Social media damages business reputation

Social media damages business reputation

Senate Communications says social media was instrumental in creating reputational damage for New Zealand organisations in many of the corporate crises over 2009.

Neil Green, Managing Partner of Senate Communications, said today that public reaction expressed and fuelled by social media had helped to double CEO awareness of the importance of corporate reputation over the past five years.

The 2009 “Managing Reputation” survey, by Senate Communications and Baseline Consultancy, revealed that 92% of CEOs now rate their organisation’s reputation as their single biggest asset, and 80% of them believe it is the biggest risk.

“A common factor in at least half of the corporate crises in 2009 was an increasingly large number of people expressing their opinions online, and those opinions getting mainstream media coverage. Social media continues to gain increased traction, usage and influence.”

“Yet over 80% of CEOs said online channels were only a low or average threat to their business.

“In contrast, mainstream journalists see online media commentary as equal to their own coverage in the damage they can cause to an organisation’s reputation,” Mr Green said.

CEO and media respondents in the survey both cited Jetstar’s public management of customer complaints as poor. The wave of customer disaffection expanded rapidly through online channels.

The survey revealed that organisations were aware of the role of ‘word-of-mouth’ in setting their reputation, but had not yet realised that online social media was a highly efficient and rapid engine for spreading and reinforcing opinions between people.

“Social media brought people together to share opinions about companies they thought had acted badly, or responded badly to an event.

“Social media not only magnifies the voice of a disaffected group, it gives them novel ways of expressing their feelings. They are not restricted in that there are no journalists and editors interpreting their stories.

“Whether it is on Facebook, Twitter, a consumer complaint website, chat group or another form of social media, more people are being more easily connected to arguments or issues – regardless of geographic location. Importantly, social media continues to gain increased traction, usage and influence.

“The exaggerated network effect enables public sentiments about corporate behaviour to grow and spread rapidly. The colour and size of the expression attracts the attention of other disaffected people, and mainstream media, and thus an even larger audience,” Mr Green said.

ENDS

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