Another Indirect Cost of Unethical Corporate Behavior

Posted on May 11, 2010

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I am astounded by how few (relatively speaking) compliance hurdles my father’s and grandfather’s generations faced when operating their business compared to the policies in place today. In the 25 years I have been in the information management industry, I have learned to adapt to new rules, regulations, laws, and other forms of governance we all must follow in order to avoid penalties  or sanctions. In fact, the increase in regulatory controls seems to follow the path of Moore’s Law (http://en.wikipedia.org/wiki/Moore’s_law): they double every 18 months!.

Now that might be a bit of an exaggeration, but the fact remains that organizations face far more compliance requirements than ever before, and that trend will continue.

One might wonder why. We simply need to look at the recent economic crisis for insight.

Have companies like Goldman Sachs violated rules? ( http://www.businessweek.com/news/2010-04-27/goldman-sachs-grilled-in-senate-hearing-over-mortgage-business.html ). Can we fine them or take other actions against the bankers? From what I read in the newspapers, probably not. But did they operate ethically? I think we all know the answer to that question. So, how do we prevent it from happening again? We will make more rules for every organization to follow.

According to Gartner, “the cost of compliance will grow with every new regulation, especially in the IT organization…” (Gartner, Hype Cycle for Regulations and Related Standards, 2010, by French Caldwell, report number G00175154). Furthermore, Gartner defines compliance and information governance in particular as: “the specification of decision rights and an accountability framework to encourage desirable behavior in the valuation, creation, storage, use, archiving and deletion of information. It includes the processes, roles, standards and metrics that ensure the effective and efficient use of information to enable an organization to achieve its goals. Information governance should be an element in planning an enterprise’s information architecture.”

In a more simple definition: more rules will lead to more confusion, more compliance officers, more lawyers delaying business deals, and more non-business related costs. It reminds me of the crazy and contradicting rules of Alice in Wonderland which all seemed to be perfectly logical from the rule maker’s point of view: http://www.alice-in-wonderland.net/school/themes.html.

We can expect that this will continue to go on and we better get used to it and deal with it. As a result, information governance tools are inevitable and the only real solution. Without such IT tools, we will be lost and we will not be able to keep up with all the rules and regulations in the future. Companies like ZyLAB provide such tools to be compliant, to implement audits, to be litigation ready, and if necessary, to have efficient tools to respond to litigation requests. You can find more here: www.zylab.com and here: www.aiim.org.

If only everyone operated ethically, then our litigators wouldn’t need to create more new rules and add complexity and costs to doing business!

Here is a link to all the different sets of rules and regulations in place today; read and “enjoy”: http://www.compliancehome.com/.

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