Boards Must Be Prepared for Social Media Crises, Panelists Say

By Michael Greene

Oct. 15 — A business needs to be prepared to communicate its message effectively during a crisis, which includes having a “social media crisis plan,” Judy A. Smith, a crisis expert and former White House deputy press secretary, said Oct. 13 during the 2014 NACD Board Leadership Conference.

The power of social media has made it increasingly important for companies to take responsibility for their mistakes and to be careful when communicating their message, Smith said during a panel discussion, Surviving Corporate Crisis in a Socially Networked World, at the National Harbor in Maryland. She spoke at the National Association of Corporate Directors 2014 Board Leadership Conference.

Game Changer

People are waking up and checking social media sites such as Facebook and Twitter to learn the news of the day, and “this is a big game changer,” Smith said.

Embracing social media can present huge opportunities, but it can also create problems for companies, Virginia Gambale, a managing partner with Azimuth Partners LLC and director at JetBlue Airways Corp., said at the conference. Smith added, “All it takes is one tweet” to create the kind of crisis and chaos that used to take days to start.

Social media has been described as a massive, unstructured means of peer-to-peer exchange. From a strategical standpoint, this can create problems for boards aiming for predictability, according to Gambale.

Assessing the importance of social media can be difficult for many board members who “don't really understand the power of social media,” Smith said.

Social Media Crisis Plan

It is important for board members to make sure their company is equipped to deal with a corporate crisis in the digital world, according to Smith. One thing a company can do to be prepared is to have a social media crisis plan in place, she said.

The plan should include having a social media crisis team—either an outside firm that is familiar with the company or an in-house team that is equipped to deal with the crisis, Smith said. Additionally, companies should periodically review their social media policies and have briefings to assess problems that could arise.

Companies that don't have these plans are “way behind the curve,” she added.

Own It and Be Authentic

Smith said that when responding to a crisis, “word choice is critical.” It can be the difference between whether or not a company is successful in rehabilitating its brand name. During a crisis, a company needs to be authentic and own the mistakes it has made, according to Smith.

Two audience members agreed, commenting during the discussion that Microsoft Corp. Chief Executive Officer Satya Nadella didn't “own up” to his mistake when he made controversial remarks at a women's tech conference Oct. 9. He responded to the controversy by posting on Twitter that he was “inarticulate.”

Smith added that when company officials own up to their mistakes, it can give a company tremendous credibility in the marketplace. Sometimes a crisis can be turned into a positive for companies, Smith said.

Another audience member contrasted Nadella's response with that of Dick's Sporting Goods Inc. CEO Ed Stack. A 12-year-old girl wrote a letter to Stack addressing gender inequality concerns in the company's basketball catalogue. On Oct. 9, her father posted the letter on Twitter. Stack responded to the girl's concerns by posting a response letter on Twitter apologizing for the company's mistake and promising to include female athletes in the company's future catalogs.

Know Your Baseline

When asked about how companies should know when to respond to a social media crisis, Smith said the first step is to “know your company's baseline.” If a story is building traction, a company needs to react to it.

She added that it is also important for a company to stay on message and have one voice that is tailored to the company.

Additionally, the message needs to “come to a happy medium” that not only protects the company legally but also resonates in a way that will positively affect its brand and value.

For companies that aren't active on social media, Smith said it can be important for them to have some kind of presence on this platform. She added that if they don't have a voice during a crisis, it can be difficult to catch up. This presence can give the company a profile and allow the company to put “good will in the bank.”

To contact the reporter on this story: Michael Greene in Washington at mgreene@bna.com

To contact the editor responsible for this story: Kristyn Hyland at mailto:rtuck@bna.com