It’s been 20 years since the Enron scandal in the U.S. – a massive corporate accounting / audit conflict-of-interest debacle so wrought with systemic prompts and loopholes that it helped usher in a new era of regulation with far-reaching, permanent impacts.
In the U.S. corporate-governance and regulatory world, “Reg-FD” (Regulation “Fair Disclosure”) ultimately was deemed inadequate to the task of ensuring corporate integrity, and thus Sarbanes-Oxley fell out of Enron’s and Arthur Andersen’s demise alongside similar fates of a slew of other high-profile companies in the same time period (such as WorldCom).
Many such companies were caught in the throes of obvious financial non-compliance, various forms of self-dealing (with some cases involving members of their own corporate boards and/or audit firms entrusted with assuring integrity standards), and other sleights-of-hand, at levels disastrous enough to implode some of them (like Enron).
In the PR World, this spate of scandals 20 years ago also deeply influenced the public relations industry in how we began framing high-level conversations and concepts about earning and sustaining public trust in a brand – particularly corporate brands that are publicly traded.
Prior to Enron, the term “transparency” was irregularly or rarely encountered in the standard public relations vernacular.
Suddenly, in the wake of Enron, “transparency” hit quicksilver as the buzzword across management disciplines … with the PR industry among the more enthusiastic early-adopters.
Universally, “transparency” captured the idea of operating financially in a clear, thoroughly disclosed and legally compliant manner, devoid of conflicts-of-interest such as those that plagued Enron’s audit function – and instead, with every major practice fully awash in sunlight, in service to earning and sustaining public trust.
Over time, the PR industry began evolving “transparency”-speak toward an even higher brass ring: “authenticity.”
While “transparency” was the pathway, “authenticity” was proof-in-the-pudding.
As we in PR often advocated (and still widely advocate) to clients and management teams, these two ideals work best in tandem.
Together, they undergird core purpose with financial / legal / ethical integrity as non-negotiables, thereby validating the organization’s profitability and other measures of success, with staying power.
The word “transparency” was voted 2016 Marketing Word of the Year by the Association of National Advertisers, begging the question – “What took so long?”
It’s now the fourth quarter of 2021, and certainly a great deal has happened in these past 20 years since Enron.
In the spirit of the 2020 social media meme of “How It Started / How It’s Going,” we in PR need to ask ourselves, is the quest for “transparency” still relevant, or has it devolved somewhat into a modern-day punchline of cynicism?
The greatest game-changer over these past 20 years arguably has been the global impact of social-media / digital communications technology in defining, influencing and unapologetically exposing which brands are transparent / authentic… and which ones most decidedly are not.
When taking stock of how much has changed in 20 years versus what’s stayed the same, one can’t help but notice how little progress the PR industry has made toward integrating its own business case into financial parlance – and in terms that have achieved adequate respect from and authority with C-suites and boardrooms.
In a spirit of self-evaluation, the PR industry must ask of its practitioners:
· Have we acquired the necessary skill sets and leadership authority to hold management’s feet to the fire on communicating a transparency ethic at financial and operational levels, consistently supported at all levels of corporate management?
· Or, instead, are we all-too-complacent with hoisting up window-dressing and corporate-speak when transparency / authenticity are woefully absent … and for no other reason then we think it’s what we’re paid to do?
Over the next decade, the PR industry can remove obstructions that are preventing positive growth and evolution of our function, by aligning ourselves more closely with ethics / compliance functions in the organisational structure.
In addition, we as an industry should re-learn the lessons of Enron to prevent different versions of the same scandal from replaying in the future.
On a final note, many congratulations to the PRCA, for not only modeling excellence in transparent reporting of its own operational / financial performance with its just-released 2020-21 Annual Report but also in achieving outstanding results, in service to its members and the broader industry.
Mary Beth West, MPRCA (@marybethwest) serves as co-chair of the PRCA Ethics Council and as a senior strategist with U.S.-based Fletcher Marketing PR.