Frederick E. Allen is the Leadership Editor at Forbes. Recently he hosted a guest blog post by Mark Rogers, the founder and CEO of Boardprospects.com. Now that Sarbanes-Oxley has completed a 10-year run, Rogers reflects on the benefits delivered . . . or not delivered. Rogers explains:
Corporate governance scandals are still commonplace, Green Mountain Coffee, Chesapeake Energy, Wal-Mart, and Groupon being among the latest examples. The fact is that Sarbanes-Oxley was well-intentioned but didnt address the real problem with corporate governanceboards of directors.
Rogers rightly points out the boss does not act alone. In the classic cases, the boss surrounds himself or herself with board members who are afraid to say no. That sets the stage for scandal.
I agree with Rogers on these major points. I disagree with his prescription. Rogers affirms the statute would have been more effective had it incorporated three additional legal requirements for board members:
1Set term limits
2Limit public company board service
3Require continuing education for board members
I can appreciate Rogers concerns, but I dont believe more government regulation is necessarily the solution. Ultimately, the CEO is the one who will be held accountable. Ultimately, the CEO bears the responsibility for leading, developing, and supporting his or her board. That includes educating the board on the serious implications of its decisions and actions.
As we might have expected, Sarbanes-Oxley didnt solve everything. Law alone usually doesnt. Nevertheless, Sarbanes-Oxleys strengths and weaknesses remind us of the importance of our ethics and integrity. Whether you are a CEO, a board member, or a rank-and-file employee, your daily decisions carry significant impact to you, your organization, and our society.
Lets remember to do the right thing, even when we cant pin it to a chapter and verse in a statute.
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