Social Media and the Piercing of the Corporate Veil

There has been a lot of online commentary on the social media rules imposed by the WSJ.  For instance, Fred wrote how some of the rules conflict with what makes for effective online engagement.  He got an interesting comment from Peter Kafka arguing that the rules amounted little more than a “think before you write - in any medium” – but then Peter added that “[this is] one of the reasons I enjoy being a contractor."  That is where I believe the bigger story sits.  Social media is creating a new balance of power between individuals and firms.

Historically, most individual contributions occurred in meetings, phone calls, emails, internal documents, etc. all of which used to be either ephemeral or had a strong presumption of privacy.   As a result, reputation and audience attached at the corporate level much more than at the individual level.  Now we are entering an era in which individuals are establishing their own audience and reputation online independent of their employer.  At the same time the previously hidden activities are increasingly leaving an external trail that connects up to the individual.

This is a kind of ”piercing of the corporate veil“ – not in the technical legal sense, but in the sense that individuals are now becoming increasingly visible.  Some companies will try to control this and fight it all the way.  But in the long term it seems to me that the more successful strategy will be to not only accept this blurring of lines, but leverage it.  This will be hard to do for many existing companies because it requires employee motivation to be based on "soft” factors, such as culture, rather than “hard” monetary factors.  Creating a clear understanding and alignment of goals and values will allow companies to rely on employees’ judgement and actually empower their online presence rather than trying to regulate it.

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#individual#firm#social media