This is a guest post from Dennis Walsh, Senior Consultant & Director of Social Media at Sharon Merrill. It was originally published on The Podium, Sharon Merrill’s investor relations blog.
Last week, Houston-based Francesca’s Holdings Corporation (NASDAQ: FRAN) announced that it had fired its chief financial officer, Gene Morphis, after discovering he had “improperly communicated company information through social media.”
This case highlights how important it is for all companies to have a clear social media policy in place and to educate top executives on their roles and responsibilities as company spokespeople.
Mr. Morphis was very active on Twitter, publishes a personal blog, and has public profiles on LinkedIn and Facebook. Mr. Morphis spoke freely about his duties as CFO of Francesca’s in his Facebook status updates, which were open for public viewing. In one example he states that he just completed a roadshow for a secondary offering, which appears to have been announced via press release prior to the post.
On his Twitter profile, Mr. Morphis did not disclose his association with Francesca’s, although the handle is listed on his LinkedIn account. Here, he often interacted with traders and business journalists, sharing his opinions on market news. In one instance, he discussed a company board meeting by tweeting, “Good numbers=Happy Board.” Even though it is a personal account, anything said about an employer can have wide-ranging effects.
Francesca’s is a retail boutique that offers apparel, jewelry, accessories, and gifts to female customers. As such, e-commerce plays an important role and the company uses a variety of social media tools to drive customer engagement. On the company’s website, it lists a Facebook page, Twitter, YouTube, Vimeo, and Pinterest accounts, as well as a blog. Given Francesca’s social presence and Mr. Morphis’s termination for improper use of social media, one must assume there were guidelines in place that he did not follow.
When it comes to social media for investor relations, there are some important lessons to be learned from this case.
- A social media policy is necessary for all companies. Whether your company is a consumer-focused retail boutique with an active social media program in place, or a B2B manufacturer of semiconductors with no corporate social media accounts, employees, management and the board need to be aware of guidelines for proper use of social media at work and at home as it relates to being employed by the company. The majority of employees use social media and the line between personal and professional topics is often blurred. Make it clear.
- For a public company, social media use should be specifically addressed in the disclosure policy. More companies today are using social media for investor relations. NIRI updated its “Standards of Practice for Disclosure” in April. In regard to use of social media, NIRI asserts that the “company will be responsible for statements made by or on behalf of the company and cannot avoid liability by having employees speak in their ‘individual’ capacities if employees are authorized company spokespersons.”
- Provide education for following the guidelines. Don’t assume that everyone has read and understood the guidelines. Instead, show them what is deemed appropriate and provide examples for acceptable and unacceptable uses of social media. If there is no one in-house to provide this training, hire a firm, like Sharon Merrill, that offers services that can be customized to the specifics of your business needs.
No matter what your position is on the use of social media, incorporating a policy and an education program for the proper use of social media is the first step toward protecting a company’s reputation and all of its employees. As more details are revealed from the Francesca’s case, you can be sure that the company’s social media policy will be the focal point of the story. Don’t let your company be the next example.
Dennis Walsh is Senior Consultant & Director of Social Media at Sharon Merrill. He counsels clients on a broad array of investor relations and corporate communications issues such as market research, competitive intelligence, earnings announcements, investor targeting, roadshow planning and social media.