Consider it a twist on the famous quip from gonzo journalist Hunter S. Thompson: When the going gets weird, the weird turn pro.
"You have no idea how many times I have gone to the CFO and said, 'I do words, I don't do numbers. If you want me to diagram a sentence I can do that, but if you want me to read this chart, you have to explain it to me,' " says Lori Hutzler, director of corporate
communications at the publicly traded Isle of Capri casino company.
Hutzler was referring to the Brave New World of Sarbanes-Oxley, which lays out a range of new measures that are meant to keep public corporations open and honest about their business transactions. Although the regulations mostly govern financial disclosures,
they're having an indirect effect on the PR side of the house. After all, who does the disclosing? And, if PR is going to talk finance in the SOX era, PR is going have to learn to read the numbers.
Hutzler works in a highly regulated industry, so she's used to operating in the full-disclosure realm demanded by SOX. To that end, her PR efforts align with the work of Capri's financial folks. "If I have information, before I give it to a reporter I will go back and
double check it," she says. "If I am giving a numerical amount for a capital investment I will make sure that has not changed before I give it out. I cannot say an approximate number. I have to make sure that I have current information."
Outside help
Some already are daunted by the challenges posed by SOX.
For many PR professionals, "they just don't understand it," says Chris Kettmann, a VP at the strategic financial communications firm Ashton Partners. "They don't understand a lot of the legalese and that is putting extra tasking on their time. So it makes sense to
bring in an expert. It helps them to focus their time on what is really important."
The cost of that help is hard to gauge. A small cap company might spend $2,000 to $3,000 to engage Ashton Partners' services, but that will cover all aspects of Sarbanes-Oxley. How much of that goes to PR help will depend on how much help is needed.
While the issue here is largely one of external financial disclosure, some consultants say they can help best by working with PR to establish more firmly the internal communications processes, says Hundley Elliotte, a VP at the project-consulting firm YCA
Solutions for Project Success, which currently draws about 20% of its business from SOX consulting.
The law is all about financial data, "but that financial data often comes from operational data. It comes from the business processes throughout the organization," Elliotte adds. "So you find that Sarbanes-Oxley touches almost anywhere that data is kept, and within
that framework there is going to be the need to communicate, so that everyone understands the requirements."
Talking cash
Sarbanes-Oxley is all about learning to talk accurately and precisely with regard to financial matters both internally and externally. That means a PR executive who does not understand the fundamentals of corporate finance had better get up to speed.
"We have seen a lot of growing interest in education," said Michael Claes, managing director of the U.S. corporate financial practice at Burson-Marsteller. "We have been briefing communications and investor relations people...we do a lot of education programs
that bring together communicators along with legal talent and accounting experts."
Claes says this sort of dialogue ensures PR does its job under the new regs. "A communicator who has a broad perspective on what the company is trying to do may very appropriately rely on other resources for that more technical knowledge," he said. "It would be
great to have a broad- based understanding of accounting, but realistically if you understand the essentials, you can really just concentrate on getting the story out there."
With solid financial know-how -- or at least reliable help from the accounting department -- a PR executive is ready to tell the story. But what is the story under the new regs? When it comes to financial disclosure, the story is largely one of reassurance, according to
Michael B. Goodman, director of the Corporate Communication Institute at Fairleigh Dickinson University.
"Sarbanes-Oxley started because people didn't want to invest, and that was because of a lack of trust," he explains. To restore that trust, he says, a PR practitioner has to show a new sensitivity to the concerns of financial stakeholders. "The chief communications
officer should have his or her finger on the pulse of the market that the company is in. Not just investors, but the entire community, the atmosphere in which the organization is working."
On the plus side, this is actually easier to do in the new regulatory environment. "In the past the SEC has tended to be deliberately vague" about disclosure, Claes added. Now, corporations are being told exactly what must be disclosed, and when, and in how much
detail.
On the other hand, the new environment means that you can't afford to trip up. "If I am going to communicate in some way a disclosure that we have, I have got to follow protocol," Hutzler explains. "Say we have a quarterly earnings call. If we say something in that
call that is not in that press release, we must get that on our Web site immediately. We have to make sure that we make everything public now." PR
Sock It To Me?
Since the Sarbanes-Oxley Act was passed in 2002, corporate PR pros find themselves enmeshed more deeply than ever before in issues of corporate accounting and business ethics. A survey conducted last December by KRC Research, on behalf of Weber
Shandwick, found that SOX has significantly altered the job of senior PR executives.
- 86% of Corp. Comm. executives say SOX has dramatically changed the nature of their jobs
- 81% have addressed issues regarding government regulation in the last year
- 86% said their jobs have become increasingly complex in the past five years
- 91% said that their job has become at least somewhat more difficult
- 22% had to publicly address allegations of improper behavior by a senior manager
Unfolding Sox
For some corporate PR executives, Sarbanes-Oxley translates to more than extra work. It means more success: More media hits and, ultimately, more business.
Take Aparna Sharma, PR manager for Internet security company SecureWorks. The firm provides security tools for banks, credit unions, utilities and hospitals. The common thread? All these industries are governed by the new disclosure regulations.
Sharma has used the law to her advantage, touting her firm's services as a means toward achieving compliance. It's a pitch that has won the attention of media outlets hungry to help their audiences understand the new regulations. "All my pitches revolve around the
importance of Sarbanes-Oxley," she explains. One recent pitch, for instance, offered a story idea on ways in which board members in financial institutions could use security to help avoid Sarbanes-Oxley related fines.
And the media like it.
"Key success has been with trade pubs, which struggle to provide meaningful content for their readers," she says. As a result of this positive coverage, the firm finds itself increasingly in demand as a source of Sarbanes-Oxley expertise.