Moving forward, echoes of 2007

Strategic Finance, Jan, 2008 by Paul A. Sharman

Simplification Works

This brings us back to what I have been saying all along: Simplifying regulation works for the public good. By decreasing the burden on corporations, we are recognizing the most important public interest--the creation of jobs and wealth for all of society.

In 2008, we need to move further in the direction already initiated by Chairman Cox and the SEC. We need to reduce the burden of costly, inefficient compliance practices. Only when the most efficient regulatory environment is in place will American businesses be able to compete most effectively in the global market. Central to business competitiveness are the practices of continuous improvement and cost reduction that should be applied to standards, regulations, and their use. Such practices may be contrary to the perceived interests of lawmakers, standards setters, lawyers, and auditors. But their heavy-handed success in weighing down corporate America carries the cost of reducing competitiveness at a time when other economies around the world are taking off without such heavy burdens.

Clearly, the Enron and WorldCom scandals were a wake-up call to law-makers. What our leaders in Washington need to avoid is causing one problem while solving another. At IMA, we urge the SEC and Congress to make one of their New Year's resolutions a firm commitment to stimulating the growth of all businesses, small and large, within the global market. Focus on the creation of jobs and wealth by reducing inefficient standards and regulations and costly dependence on ineffective assessment and enforcement methods.

We need to shift the emphasis toward empowered business professionals whose judgment is respected as long as they have accomplished appropriate education, certification, and experience. The mantra should be "build quality in," just like that of the Japanese 30 years ago when they completely changed business operating rules globally. Of course they got the idea from the U.S. and applied it in their factories, while American companies were unwilling to change until it was too late. I hope we can avoid making that mistake again. Bring on change, Chairman Cox. This is your year to do it.