Social media offers
technology to help improve the immediacy of feedback and the opportunity for
dialogue. In the context of a discussion
of corporate social responsibility and financial reporting, I wanted to read more
about investor relations; specifically how companies use social media to
communicate their financial results. Bonson
& Flores (2011) studied the use of social media in the banking industry.
Social media facilitates
two-way interaction in real time and a multi-directional flow of information,
as opposed to the traditional unidirectional communication traditionally used in
investor relations (Bonson & Flores, 2011). Social media enables readers to receive and give
immediate feedback. In the banking and
financial services industries,
In their study,
Bonson & Flores (2011), looked at the web sites of 132 financial institutions
in the Americas, Europe and Asia-Pacific and scored the social media tools available
on the web. They find that in spite of the rapid growth of social media, its opportunity
for transparency in communications and feedback from stakeholders, the banking
industry has not yet fully embraced the technologies (Bonson & Flores,
2011). They speculate that regulatory
requirements may drive financial institutions’ resistance to adopt social media
(Bonson & Flores, 2011).
The financial
industry over the last several years has faced a number of public relations
challenge and gained a reputation of secrecy.
One needs look no further than the recent news of JP Morgan derivatives
loss (Silver-Greenberg & Craig, 2012) to understand that the use of social media
tools could help the industry’s perceived transparency. Social media offers banks
and financial institutions an opportunity to improve their public reputation
and public understanding of this complex industry through real time dialogue, increased
interaction with shareholders (Bonson & Flores, 2011).
References
Bonson, E., &
Flores, F. (2011). Social media and corporate dialogue: the response of
global financial institutions.
Online Information Review, 35(1), 34–49. doi:10.1108/14684521111113579
Cynthia, what are the drawbacks of using social media to increase financial transparency? Besides regulatory restrictions, are there other reasons why companies might be unwilling to jump on the social media bandwagon? Do you think these risks could be mitigated with the right social media platform?
ReplyDeleteI wondered the same thing. Do financial institutions have more to lose by engaging in two-way dialogue? I wouldn't put them on the same level as an oil company in this regard, but it does seem that social media platforms could become a lightning rod for complaints and criticisms.
DeleteMy guess would be that it's their internal regulatory environment (which seems a bit laughable as a concept given some recent high profile events); the legal departments are likely reluctant to allow external control of some messages, or the two-way dialogue that would result. I think they'd have more to gain than lose in engaging in a two way dialogue. Bloggers are writing and speculating on their own in any of a number of venues. Opening their own would allow them a measure of control over the conversation (as Bonson & Flores noted in their article).
DeleteCynthia, I do a lot of social media for various clients. I've seen a reluctance by high-up administrators to embrace it for the same concerns you mention. There's a lot of potential for a rogue employee to do a lot of damage. Also, a lot of training is needed before admin will allow anyone to "take the driver's seat" with corporate communications. A short tweet must be well thought out.
ReplyDeleteThat's interesting Paul. I attended meeting last week at work where a Fortune 500 technology company presented their social media strategy to us...how they got started and how they execute their strategy. They had identified and approved a group of people allowed to post on behalf of the company. These were drawn from a variety of roles--marketing, communications, technology, customer service, engineering, etc. This army of spokespeople attended a "boot camp" where they received training on how and when to respond, and some guidelines. And this strategy has been very successful for them, but like you say, well-thought out, well-executed. It all started though because a disgruntled customer had posted a blog and no one responded, and the president of the company said "figure this out. Now."
DeleteThis discussion on how social media could be used in investor relations actually put me on the side of the wary banks, as I'm just not sure how a complex banking organization could accurately tell its financial story in the way social media would require. It would take a deft hand to turn an annual report into 140 characters. I think companies can do a fine job using social media to tell their company's story in broad strokes (something like "Retail banking to fuel $3bn of growth in US over next 3 years, more at bit.ly/abcd"), but I would be worried about context for the banks' communications.
ReplyDeleteI'm of the opinion that many companies have no business letting junior employees or third-party vendors craft their social media messaging (with all due respect to what you do, Paul!). There's definitely a place for vendors in the *delivery* of messaging, but the most successful social media implementations I've witnessed involve thoughtful content planning on the part of the company's in-house marketing team to align messaging with strategic goals. While it's true that a major advantage of social media is facilitation of two-way communication, I have seen a lot of companies become aimless in their social media messaging; they may become entirely reactive, or they may start Tweeting (or posting, or whatever) just to fill space and appear relevant . It is more than possible for companies to plan the content and timing of their key social media messages. In this way, they help shape the nature of their dialogue with other SM users and mitigate risk.
ReplyDelete