Friday, May 13, 2005
Challenges of Sarbanes-Oxley: Sustainability Is an Organizational Cultural Issue
Sarbanes-Oxley (SOX) sustainability is an organization-wide issue. This means that the organizational culture will be impacted by new requirements related to the compliance initiative. Conversely, it means that the culture will influence or determine how to efficiently fulfill the new requirements of the compliance initiative. Discussions on how to achieve efficient sustainability must begin with a discussion about organizational culture.
For our purpose, culture may be described as a combination of several core elements (among others):
1. Uniquely talented and uniquely biased employees and contractors
2. Ethical and moral predispositions and preferences of those same persons
3. Entrepreneurial and/or bureaucratic tendencies
4. Team-orientation and/or self-orientation
5. Innate Technology-focus (pro or con)
6. Behavior and policy flexibility
7. Willingness and adaptability to change; faith in the future
8. Reward systems (monetary and psychological)
9. Organizational pride and cohesiveness
10. Sense of urgency to move forward
Based on this mix of variables, any given organizational culture requires a custom-tailored approach to compliance at a point in time. Even COSO and the PCAOB recognize that internal control systems are not one size fits all. They are unique to the entity and the particular moment in time. Incentives, tools, and processes that are effectively employed by one culture could be wasted by another: Give a bandsaw to a carpenter and get beautiful cabinetry; Give the same bandsaw to someone else and get a boat anchor.
posted by Brian Moran @ 9:59 AM