King III links in with social networks

The impact of social networking on the South African business landscape is still to be felt in its entirety, and presents risks and opportunities for managing corporate reputation, says the Institute of Directors (IOD).

Earlier this month, the final version of the Third King Commission Report on Corporate Governance (King III) was released, and chapter eight deals in depth with the management of corporate reputation.

The report says: “The board should appreciate that stakeholder reputations affect a company's reputation.”

IOD chief executive Lindie Engelbrecht says the impact of social networking sites has a profound effect on companies, and they have to set up the proper policies and structures to manage it.

“Companies cannot monitor their employees' comings and goings on social networking sites. Very often, they ban them from using these sites from work; however, they cannot stop them altogether. What they must do is make sure that employees understand the consequences of leaving sensitive company information on these social networks,” she explains.

However, Engelbrecht says such social networking sites can also offer companies a fantastic opportunity to engage with their stakeholders.

“Wherever there is a risk, there is an opportunity as well. However, people must begin to understand that whatever is placed on the Internet is now in the public domain and there are consequences.”

Tim Shier, marketing manager at online marketing company Quirk eMarketing, says many South African companies are ignoring online reputation management and have not yet quite woken up to its implications.

“We have seen a few cases of companies trying to sue a blogger on what he or she has said about their products or services. Largely, such action backfires as it raises the issue in a very negative way, and then it is compounded as it is taken up by other bloggers or members of the social network,” he notes.

Shier says the case of travel company QVC, which claimed a blogger's comments cost it 10 clients, cost it R25 million in lost business once it tried to take legal action against him.

Quirk eMarketing has come up with 10 action points to help companies deal with social network commentary. Among them is that a company must be humble and listen to its stakeholders, respond immediately to commentary, try to get a false allegation removed, or, if the allegation is true, demonstrate how it has been corrected and incorporate this into the company strategy.

“Companies must be prepared to engage in the conversation with their clients and also be prepared for almost any eventuality,” Shier says.

ITWeb and the IOD will jointly host a conference on directors' responsibility, in Sandton, on 1 October.

Related stories:

• King III highlights IT's importance
• King III addresses IT governance

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