For sure you have heard about post-Enron legislation such as the Sarbanes-Oxley Act (SOX) that regulate the accountability for corporate compliance and risk.
Until recently, it made the upper echelons of a company or organization accountable.
However, it is now making its way to the marketing department so marketing professionals must be prepared.
Marketing takes a sizeable chuck out of a company’s budget for marketing and PR activities that have an enormous impact on customers and shareholders alike.
It makes sense that Sarbanes-Oxley forces every marketing executive to ensure that the processes that they are responsible for have security, integrity and financial accountability.
Nearly every department and/or function within a company or organization is subject to a severe Sarbanes-Oxley audit.
Until recently, marketing has remained fairly unaffected, resulting in highly inaccurate financial reporting by most corporations.
But marketing departments are now also forced to become financially accountable.
This makes sense: the marketing communication budget is often quite substantial - with corporate management being responsible for the procedures for financial reporting.
Therefore, accurate and quantitative measurement of the marketing performance is required. To improve SOX compliance, a CEO or VP Marketing will demand that marketers use a chosen technology that forces marketing to tightly integrate with the company’s financial reporting.
How does SOX impact marketing and PR performance?
From "SOX on", marketers will play an instrumental role in the corporate compliance of the company.
Internal communications between marketing and the rest of the company or organization will improve, thus avoiding severe compliance risks, legal implications, and monetary risks.
The risk of erroneous representation will be reduced. This is important for those companies where marketing interacts with many different departments, such as R&D and Testing. Misrepresentation of a product or the company itself both internally and towards the public and press, can have severe repercussions. It can lead to brand and image damage - with financial and/or legal consequences.
Most importantly, it will put a stop to significant ad-hoc, unplanned operating expenses – no matter how justified.
These expenses are normally not accrued accurately, resulting in an error margin up to 10% in corporate profit & loss statements. Adequate financial reporting by the marketing staff will solve this problem.
For now, marketing and PR professionals might feel that they have to act "like accountants" and that their creativity will suffer, but in the long run the whole marketing discipline will benefit ensuring a high level of professionalism.