating employees and protecting the organization against activities that may contravene advertising laws or be considered to be defamatory or discriminatory? Do employees understand the consequences of breaching the social media policy?
9. Monitoring. Who is responsible for surveillance of the reputation of the organization and competitors in social media? Who will receive reports of major events? How will the social media strategy be fine-tuned to respond to the information received through social media?
10. Disaster Plan. Does the organization have a 24/7/365 disaster plan in place in the event that the organization is under attack on social media platforms or a social media effort backfires? Are the appropriate personnel and external advisers in place to assist?
For more information, visit our Data Governance Law blog at www.datagovernancelaw.com
About Fraser Milner Casgrain LLP (FMC)
FMC is one of Canada's leading business and litigation law firms with more than 500 lawyers in six full-service offices located in the country's key business centres. We focus on providing outstanding service and value to our clients, and we strive to excel as a workplace of choice for our people. Regardless of where you choose to do business in Canada, our strong team of professionals possess knowledge and expertise on regional, national and cross-border matters. FMC's well-earned reputation for consistently delivering the highest quality legal services and counsel to our clients is complemented by an ongoing commitment to diversity and inclusion to broaden our insight and perspective on our clients' needs. Visit: www.fmc-law.com
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.