Slippery Slope of Social Media Posts and Corporate Governance Guard Rails!
When a well-known journalist and the honcho of an iconic corporation spar on social media, can the temptation to pick on the corporate governance angle be easily resisted?
Clearly not, especially when the two institutions that each is a part of, live within a kilometre of each other on either side of the arterial Mount Road in Chennai!
N Ram had commented on an X (Twitter) posting of Rajiv C Lochan, who happens to be the managing director (MD) of Sundaram Finance Ltd.
(The post of Rajiv C Lochan appears to be entirely in his private capacity and shows no connection to the company he helms.)
Should MDs and other top corporate functionaries be denied their personal space to comment freely on social media on subjects beyond their immediate area of expertise or directly relevant to their business?
The answer to this may lie in the code of conduct for employees and directors that most companies draw up. Such documents, if in existence, would generally be accessible to the public on the company's website.
An extract from one such code of conduct of a company is provided below for reference.
Para 5.5 may be seen as relevant, to a limited extent, for an employee to conduct herself in a manner that the same doesn't, in any way, affect the image or interests of the company.
Unless Sundaram Finance has its own policy (a search on its website did not locate the policy), which has more precise dos and don'ts, the limited test for interactions on social media can only be if the postings would affect the interests of the company concerned or act in conflict with the public position adopted by the company on an issue.
However, most of these policies are legacy documents and have not specifically incorporated the impact and pervasiveness of social media.
It is seen that, among global corporations, it is quite prevalent to have specific policies on social media interactions and rarely do they prohibit the sharing of views and opinions in a non-controversial and non-combative way.
Among the Indian corporations, the Tata group has a detailed policy document, which most of the companies in the group seem to have adopted. Their policy doesn't stop employees from using social media to interact with the external world, subject to the common caution of maintaining due dignity and decorum.
Should persons at the level of MDs and chief executive officers (CEOs) be held to a higher standard and restrictions for such social media usage as compared to employees in the lower echelons?
The fair expectation is that the persons at the top of the heap would generally exercise greater discretion in how they conduct themselves, and trusting their judgement in such issues is perhaps the right approach rather than getting too specific and restrictive.
Such senior people may be quite conscious that they not only hold themselves as examples to others but what they say, even in their personal capacity, is invariably construed as the house view.
At higher levels, the person and the position may coalesce such that it would be quite difficult to distance the organisation from what the individual at the MD or CEO level says.   
Therefore, exercising greater caution and restraint may be more prudent than shooting one's mouth off, and reaping the consequences.
Corporate boards should devise their own policies around the personal use of social media, especially for persons at higher levels. Assigning the job of monitoring the private social media posts of employees on some random basis is also a way to arrest the damage should some untoward message get posted on these platforms.
A pertinent and sagacious guidance comes from Bill George, executive fellow, Harvard Business School, former Medtronic CEO, and best-selling author, which is pat to the point-
"Just as many business leaders have a manual to guide them through crises, CEOs need to develop a framework to determine when to engage in public issues so that there is a consistency to their actions. This framework must be prepared in advance as usually there is not time for discussion and debate. Here's when they should get involved:
Issues relating directly to your company's mission and its values
Issues impacting your employees.
Issues directly impacting your customers
Issues impacting your community
When issues violate fundamental societal norms
In our surveys of CEOs in our courses at Harvard Business School, we have learned that this aspect of their jobs is the one that makes them most uncomfortable. None of these choices is easy or risk free, but today representing their companies and all their stakeholders is an essential part of the CEO's job."
Though the above guidance may be seen as quite self-contained, the question may still linger whether a CEO should be denied her personal space to air views on a subject considered personally important or where it conflicts with a dearly held private belief or something similar.
A smart answer may be that discretion is the better part of valour!
To conclude, indulge a CEO with all the freedom, only insofar as it helps raise the corporation's market-cap!
A 'Ram' opens our eyes to a subject that definitely needs more of the board's attention!
(Ranganathan V is a CA and CS. He has over 43 years of experience in the corporate sector and in consultancy. For 17 years, he worked as Director and Partner in Ernst & Young LLP and three years as senior advisor post-retirement handling the task of building the Chennai and Hyderabad practice of E&Y in tax and regulatory space. Currently, he serves as an independent director on the board of four companies.)
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