Washington Is Here To Help – Really
Michael W. Robinson
For the singular macro-level issue that will hover over corporate governance decision making in 2022, thanks are due to former President Ronald Reagan for his prophetic admonition that “the nine most terrifying words in the English language are: ‘I’m from the Government, and I’m here to help.’”
Articulated four decades ago, Reagan’s commentary is as true today as it has ever been.
Indeed, corporate and financial leaders alike should have no illusion – the active and activist leaders that the Biden Administration have appointed to many of the nation’s most powerful regulatory agencies are poised to push policies that could fundamentally change the legal, business, competitive, and regulatory landscape on which the capital markets and the economy have come to rely. From the SEC to the FTC to the CFPB to OSHA, this alphabet soup of agencies share a common mission and vision: namely to move as quickly as possible to leverage the immediacy of change that regulators can enact, especially given the slow pace of legislation today.
To meet these challenges, companies – in partnership with their respective trade associations – are well advised to engage now in order to help shape the contours of the new rules and regulations. To that end, it is worth considering employing a mix of these approaches:
- Embrace regulation as a competitive advantage. As is the case in most industries, the bulk of participants operate with a commitment to the highest ethical standards and play by the rules (to the extent that they exist). Nevertheless, there are always those whose less than above board dealings sully an industry’s reputation. To be sure, new and stricter regulations can prune these competitors out of the business, resulting in a marketplace that is larger, safer, and better trusted by its users.
- Ensure that newly-developed regulations include every participant in a given industry, not just some of them. Doing so will put every player under the same regulatory umbrella. With 20/20 hindsight, companies often rue the exemptions secured by competitors who, in turn, successfully leverage such advantages to their long-term benefit.
- Drive clarity in the resulting regulation or legislation, given that the only thing worse than an instant disadvantage is long-term ambiguity that could take the courts years to resolve and be an ongoing drag on the business until then.
- Take the high road when it comes to public and private rhetoric. With long memories, Washington decision-makers will not soon forget explicit or implicit commentary that castigates them. Even as emotions escalate – and the temptation of social media is ever-present – keeping the focus on the policy, and the not the person behind it, will yield the best results. The alternative, an escalating public confrontation, will obscure the legitimate policy matters at issue and almost certainly generate unflattering media coverage for the business and/or leader involved.
While the impact of these efforts may not put an end to the change that is clearly in the offing, corporate governance leaders are well positioned to help strike the right balance between results that are either overly onerous or too timid. For enterprises of all sizes, the time to begin this engagement is now.
Michael W. Robinson is the Chairman and CEO of The Montgomery Strategies Group, a full-service agency with broad expertise in reputation management, crisis and litigation communications, public affairs and regulatory advocacy, financial communications and transactions, as well as marketing and brand awareness.