This content is produced by The Australian Financial Review in commercial partnership with KPMG.

"A lie can travel halfway around the world while the truth is putting on its shoes," as Mark Twain said, but he did not envisage social media: "halfway" is understating it. A lie – or at least a bad impression – can get fully around the world, in an instant.

That is the nightmare scenario for companies and organisations in the social media age.

"It's so much easier in today's environment to see and hear the actions that can lead to a loss of trust," says Karen Penrose, director at Bank of Queensland. "Humans love to communicate, and they now have a huge range of global, electronic communication networks: Google, Facebook, WeChat, Twitter etc. That gives the community a voice that's both a local and a global platform, and the reality of that for businesses, directors and managers, is that trust is so much more readily lost."

But the challenges posed by social media are not new, argues John Stanhope, chairman of Australia Post and former chief financial officer at Telstra. "Social media is certainly a medium that allows messages to be spread a hell of a lot faster, but what we have to be alert to is that it then changes community expectations quicker. Before social media was around, community expectations were always changing, but not this fast," he says.

Richard Boele, partner and human rights and social impact leader at KPMG Australia, agrees. "We've been here before: the challenges around loss of trust are not new challenges. I was involved in the mining industry's response to the global loss of trust in the mining sector, in the 1990s, which culminated in the MMSD (Mining, Minerals and Sustainable Development) Report, which was published in 2002. But social media is raising the intensity of these challenges."

Boele says companies and organisations have "much more transparency" these days about behaviours and impacts on people and the environment and other stakeholders – but the other side of this coin is the speed at which social media can generate reaction.

"It's faster, nastier, some of it's not right, not founded in fact, but it's at such a speed now that stakeholders are questioning quicker and coming to a distrust with you quicker. Social media is the enabler [for this]."

Listening to customers

The challenge for boards is that, somewhere in the social media maelstrom, there is the voice of the customer – to which companies have always had to listen. "What social media is delivering is the capacity for the individual in the street to have a voice, and they can have a voice directly at a board table effectively, or in a government office or the media," says Michael Ullmer, director at Lendlease and Woolworths.

"That was not available to them previously, unless they were out on the streets marching with placards or whatever, and then they were reliant on what sort of coverage they were going to get.

"Boards need to ensure that they're getting feeds coming to them around what customers are saying – and taking an interest in that."

In the old days, he says, it was around customer complaints coming in via telephone: large numbers of which were actually a very early warning signal about a systemic problem in the organisation. "Today with social media, you just get that so much more immediately. Boards ignore the voice of the customer at their peril."

Penrose says it's "critically important" that the organisation has an open culture, to be able to feed-in the messages that are coming in from social media – and that the organisation truly "hears" these messages, rather than thinks in terms of "managing" them.

"Once you've heard it, you can work out how it fits in the framework and what's material to the business. Then you can communicate back as to what decision you're making, but with a really strong customer lens," she says.

Social media is not just a channel through which messages come in to the organisation, says Penrose, it also creates a "much broader opportunity to get closer to the customer". "Management teams have to work hard at finding ways to be at the front line and making sure that they're really hearing those messages," says Penrose. "The part that remains constant in all of this is the customer."

But the organisation cannot afford to think of how it handles social media solely through a customer lens: it must also be thinking of its "employee brand", says Ullmer, recognising the importance of having younger employees. "We're in a world where employees don't have the same views around loyalty in terms of service to the company, they're far more prepared to move, far more choosy – the organisation's 'employee brand' is critical and is informed by everything we're talking about, as well."