September 2019 Issue
Consumers are increasingly driving the conversation when it comes to the brands they engage with and those they ignore. For the most part, consumers want to know that the companies they deal with are trustworthy and authentic. According to Sprout Social, 86 percent of consumers value brand transparency. Given that social media allows consumers to quickly and easily call out a company for poor service, it is imperative that companies are truthful, honest and reliable in their actions and communication.
Although much of a CEO’s work is conducted behind closed doors, times are changing and progressively more CEOs are taking active, public roles, particularly on social media. For many companies, however, this evolution has the potential to be contentious, as considerable harm could be done to a company’s brand if an executive maintains an ineffective or problematic social media presence.
The emergence of an ‘activist’ CEO, in this sense, does have the potential to be valuable. Activist CEOs can raise awareness of a company or issue through social media statements or by writing opinion pieces. They can also exert economic influence on their companies by relocating business activities or funding political and activist groups. According to Hootsuite, companies with social executives are perceived 23 percent more positively than those without. Positive examples have been set by John Legere at T-Mobile, Marc Benioff at Salesforce, Brian Chesky at Airbnb and Satya Nadella at Microsoft. Mr Nadella’s means of utilising social media to connect and interact with Microsoft’s customers and investors, for example, is said to have contributed to the company increasing its market value significantly in just a few years.
Furthermore, there is a growing expectation among employees, investors and customers that CEOs will take a stance on issues including the environment, sustainability, community and others. In a 2017 Weber Shandwick and KRC Research survey, 47 percent of millennials believed that CEOs should take a public stand on social issues. Fifty-one percent said they were more likely to buy from those companies. Twenty-one percent of respondents said silent CEOs risk declining sales.
Yet, according to CEO.com and Domo, 60 percent of Fortune 500 CEOs have no social media presence. This may be an error, particularly at a time when brands want to engage with their customers. A socially active CEO can bring numerous advantages, allowing companies to build their brand, recruit talent and connect with employees and prospective customers.
Any CEO wishing to speak publicly must be careful, however, not undermine or embarrass their organisation. The social media accounts of Tesla co-founder and chief executive Elon Musk, who was ousted as company chairman and fined $20m by the US Securities and Exchange Commission (SEC), for example, have highlighted the potential risks when business leaders are active on social media.
Tesla’s market value fell 5 percent in October 2018 after Mr Musk published a tweet that appeared to mock the SEC. Mr Musk and his high media profile were considered to be an advantage to Tesla and his other companies, so this reversal is notable. Indeed, in Telsa’s 2017 annual report filed with the SEC, the company said that it had benefitted from Mr Musk’s considerable social media presence. “Historically, we have been able to generate significant media coverage of our company and our vehicles, and we believe we will continue to do so,” the company wrote. “To date, for vehicle sales, media coverage and word of mouth have been the primary drivers of our sales leads and have helped us achieve sales without traditional advertising and at relatively low marketing costs.”
However, as Mr Musk’s tribulations have demonstrated, executives can harm their company’s brand through poor social media interactions. Consequently, companies need to educate their executives on effective social media use, providing training programmes and setting guidelines for content and behaviour. Fostering a better relationship between a company’s leadership and its public relations team can be advantageous. Regardless, reining in a CEO may be difficult without imposing a strict social media policy on the C-suite.
Going forward, additional oversight from both companies and regulators may be incoming. Tesla, for example, has been instructed to ‘oversee’ Mr Musk’s communications with investors, including via his Twitter account. This ruling could set a precedent in the future, and also see the SEC taking a more active role in regulating the social media accounts of prominent corporate figures.
CEOs can help shape a company’s brand and improve relationships with consumers and stakeholders. However, rogue executives can also be detrimental to a company’s reputation. Companies must demonstrate sound corporate governance to reduce the risk of any damage. In today’s social media world, there is a fine line between an outspoken executive who promotes their organisation and a ‘loose cannon’.
© Financier Worldwide