Under the Microscope: A New Regulatory Age Requires Increased Transparency

It was his first full day on the job and already President Obama was making quite an impression. In the first of what will surely be many sweeping policy changes, he swiftly set firm limitations for business and government alike, demanding more disclosure, not to mention something communications professionals know all too well: transparency. Indeed, in what he called "a clean break from business as usual," Obama set a new tone for leadership. "For a long time now, there's been too much secrecy in this city," he said, referring to the nation's capital. "Transparency and rule of law will be the touchstones of this presidency." This nod to the value of transparent communications will usher in a new era for business, which, after a period defined by greed and scandal, has been crippled by its own bad behavior. Now comes increased regulation, sharper oversight and tighter controls--all of which will (in theory) force companies to be more accountable for their actions. But this transition will be riddled with land mines, and PR professionals should expect to assume responsibility for facilitating transparent communications in this new regulatory environment. "Communications professionals should be right in the middle of these matters," says Neal Cohen, CEO of APCO Worldwide's Americas region and worldwide COO. "To be transparent, you have to communicate positions and messages clearly, no matter the audience. Transparent communications gives businesses the most credibility with their stakeholders." To turn the challenges that will inevitably come with this era of regulation into opportunities, communications executives should take a proactive role in shaping and implementing the following strategies. *Assess your organization's potential risks. Business is about to be put under the microscope, so communications executives need to take a hard look at their organizations' practices. If there is a rotten underbelly to be found, now is the time to do it. Ignorance may seem like bliss, but that bliss quickly sours when news of wrongdoings becomes public and you have to move into crisis management mode. Consider these steps for identifying and assessing potential risks before it's too late: Ask tough questions: Conduct an internal audit by interviewing senior management about all the hot-button topics (see sidebar for some of this administration's key areas of focus). Ask pointed questions about the company's current policies--the policies as they exist on paper versus how they are executed behind closed doors. (For more on conducting an internal audit, see "Model Behavior: Restructuring Orgs to Assess Risk and Manage Change," PRN 01-19-09.) Divide and conquer: Once you get an idea of the potential sore spots in your (or your client's) organization, break out the risks into categories, such as operational, financial, managerial and environmental. This will help you manage issues without losing sight of the end goal. Study up: The reforms may not have been made yet, but get as much information as possible regarding the proposed policy changes/regulations in each risk category. If necessary, bring in an outside consultant who is fluent in each regulation's implications on your business. NGOs are also good sources for advice and strategy development. *Come up with solutions for the problems. Once the risks have been identified, it's time to minimize them. Chances are the problems won't be as glaring as, say, fraudulent accounting practices, which means the solutions won't be as cut-and-dried. Prioritize risks according to how critical they are. Then establish short- and long-term goals that can be achieved incrementally; make sure you collaborate with the executive, team or department that will be most affected by the change. Transparency throughout the entire process is critical. *Anticipate resistance from nonbelievers. Sometimes people resist change until there is a proverbial gun to their head and they have no other choice; this is not a situation in which such behavior is acceptable. You need to approach senior management with a compelling argument for why they need to adhere to a higher standard of transparency now, not later. *Institute transparent reporting practices to all stakeholder groups. Traditionally, investors are the one audience that receives regular reports on the company's financial status. Now, though, communications executives must facilitate open and ongoing dialogue with all stakeholder groups, even if it means instituting formal reporting practices. "I'd recommend broad and targeted strategies. 'Broad' in the sense that you often need to communicate to the broader public, and that is one set of messages to get your points across. 'Targeted,' because different audiences are focused on different angles," Cohen says. "For example, financial stakeholders want to know how what you're doing affects the company's finances and, if public, share price; vendors to your company are interested in other issues as are the consumers who buy your product or service. So, you need to develop messages that speak directly to these audiences' interests." *Get an external advocate to vouch for your compliance. Support from an objective third-party lends credibility to any activity. In terms of the new regulatory environment, take advantage of NGOs by partnering with them on critical issues. These organizations can act as invaluable strategic advisers, and they will help you stay on course to be compliant with all regulations--and to be successful while doing so. PRN CONTACT: Neal Cohen, ncohen@apcoworldwide.com Issues Management: Hot Topics For Business Leaders As The New Administration Ramps Up Regulation It's still too early in the game to fully grasp the effects of increased oversight and regulation, but that doesn't mean communications professionals shouldn't be aware of the issues that are up for grabs. These are the hot-button topics that will be redefined by a renewed commitment to transparent business practices: Executive compensation: Obama already made a big statement by freezing the salaries of his senior aides, but what will his reforms mean for the C-suite's paychecks, and will these reforms demand greater accountability? Globalization: How will Obama's policies affect trade? Will he protect American jobs or encourage outsourcing and spending overseas? Healthcare: Will moves to provide coverage for the uninsured become full-blown socialist healthcare? Technology: Obama is the most wired president to date, but how accessible (and expensive) will emerging technologies be for businesses and the general public? Corporate taxes: Will the rates go up or down, and how many loopholes will still exist? Environment: What should be the cost of reducing greenhouse gas emissions and who should carry that financial burden? How much accountability will there be for companies in the context of sustainable business practices?

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