How employees at all levels conduct themselves in public and on social media can reflect positively on a company - or blow up in its face. But just what are the risks and how can they be managed?
Six HSBC staff went go-karting in Birmingham in July as a team-building exercise. Dressed in racing overalls and balaclavas, they figured it would be amusing to get a photo of themselves using a coat hanger in a mock beheading of an Asian colleague wearing an orange jumpsuit. Someone then put the image on Twitter, it spread to the local news, and then went global. The bank"s reserves probably doubled that day thanks to the swear box in the HR department.
Welcome to the world of conduct risk, at least one area of it. Conduct risk has no standard definition, but managing it is a regulatory requirement for UK financial services. As well as other areas such as staff remuneration and dealing with conflicts of interest, it covers how representatives of the company act and how the company treats its customers. And in the age of social media and 24-hour rolling news, both sides of this PR equation have become incredibly sensitive.
“Execs go out for a drink, have some beers and can happily chat away,” says Peter Derrick, Head of Risk and Compliance at law firm Ogier. “But you never know who"s listening. It"s the same with airport lounges - you don"t know who"s looking over your shoulder as you read confidential papers.”
Derrick points to the case of Greek Finance Minister Euclid Tsakalotos, who failed to cover his notes ahead of an important meeting about the bailout this summer. Senior counter-terrorism officer Bob Quick did the same back in 2009, potentially compromising a major anti-terror operation.
Both cases caused a media uproar. And this happens all too easily these days - social media provides plenty of rope for people to hang themselves very publicly.
In March, Roy Cullinan, an RBS senior investment banker, sent messages to his daughter bemoaning "boring" meetings. This may be understandable, but it shows little respect for customers, especially considering the bank is four-fifths owned by the taxpayer. And as The Sun pointed out, Cullinan took home £4 million in bonuses and "plans to axe 14,000 jobs". Cullinan and RBS soon parted company.
Putting your foot in it isn"t new. As Tom Vesey, CEO of Risk to Reputation, explains: “Social media is just a manifestation of technology. People have always chatted, shared secrets and misbehaved. But social media is much quicker - and it can really explode.”
Another danger of the social media age is that companies can easily find themselves in public discourse with customers and don"t necessarily handle it sensitively. Take Manchester restaurant 47 King Street West, which responded to a bad review on Facebook from a bride-to-be by posting a message that her hen group was "bottom of the barrell" [sic] and "chav cheap trash" who "wouldn"t know fine dining if it slapped them in their ugly faces". Then there"s the pub manager who, in 2011, got into a nasty slanging match with two customers on Facebook after they verbally abused her. She was dismissed for gross misconduct.
This doesn"t just happen online - but social media will often take an isolated incident and make it far worse. Last year, a Lidl employee in Birmingham was filmed having a meltdown with a customer over a plastic bag, and shouted such delights as “I was having a good day until I saw your fucking face” and “Die, you Muslim, die”. Needless to say, that clip went on to do OK on the internet too.
Whether it"s execs inadvertently telling their shareholders how dull their meetings are or team members telling customers in no uncertain terms what they think of their opinion, the solution to such potentially explosive situations is simple - company representatives must be cautious about what they
say and do, both personally and professionally. Be aware of where you are and whether what you"re saying is appropriate.
Strategic lead
It"s not just down to the individual, however. The organisation needs proper processes in place when it comes to social media.
“If a junior in the finance department spots a mistake on the accounts, they know they can liaise with a superior to fix it,” says Vesey. “But in the constant flow of social media, most companies haven"t woken up to the fact that they need to change their governance. If you don"t respond fast on social media, it can spin out of control, but equally you can"t just put a 20-year-old in charge as they may not yet understand the principles that should govern behaviour.”
Conduct can be kept under control and out of the public eye. Much of that is down to awareness and training and instilling a culture of responsibility in the company. “If someone is having a go at you or your company over the internet, you have to co-ordinate any response to that and carefully manage the process,” says Derrick. “It"s the same with the media. A quick response is often necessary, and that it"s dealt with by one person, with a properly co-ordinated response. For everyone else the simple answer is "no comment. When you"re with friends and family, it"s even more simple - you shouldn"t talk about anything to do with clients at all.”
Risk culture guidance
The Financial Stability Board has published guidance on risk culture, which includes setting the tone at the top and monitoring it, offering incentives to keep people in line with what you want, and accountability. Parameters must be set - if no one is to talk to the media, make that clear. If social media is to be handled by one person only, make that clear.
It shouldn"t be the end of the world if something does happen - you can use the response to demonstrate the preferred approach to conduct risk management. Show that it"s a chance to learn rather than blame people for failing at a tick-box exercise.
“The main thing is, don"t invent 15,000 rules,” says Vesey. “They"re usually ignored. Instead make it value-based. Reach out to all staff, letting them know they"re the guardians of your reputation. That way everyone becomes vigilant to promoting and protecting it. Do this by sensitising all members of the company to their responsibility - bonuses, company values and their jobs and those of their colleagues are at stake.”
Vesey cites IBM as a good example. As part of their annual reviews, its staff have to read out loud and sign a one-page conduct statement that includes how they"ll protect the values of the company to protect people"s jobs. This covers social media conduct. “The advantage is people can"t then say "I didn"t know",” says Vesey. “It"s a very good way of anticipating conduct risk.”
There"s plenty that can go wrong in this equation - it"s called conduct "risk" after all. But that doesn"t mean everyone needs to shy away from the public eye and modern forms of communication. It"s easy to read the headlines and fear the worst, but papers have always sought comment and team members have long slagged people off. And, as the Lidl example shows, it"s not just social media that"s causing this.
“For each high-profile case of a social media gaff, there are thousands of customers fuming on call lines because they"ve been mistreated,” says Vesey. “It would be ridiculous for companies to be smug, writing someone off as "just some tosser trying to get attention". But to get paranoid about it is equally silly. Think it through and manage the problem. Managers have always had to deal with this.”
If you"re unsure, there"s one simple piece of advice that remains as pertinent now as it ever has: if in doubt, keep your trap shut.