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Why Business Needs To Engage In Social Media

By: Shel Holtz

Paul Argenti’s excellent keynote talk at the IABC Research Foundation luncheon today included a few references to social media, but mainly these addressed the impact of social media on public perceptions of organizations.

When he spoke about corporate communication, he spoke specifically about an organization’s effort’s to communicate to constituencies, never about communicating with them. I don’t have a huge problem with this; after all, an organization’s use of social media should augment, not replace, conventional communication. Each channel should be employed based on its strength.

Nevertheless, the bulk of Argenti’s talk could serve as a primer to explain to executives why their organization’s should embrace social media.

Argenti, who has taught management and corporate communication at Harvard Business School, COlumbia Business School, Dartmouth, the International University of Japan, and several others, is also an author and consultant. He’s also (wisely) fixated on research and measurement, which means he offered numbers to support his assertions. I’ll summarize and add my own comments about the connection between Argenti’s remarks and the case for social media.

He began by noting the Western envrionment for business is uncertain, presenting a chart showing the public response to this question: “Does business act responsibly?” His numbers consolidated three studies, from Yankelovich, CNN/USA Today, and Gallup. The numbers below represent the percentage of respondents who said “yes.”

1968 - 70%

1976 - 15%

1985 - 30%

1999 - 28%

2006 - 16%

Yep, that one-way, top-down communication style definitely seems to be working for business, doesn’t it? According to Argenti, the turning point after the comforting numbers of the late 60s was not Watergate or the Vietnam War protests-which were political but not business-focused-was the oil and gasoline crisis. Since then, some of the best-known examples of formal organizational communication have been characterized by deliberate efforts to mislead, including (but by no means limited to)…

* Enron, which misrepresented its reality and its values

* Arthur Andersen, which disregarded regulations and the clear signals that it was acting inappropriately

* Tyco, whose CEO misused company funds to throw lavish personal parties

* Martha Stewart, who lied an obstructed justice (rather than simply say, “Oops, I messed up)

* British Petroleum, whose green talk was seen as false

* KPMG, which created illegal tax shelters for its clients

These high-profile communications have led many in the media-such as Newsweek writer Allan Sloan-to begin characterizing the situation as the big, bad corporation versus the poor, downtrodden little guy. (Argenti noted that nobody rooted for PG&E; all the cheers were for Erin Brockovich.) This exacerbated the perception that business couldn’t be trusted, as in the results of this study that found…

* 68% of respondents believe big companies are too big to provide high levels of service

* 65% said big companies can’t be trusted to make safe, durable products without government regulations

* 67% said the quality of deliverables from big companies is slipping

* 88% said big companies are too concerned with profit and not enough with their responsibility to society, the environment, their employees and the like

As if that’s not enough, the public is also aware of the staggering growth of executive pay compared to the lowest paid worker. That ratio was 42-1 in 1980, 419-1 in 1998, and was well over 530-1 in 2000. Even Fortune magazine, when covering this disparity, pictured CEOs as pigs. (Argenti noted that label was reserved for law enforcement in the 1960s.)

Need more statistics? Trust in institutions, according to an Accenture study, shows global companies at -9% and large national companies at -10%. Lawyers ranked higher (at -2%). Near the top were armed forces (+43%), NGOs (+27%), Educational systems (+26%), health systems (+17%) and unions and labor groups (+2%).

Again, formal, one-way communication has definitely served to build confidence and trust in our organizations. Makes you wonder why so many executives are afraid to relinquish control and engage in conversation with their various constituents, given how well their communication efforts have succeeded to date.

Argenti offered sound solutions around the ideas of strategic communication and alignment of communication with the core business. Strategic communication, he said, is…

* Clear and understandable

* True

* Communicated with passion

* Consistent

* Repeated

Argenti further noted that the lessons all communicators should take from the business experience, the numbers, and the research, include…

* The CEO must be involved

* Communicate with a long-term orientation

* Top communicators must have general management skills

* Communications must be strategically aligned

To the last point, Argenti argued strongly for combining, either formally or through alliances, investor relations and corporate communication functions. But many of the points he made pointed directly to the authentic, passionate, clear, human communication that is so well enabled by social media.

About The Author

Shel Holtz is principal of Holtz Communication + Technology which focuses on helping organizations apply online communication capabilities to their strategic organizational communications.

This entry was posted on Wednesday, June 27th, 2007 at 11:14 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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