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When a leader’s misstep puts a company in peril

When a leader’s misstep puts a company in peril

The revelations last week of Ben Polis’ social media antics do not make for pleasant reading.

The EnergyWatch founder found a way to offend almost everyone: people from the outer suburbs, women, public school graduates, people of different races. His comments, which he says were meant in jest, were not subtle. There’s no way he ever intended them to be made public, but nonetheless, he posted them on Facebook.

He’s paying for it now. Last Thursday he stepped down as chief executive of EnergyWatch, as scores of energy suppliers cut their relationships with the company.  EnergyWatch’s 75 staff are likely to lose their jobs.

Polis’ experience begs the question: why would the executive of any company risk putting themselves on social media? In EnergyWatch’s case, it’s been nothing short of a catastrophe.

Public relations experts don’t dispute that social media can get you in a mess.

“It is a huge risk if [leaders] don’t know what they’re doing,” says James Griffin, a partner at social media research company SR7.

“For managers and boards sitting around discussing social media, they need to acknowledge the risks.”

Griffin says companies need to develop governance policies for social media. They need to apply not only to staff, but right to the top of the organisation.

“It’s especially important nowadays because more and more Australians, regardless of age and position, are using social media, and Ben [Polis] is a good example of that.”

Company leaders should also ensure they use the highest privacy settings when communicating with friends or family via social media.

Social media will always pose some risk. “You can’t stop stupidity,” Griffin says.

But the benefits of social media are tempting for CEOs.

“If a leader wants to show they’re innovating, and that they understand there’s been a shift in how communications occur, it does make sense to use social media in a professional capacity,” Griffin adds.

“Organisations that don’t encourage CEO or senior management to participate in social media are doing the organisation a disservice, but have to ensure they have the correct governance in place.”

Asked about the risks of CEOs using Facebook, Twitter and blog sites, Wayne Burns of Allen Consulting Group says company leaders are “big boys and girls”.

“A lot of CEOs are now saying ‘if our senior management team can’t communicate with stakeholders, they’re in the wrong job’. We’ll be in a situation in five or 10 years where if executives don’t have that capability they’ll be seen as in the wrong job.”

But the fact remains, very few CEOs are active in any public sense on social media.

Burns says leaders are cautious of the technology, and do not have a habit of using it.

That will change.

“Mobile phones weren’t a CEO habit 20 years ago. Email wasn’t 15 years ago. Both of them are today,” he says.

“Slowly, CEOs are getting their head around the use of social media as a business tool.”

Part of the slow uptake is that few companies have been presented with a business case for why their leaders should engage with social media, Burns suspects.

The strength of this case is likely to depend on industry. For example, it’s likely to be more important for those who operate in the fast-moving consumer goods market, or who have reputations for being disruptive or “edgy”.

“Lots of first movers are finding it very productive. It can reinforce brand value, engagement and the like, but it depends on the industry.

“If there’s a business case for it, they’ll be all over it, and we see that happening very quickly.”

Nothing to fear: Ruslan Kogan uses social media to give his business personality

Valued at $63 million, Ruslan Kogan is the richest Australian under 30. The founder and CEO of consumer electronics retailer Kogan uses Facebook and Twitter in a personal capacity, but many of his posts are open to the public.

This doesn’t seem to worry him.

“Look, I don’t really actively hide anything on there,” he tells LeadingCompany. “But I might choose for something to not be a public discussion but to be a private discussion.

“I think people get a bit too paranoid about social media. You have to treat it as another communication avenue.”

He says people who don’t pull their blinds can’t be unhappy if others look in their windows, and it’s the same with social media.

“The things I do on social media are things I chose to be in the public domain.”

Six years ago, Kogan moved from working for others to running his own company. He says this makes him responsible to his 80 million customers in Australia and the UK. Social media is how he keeps in touch with them.

“It’s good to add a bit of personality to the brand, and engage with discussions and issues,” he says.

He says he learns a lot on social media, too. “I get to see comments and feedback. It’s very much a two-way thing.”

Asked why more of his C-suite colleagues don’t use social media, he agrees it’s probably a generational thing.

“I’m 29, so I don’t look at myself as being very young, especially in the business world where we’re getting younger and younger CEOs,” Kogan says.

“But when you look at the whole landscape, whenever I’m out at a CEOs function or on a flight, I’m surrounded by 60- and 70-year-olds.

“So yeah, they’re probably a little bit scared of social media and don’t really understand it.

“Every CEO I know under 30 or 40 has a social media presence. That’s becoming more and more common.”

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Myriam Robin

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Myriam Robin is a reporter for SmartCompany and its sister site LeadingCompany. She has degrees in economics, international studies and journalism. She likes writing about businesses taking risks and doing new things.