Disconnect Between Companies' Understanding of Social Media and The Actions They Take

Social Media

October 26, 2012 -- There is a disconnect between companies’ understanding of social media – both the opportunities and the risks -- and the actions they are taking to apply it to their businesses, according to new research conducted by Stanford University’s Rock Center for Corporate Governance, the Center for Leadership Development and Research at the Stanford Graduate School of Business, and The Conference Board. 
 
More than 180 CEOs, senior executives and corporate directors of North American public and private companies across all major industries were surveyed on their knowledge of social media and their companies use of it. The authors state, “Unlike most surveys on social media, which rely on a demographic of mostly young practitioners, the survey sample included only representatives from the highest levels of their respective organizations, with the average age of survey respondents in the mid-50s.”
 
Key findings from What Do Corporate Directors and Senior Managers Know about Social Media?
 

• Nearly two-thirds of respondents (65%) use social media for personal purposes, and 63% for business purposes. Of those who use social media, 80% have a LinkedIn account and 68% have a Facebook account, demonstrating that executives and board members are familiar with this tactic.

• Three-quarters of respondents’ companies (76.4%) use social media to support business activities. Top uses:

• To communicate and interact with customers – 77%

• To advertise to its customers – 64%

• To research customers – 46%

• To research the competition – 40.3%

• Slightly more than half of executives and directors (56%) surveyed state they have a "good to very good" understanding of the impact that social media can have on their business; 44% percent self-report having a "very poor to modest" understanding of the medium's impact.

•  Six in 10 companies (59%) use social media to interact with customers, 49% to advertise, and 35% to research customers.

• Approximately 30% use social media to research competitors, research new products and services, or communicate with employees and other stakeholders.  

• Just 32% of surveyed companies monitor social media to detect risks to their business activities. These companies tend to monitor risks related to corporate reputation and customer satisfaction. Less attention is paid to other organizational risks, such as unauthorized release of proprietary information or threats from competitors.

• Only 14% use information gathered from social media as part of the key performance measures to track the success of business activities. Companies that do gather metrics use them are most likely to measure customer engagement (61.5%) and monitor corporate reputation (50%).

• Approximately half of the companies surveyed do not collect social media metrics, thus not “collecting information that might be used to improve corporate strategy or mitigate risks.”

• Only 24% of senior managers and 8% of directors surveyed receive reports containing summary information and metrics from social media. The overwhelming reason as to why the lack of reporting is the company does not collect this information (61.4%).

                           
“Companies appreciate the potential that social media can have to transform all aspects of their business: branding, reputation, communication, outreach, and identifying strategic risks,” says Professor David F. Larcker of the Stanford Graduate School of Business and lead author of the study. “They also realize the serious threats that it can pose. They’re just not doing very much about it.” 
 
View the report for the authors recommended steps in implementing a social media strategy that integrates with corporate strategy and risk management.
 

About: Results are based on a sample of 184 American and Canadian CEOs, senior executives, and external members of the board of directors surveyed between May and June 2012. Public and private companies across all major industries and revenues were surveyed. Two-thirds (67.8%) of the respondents were male, 32.2% female. Breakdown by age: 26.4% were age 50 and younger, 35.7% were ages 51 to 60 and 37.9% were age 61 and older.

Source: Stanford Graduate School of Business, 2012 Social Media Survey, accessed October 30, 2012.