CEOs follow the money, not the tweets

Think Return on Investment (ROI) and not Return on Engagement

December 6, 2011

CALGARY, AB, Dec. 6, 2011/ Troy Media/ - While wandering through Google Plus the other day, I ran across a video “CEOs suffer from social paralysis” by Thomas Power. Power, chairman and founder of Ecademy.com, essentially posits that CEOs are rewarded for things like reducing costs, automating processes and producing short term results, none of which social media is good for.

Well, maybe it helps reduce advertising costs with more efficient digital, but that’s not enough for the C-suite. To them it all seems too chatty and frivolous.

What drives CEOs?

That got me thinking about one of my favorite books “Freakonomics”, a non-traditional economics text that explores behaviour as explicable by incentives.

Stock price, the expectations of investors, revenue, margin, market share, production volume and so on are what drive CEOs. They are incented to raise the stock price, provide market gains, and to deliver dividends to investors. All the while, they are performing a balancing act between the board and employees, and keeping an eye on their own bonuses and stock options.

Telling a CEO you can’t deliver Return on Investment (ROI) on social media but you expect “return on engagement” is about the same as saying you’re seeking permission to hunt for unicorns. It simply won’t fly.

To embed social media into an organization you need executive sponsorship, which means you need to align your program with their motivations. Connect the dots for the leadership team on how this helps them do their jobs and you just might get their support.

I typically turn to the old economics trifecta to create this alignment: land, labor and capital.

Social media has been increasingly implicated in stopping projects or denying companies access to land, particularly resource companies. Witness the Quebec moratorium on hydraulic fracturing for natural gas. As the Financial Post reported this summer:

“Behind closed doors in the board rooms of some of these energy firms, the introspection has been gut-wrenching. Directors questioned what the decision means for business and what they should do next. Backers questioned whether to keep their money in or pull out.”

Or consider the rough ride TransCanada’s Keystone XL pipeline project has been having in the U.S.

There’s really no bigger showstopper than being denied access to the land. And the folks seeking to deny such access are particularly adept at fomenting dissent via social media.

Next, there’s labour. Obviously you can’t run projects without talent, but how to find said talent?

While the U.S. shuns pipeline jobs in favour of partisan politics, Canada, particularly the western provinces, is rapidly experiencing another labor shortage. Human resource professionals are pulling their hair out to find qualified candidates. The demographics of the baby boom are playing against them, increasingly exacerbating the shortage. Print career ads have almost evaporated. Job boards deliver masses of under-qualified “junk” candidates that recruiters have to sift through. The new world of recruiting is search and social (think Google searches and LinkedIn). All of which came upon us in the past few years. Recruiters are reeling with the change.

Then there’s capital. As Howard Lindzon said at a recent meeting of the Canadian Investor Relations Institute “Being active in social media does not mean your stock price will increase. Only good business will do that but you’ve got to participate in social platforms for no other reason than to prove that you’re doing what you are supposed to.”

Align your proposal with your CEO’s motivations

Lindzon, a highly successful angel investor and co-founder of StockTwits.com, told me recently “It’s not just about driving the stock price, but it’s about recognizing these guys that own 10,000 or 5,000 shares … are the ones the reporters are reading that drive the stories in the Wall Street Journal, etc.”

If your CEO asks you why you want to “do” social media, think twice before blurting out something about engagement and the wisdom of the crowd. Instead, tell her how you’d like to help build the stock, attract talent, and educate the public on why you belong in their back yard.

Doug Lacombe is president of Calgary social media agencycommunicatto. Visit him at communicatto.com.