Donna Flagg

SARBOX Update: For Small Business
January 4, 2008

Just a few weeks ago a news release came out from the Office of Advocacy announcing that small businesses would not be held to the same “compliance burdens” as larger companies saddled by the rules and regulations of Sarbanes-Oxley - the post-Enron legislation crafted to ferret out corporate wrong-doers. 

It got me thinking… 

Since the various ethics debacles of 2002 and those that followed, there have been do-the-right-thing training courses, new governance departments, oversight committees and Chief Ethics Officers sprouting up everywhere. But in the end, is any of it really working? Is there, or can there be, such a thing as changing the moral fibers of an individual via the rule of law? 

Unfortunately, I’m afraid that integrity can’t be "written in" to organizational behavior, especially for companies who have unscrupulous people working there to begin with. But it can be shaped around a set of principles that reflect organizational values. Isn't it ironic though that each new set of rules is necessary because of the people who found a way to get around the rules that came before? So basically, the rest of the world gets stuck in a perpetual cycle of making rules for people to break, so we need to create more rules that they’ll eventually figure out how to break again. Huh?

Even though I know (and believe) that controls are necessary, it seems like a waste of time for all the people who didn’t need the rules in the first place to have to jump through a bunch of legislative hoops. I guess that's life. However, I'd like to think there is a better way, meaning that as a strategy, law enforcement is not the most constructive or productive way to manage ethics in the workforce.

So what is? Well, first let’s remember that penalties may or may not deter bad behavior, but they most certainly will effect the spirit and tone of the company and perhaps more importantly, the sense of security among the conscientious majority. The only deterrent you really need is, “You’re fired.” Not cutting the cord when  necessary is where I see companies get themselves into trouble all the time. They’re afraid - of what exactly, I don’t know. But as a result, businesses tiptoe around terminations when they shouldn’t. That aside, suffice it to say that leaving the effects of unethical behavior to manifest inside a company is costly beyond measure, not only because of the potential legal ramifications, but because it adversely affects all of those people who want to do things “right.”

 Your best bet is to find a way to identify, communicate, enforce and reward/sanction behavior on a regular and consistent basis to create the company you want from the ground up and inside-out, before the ethics police come after you.

Posted by Donna Flagg on January 4, 2008 | Comments (0)