EDITORIAL: Sarbanes-Oxley does not lessen the need for a company to police its own ethical behavior

This week marks the first anniversary of the enactment of Sarbanes-Oxley legislation. Given its impact on agency rankings and the transparency of this industry, the regulation tends to provoke a negative reaction in normally polite PR society.

This week marks the first anniversary of the enactment of Sarbanes-Oxley legislation. Given its impact on agency rankings and the transparency of this industry, the regulation tends to provoke a negative reaction in normally polite PR society.

Outside of that debate, there is no doubt, the legislation has led to changes within corporations. We know that finance departments are cranking out more and more information, and that the checks and balances within companies are more stringently applied for anything related to the company's performance. Last week, The Wall Street Journal reviewed the impact Sarbanes-Oxley has had, including new stock exchange rules, more independent directors, and increasing cases where the roles of chairman and CEO have been split. The paper reports that "reforms have raised awareness of honest procedures and the criminal liabilities of not following them." In-house PR and IR professionals may find themselves in a reactive role when focusing solely on the legislation. But beyond the reach of Sarbanes-Oxley, there is the basic issue of business ethics, which cannot be mandated or controlled by a government agency. Thomas Donaldson, the Mark Winkelman Professor at The Wharton School of the University of Pennsylvania, a business ethics expert, spoke last week at an anniversary event for Burson-Marsteller, and told the group about the four most common misperceptions about managing ethics. One is that "bad things are always caused by bad people," when, in fact, he's observed that factors like uncommon stress and blind precedents are really at the root of the actions of those behaving unethically. Compliance programs instituted by companies can play a positive role, Donaldson added, but they do little to help executives counter an unethical environment. He also said there is ample evidence now that ethical behavior pays off for companies, rather than costing them money. Finally, he said that cultural differences really do count, and must be taken into consideration when managing ethics internationally. PR professionals can help senior executives recognize the trends like these within their own organizations, against which no one can legislate, even as Sarbanes-Oxley attempts to push companies into regimented compliance. Fame alone does not an 'influential' make Katie Couric had a very public colonoscopy in March 2000, and a recent study reports that the number of people having this procedure has jumped 20% ever since. This so-called "Katie Couric effect" has been called a good example of the power of the "influential," the buzzword that is doing the rounds this year. But given her celebrity status and Today's consistently high ratings, does this example really hold up? Rob Flaherty, senior partner/global practices for Ketchum, a firm that has been talking a lot about the concept lately, says that while Couric is undoubtedly an influential, one person is not enough to prompt real change. "It takes a chorus of influential voices...to make an impact," he says. That's important to remember as more PR departments and firms grab onto this notion. Celebrities in themselves aren't necessarily influentials, as the word should be applied. Sustained change or motivation to action is the result of harnessing diverse and wide- ranging voices, not just the power of one famous name.

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