Corporate Backlash to Social Media

by Gil Yehuda on February 10, 2010

in Enterprise 2.0

As social media becomes a mainstream topic, expect to see corporate activity that opens and closes certain on-line behaviors on the part of their employees.  There is one recent case that has hit the blogosphere in the analyst community.  Although I’ve been asked to share thoughts about this case publicly, I must decline.  I don’t think it’s a simple situation, but it is solvable.  If your company seeks advice about your corporate blogging policies, retain my advisory services (contact me) and I’ll gladly help you find a win-win path for you.

Instead let me focus on a different backlash:  As a follow-up to my post on FINRA’s guidelines for the use of Social Media for financial brokers (note: there are comparable  guidelines in the pharma industry), we will see corporate action to open and close employee on-line behaviors (even behaviors outside of the workplace).

A recent post titled “Company Forces Employee to Delete LinkedIn Profile” reminded me of the reality of the corporate mindset.  The post describes the reaction to the news that employees in this one firm can no longer have a private LinkedIn profile as a result of how the company interpreted the FINRA guidelines.  The questions this raises:

  1. Is the company in question correct in their interpretation of the guidelines?
  2. Is this the start of a pattern where others will follow?
  3. What will result from this.

From what I can tell and have blogged about, the FINRA guidelines are careful in their message — they are not endorsing any platform, and they are not clearly saying what you can or cannot do with a particular platform.  They simply restate that all the regulations apply — even in a socially mediated web environment, and they reveal that interpretation is based on the way you use a platform.  Those things that you cannot do in a flyer or TV infomercial, you can’t do on a blog or Facebook.

But where is the presumption?  Corporate attorneys are hired to protect firms from risk — and they may (correctly) interpret the guidelines to say “if you cannot ensure compliance, then you have to block usage of the site.”  And since ensuring compliance is a multi-step process, you have to ensure each element of compliance before allowing use of the site.  So to take the low-hanging fruit here:  since one of the elements of compliance is that companies have to ensure that brokers are trained in the guidelines — until such training is provided, the companies will conclude that the sites should be blocked and registered brokers should remove their profiles.  Then all the company has to do is never fund the training budget.

In other words, blocking is easy.  Enabling takes work.  As long as you see risk and fail to see opportunity, corporations will block.  And yes, this will be a pattern that others will follow.  As long as the job market is weak, employees will accept all types of uncomfortable conditions in order to keep their jobs.  In a stronger job market, many workers would walk away.  Note:  the market will get stronger.

You might ask:  can a broker use LinkedIn to violate the law?  And the answer is “clearly and easily — yes”.  An unscrupulous “pump-and-dump” broker working for a legitimate firm can set up LinkedIn profiles that leverage LinkedIn’s widget plug-ins (e.g. Slideshare,, Huddle, etc.) and construct a set of profiles that provide false advertisements, that are not recorded or audited by LinkedIn.  The LinkedIn profile itself might be all nice and good — but the recommendations may be considered illegal testimonials, and the included folder might have misleading ads claiming all sorts of things.  Fingers will be pointed.  The firm who employs the broker would share in the liability, considerably.

But this is a solvable issue — and some corporations don’t want to solve it.  They may be very focused on just being a brokerage firm (or in the parallel case — a pharmaceutical), and they don’t want to hire the social media consultants and layers to help them solve it.

Who will solve it?  Well, let’s first see who can solve it and why they might want to.

The solution to these issues lies with the platform vendors.  They have the ability to provide compliance mechanisms.  They don’t seem to be doing so — yet.  Imagine if an industry consortium of brokerage firms and pharma companies joined together to work with LinkedIn, Facebook, et al. and negotiate standards such that they could purchase the ability to audit and “backupify” the social behaviors of regulated employees.  Together, they could solve this (much the way some content management vendors get certified for providing government-approved records management standard’s capabilities).

Why has this not happened yet?  Would it work?  Or would it result in having your company cross the boundary between your personal and professional lives?  Please share your thoughts in the comments section below.  I’d love to hear what you think about this.

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February 19, 2010 at 8:02 am

{ 14 comments… read them below or add one }

1 Concept Hub, Inc February 21, 2010 at 5:12 pm

Corp Backlash to Social Media << a classic personal brand interfering with corporate brand problem which SM escalates!


2 Gillian Tachibana February 20, 2010 at 10:37 am

Good Compliance-related article RT @gyehuda Corporate Backlash to Social Media


3 SocialMediaSoftware February 19, 2010 at 8:32 am

Corporate Backlash to <b>Social Media</b> | Gil Yehuda's <b>Enterprise 2.0</b> Blog


4 Doug Cornelius February 11, 2010 at 8:00 am

Gil -

First is the proposition that all companies must use social media as part of their business strategy. This is not true. Of course it can help many companies connect with their customers and business partners. But this is not a universal truth. For good duck hunting you need to go where the ducks are.

Second, to the extent it can help, you need to balance the risk of failure or mistakes using social media against the potential rewards. As you are well aware, social media is as good for amplifying good behavior as it is for bad behavior. To the extent social media can help a business, the reward may be very small compared to other available efforts and tools.

Financial services and pharma are two areas that are highly regulated because the risks are so high. Dealing with the risks and complying with the regulations will be an expensive task for companies in the field.

So, are the potential rewards of social media worth the expense of investment and risk-taking? For many companies, the answer is no.

Some of the problems can be solved. But some of blame needs to be pointed at the social media platforms which never bothered to take into consideration the need of regulatory compliance. These rules have been in place for a long time before the rise of social media.


5 Gil Yehuda February 11, 2010 at 8:42 am

Each point you make is true. A company may or may not want to engage in social media — and should or should not based on a careful balance of potential risks and rewards. The post that I linked to, however, was not a corporate decision to decline participating (one which many companies can choose to do), but was the request on the part of the company that individual brokers should not have LinkedIn profiles, since that personal choice could impact the risk to the firm. And that’s a different ball-game. This is not about connecting to customers on Facebook (NB. I just saw that Fidelity Investments now has an official Facebook page – go figure.), this is about how companies manage the risk of employee’s personal behaviors.

In the case of LinkedIn — it seems that FINRA’s guidelines would imply there are two uses of the platform. 1. as a directory listing or 2. as an advertising platform. If used as a directory, then there is no problem with a broker being listed. If they can show up in the phone book, they can be on the online business directory. But when someone uses LinkedIn as a way to attract and solicit business, well then I’m sure the regulators would have a field day. That would be like a YellowPages ad — something you have to record and review, and one that is potentially in violation of the rules for fair advertisements.

I agree that the platforms could solve this problem. I wonder why they don’t. LinkedIn is a profitable company. Maybe they just don’t care about the regulated industries because they make their money off of the recruiters. But if the regulated industries lobbied together, I’m sure they could generate interest on the part of the platform, or another vendor, to provide the auditing scrutiny that they need. I don’t see this as a blame issue — they don’t own brokers (or pharma scientists) anything. I see this as a market opportunity, that either LinkedIn or some 3rd party plug-in could take advantage of and profit from.

In the meantime, brokerage firms, law firms, and pharma companies will continue to be uneasy about these platforms (and I understand why). And yet, these are solvable problems.


6 Doug Cornelius February 11, 2010 at 12:50 pm

One of problems with FINRA’s regulatory approach to social media is that the sites often fall into multiple buckets: public appearance, advertising, and sales literature. It all depends on how you use the sites. Obviously, the approach precedes the rise of social media.

There is an opportunity for the sites to offer a premium package that includes monitoring or third party applications to fill the regulatory needs. I think the social networking sites should take advantage of a potential revenue stream by offering a regulatory compliance package for a premium price.


7 Geoff Jackson October 21, 2010 at 4:55 am

Great points raised by Doug.

Whilst many companies cannot afford to ignore the power of social media in todays brand building, there are some industries (granted, very few), where socal media offers little benefit.

Becoming more apparent now is the introduction of a social media company policy which lays out the terms and conditions whilst participating on social networks as to not bring your company into disrepute (etc). As head of social media marketing in a previous position of employment for an ecommerce solutions agency, this is something I compiled and put in place. It was effective and anyone working under the company knew where the stood.


8 Robert Lavigne February 11, 2010 at 3:52 am

Gil Yehuda: Corporate Backlash to Social Media #e20 (via @raesmaa)


9 e8Consulting February 11, 2010 at 12:30 am

RT @gyehuda: Blog post #e20 Corporate Backlash to Social Media – As social media becomes mainstream topic


10 Gil Yehuda February 11, 2010 at 12:23 am

Blog post #e20 Corporate Backlash to Social Media – As social media becomes a mainstream topic, expect to see corpo…


11 Internet Marketing February 10, 2010 at 11:35 pm

Corporate Backlash to Social Media


12 kelvin lee February 10, 2010 at 11:03 pm

Corporate Backlash to Social Media


13 fcorbi February 10, 2010 at 9:15 pm
14 Poul J. Hebsgaard February 10, 2010 at 9:13 pm

Corporate Backlash to #SocialMedia #compliance


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