Sinking in social media scandals

Social media analysis will become the next big thing in due diligence. The importance of social media to brand reputation was revealed in two alarming incidents last week. One was the disciplining of ABC youth station Triple J presenter Paul Verhoeven who tweeted that Julia Gillard was a whore ("@JuliaGillard Boo, you whore”) in the lead up to the ALP National Conference. Then there was a salacious case that saw law firm Clayton Utz forced into a settlement with a young female lawyer, Bridgette Styles, with claims of sexual harassment, victimisation, defamation, including an offensive Facebook page. Styles alleged inappropriate sexualised humour and language used by male employees about female colleagues in emails and conversations, but the most striking revelation was about a Facebook group, ''Clayton Utz Workplace Relations (Sydney) Whorebags”.

Now, you would reckon a law firm, and the ABC, would have effective social media policies directing staff as to what they can and can't do. But strangely enough, Clayton Utz is still developing one – it's in draft form. The firm claims the Facebook page was actually put up by a female partner in 2008, all part of an in-joke that, in the end, was about as funny as cancer but then, lawyers are like that.

The impact of social media on companies and the potential for brand damage has now become an issue for managers. It's no longer a sleeper and it is difficult ground because much of it is still new and unexplored territory.

Qantas discovered that last month. Shortly after it grounded its aircraft, the airline launched a campaign asking users to describe what their "dream luxury inflight experience” would be using the hashtag #Qantasluxury, with the best 50 answers winning a pair of Qantas first-class pyjamas and an amenity kit. The public regarded pyjamas as about as useless as a sixth finger, and the timing could have been better. There was a flood of sarcastic remarks and critical comments to the hashtag's page about the airline, some from people who had been directly affected by last month's grounding. Asked to describe their Qantas luxury experience, some said: flights that leave on schedule because Management doesn't arbitrarily shut down the airline; being stranded on the other side of the world without warning when you just want to get home to your 10-month-old daughter; giving yourself a pay rise whilst grounding your whole airline and taking local jobs offshore; and somewhere in Qantas HQ a middle-aged manager is yelling at a Gen Y social media "expert" to make it all stop. And so on. It was such a disaster that it's been preserved in perpetuity after some wag posted it on YouTube as one of those viral Downfall parodies with Hitler screaming at his subordinates about the Qantas strategy of offering pyjamas after it alienated the public. This was a management stuff-up. The social media and marketing team did not talk to the people in corporate communications who might have advised them to hold off for a while as this sort of promotion was, at this stage, inappropriate.

The damage to Qantas' public relations from the exercise is a good example of how easy it is for managers to screw up social media campaigns where executives, keen to show that they're on top of all things digital, go for cheap plugs on Twitter instead of spending money on carefully planned digital advertising campaigns. As always, the cheap and nasty hurts the brand.

Similarly, the Clayton Utz case highlights why it is important to have social media policies linked to the company's harassment and discrimination policies.

Good social media policies look at how people can promote the business and connect with employees and customers, but at the same time, not have the poster presenting themselves as someone who represents the company. Coca-Cola's social media policy (http://bit.ly/5YJRnr) runs to three pages. It contains some basic common sense rules: disclose your affiliation with the company; keep records; when in doubt, don't post; give credit where credit is due; don't violate others' rights; be responsible; keep in mind that local posts can have a global significance; and try to remember that anything posted on the internet is permanent.

Policies around Twitter would include learning how to articulate the company vision in 140 characters or fewer, without public relations spin, and trying to engage with others including employees, customers and even activists. Managers need to ask several questions: how will the business be promoted? Who will be responsible? Senior managers or others? How will it be monitored? What are the specific guidelines? Will it extend to private computers and mobile phones?

Many large businesses in Australia already have social media policies, particularly those where people are computer bound and every social media policy will be different from one company to the next. One of the best is Telstra's which is good and straightforward, setting out the "3 Rs of Social Media Engagement”. "In brief, the 3 Rs ask that when engaging in social media you be clear about who you are representing, you take responsibility for ensuring that any references to Telstra are factually correct and accurate and do not breach confidentiality requirements, and that you show respect for the individuals and communities with which you interact. It is important to note that this policy does not apply to employees' personal use of social media platforms where the employee makes no reference to Telstra related issues.” Significantly, Telstra is one of the first organisations to make their policy public. Telstra to its credit is in effect setting out guidelines for other businesses.

But some companies, like Clayton Utz, still don't have policies, which is a problem.

Aon Risk Services now regards social media as one of the top 10 risks facing companies today. An internal KPMG newsletter suggests social media analysis will increasingly be used for due diligence. It's a way of finding out how the company is really regarded in the market, as opposed to what they are telling you. KPMG digital economy partner Malcolm Alder writes: "For business to business organisations, there are a range of areas where social media is relevant… reputational checking of companies, their directors and management as part of due diligence in an acquisition or major tender.”

James Griffin, founder of social media intelligence firm SR7, which works closely with Aon Risk Services, said social media analysis as part of due diligence looks like becoming the way of the future. "We have seen a huge increase in people starting to understand it instead of saying this is something the marketing department does,'' Griffin says. "Chief risk officers and boards are starting to ask, ‘what do I need to do to get a handle on this, otherwise I will be held accountable'.”

And that will be a key challenge because you don't necessarily believe everything on the Internet, or social media sites. Information sourced from social media can be biased, out of date, inaccurate or just plain wrong. Some of it might be informative; much of it might be hearsay. That means managers will need to develop disciplines to corroborate the information, which means a lot more work.