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Reader Profile

Robert L. Dilenschneider
Founder and Chairman
The Dilenschneider Group

Recently you have told America's business leaders to expect "continued, intensified regulatory and public oversight and scrutiny of the corporate sector…" What form might this scrutiny take? Do you expect additional legislative "remedies" for the real and perceived shortcomings in corporate executive suites and boardrooms?

We are just getting started. The new Congress will take stock of what they see as corporate America's abuses of the “rule of law” around the world and see it as their responsibility to change things. Expect pushback on some of the more restrictive provisions of Sarbanes-Oxley from certain sectors of corporate America. But that is not likely to make much headway. Public and investor sentiment has not recovered from the egregious abuses at Enron, MCI and many others. The fraud; deceptive bookkeeping; the failure of major accounting firms to live up to their responsibilities to effectively monitor corporate books; conflicts of interest among corporate officers, board members and accounting firms and suppliers; weak corporate governance; and the outright corruption some of those scandals have exposed are top of mind and won't be brushed away easily.

The fact is that we have the fairest, most productive private sector in the world. But it is not good enough. Americans expect more. Public confidence in big business, at just 15 percent, ranked at the very bottom of The Economist/YouGov's recent poll on public confidence in various institutions. The military, which led the poll, registered 80 percent, followed by the police, with over 50 percent and the presidency with 45 percent. Even newspapers (23 percent), public schools (22 percent), Congress (21 percent), the criminal justice system (20 percent), television news (20 percent), and organized labor (17 percent), scored ahead of big business.

This, coupled with the aggressive prosecution of wrongdoing by corporations and financial institutions by state attorneys general, led by Eliot Spitzer of New York, will keep pressure on Congress and the regulatory agencies to press for additional reforms.

Among the key areas subject to additional scrutiny will be accounting for stock option grants to CEOs, their top managers and board members; greater transparency in financial reporting; tighter restrictions on perks for corporate officers and board members; closer examination of board member selection, with an eye on cronyism and conflicts of interest; and tighter oversight of accounting firms that examine corporate books.

And that, I regret, is just the tip of the iceberg.

Board members will be held to a far higher standard of independence and, in particular, will be expected to have solid expertise in the areas of board responsibilities, especially members of the audit and compensation committees. In addition, the appointment of board members who also serve on multiple boards or who are CEOs of other corporations and presumably are too busy to be play an active role in their corporate governance responsibilities will be frowned upon.

Regardless of who wins November 2, what are the overall implications for business in the post-election environment?

We are learning to coexist with uncertainty. Business will boom and the stock market will take off again, despite ongoing concerns over the Middle East, oil and terrorism.

The end of the 20th century was marked by an infatuation with technology, but we are just now understanding how to use technology. This knowledge will lead to even greater productivity than we enjoy today, an edge that should help the U.S. address the global environment and the big emerging trading blocs in China and India.

However, if, as seems likely, anti-terror conflicts and U.S.-led involvement in Iraq and Afghanistan continue, there will be tremendous pressure on both the President and the Congress to cut back sharply on discretionary spending to slow the growth of record high budget deficits.

This means that spending for farm subsidies and business incentives of all kinds will be at risk for cuts. It also means significant pressure to raise tax revenues, which will renew liberal demands to "close tax loopholes," the euphemism for raising corporate taxes, increasing capital gains and estate taxes, and rescinding the recent tax cut provisions that benefited the most heavily taxed, those with incomes of $200,000 or more.

Defense spending, except for providing what is needed to support the troops in Iraq and Afghanistan, is also likely to take a hit, especially spending on costly new weapons systems, research on the missile defense system, and the like. Also look for cuts in the space program.

In addition, with masses of uninsured and skyrocketing costs for health care and health insurance look for another push toward universal healthcare. In the interim, look for legislation to regulate pricing by HMOs, hospitals, pharmaceutical firms, and health insurance companies.

What is the leadership agenda for a CEO and board of directors
as we go into the fall and start anticipating the year 2005?

The integrity issue needs to be addressed. Trust in the work place and in business needs to be re-established. If not, the engine that has driven prosperity over the past 20 years will grind to a halt.

With jobs, the mounting deficit, and the uncertain economic outlook front and center in the presidential and congressional election campaigns, CEOs need to be sensitive to the growing complaints about "outsourcing" in so many of the battleground states like Ohio, Michigan, Missouri, Wisconsin, New Hampshire, and Florida.

There will be strong pressure for the President to come up with some proposal that makes it less attractive to ship U. S. jobs abroad.

Nor can we ignore the need for strong environmental regulations for cleaner air and water and, on the other side of the coin, a reduction in environmental restrictions on logging, mining, autos, and utilities. Corporate leaders and boards need to realize that the country, indeed the world, is inexorably moving green. The challenge is to keep moving forward in a way that does not strangle productivity and competitiveness.

Savvy CEOs in the insurance, oil, chemical and manufacturing sectors have already taken that message to heart and are moving their companies toward a green, environmentally conscious image, particularly with respect to the issue of global warming.

Big blue-chip companies like American Electric Power, Florida Power & Light, General Electric, General Motors, Ford, Toyota, and Intel are investing in energy conservation and alternative sources of energy like wind power, renewable energy, hybrid gas-electric cars, and hydrogen fuel cells to reduce pollution from fossil fuels. Many also suggest that it is time to revisit nuclear energy as a "green" alternative to fossil fuels.

Corporate leadership groups like the Business Roundtable and the Business Council need to take a leadership role in these efforts by making some positive and realistic recommendations.

CEOs and boards need also to continue to improve corporate governance and concentrate their focus on the fundamentals of sound business practices – responsiveness, efficiency, cost effectiveness, customer service, and quality. In the end, these fundamentals are key to sustained profitability. And in today's uncertain economy, even modest changes to the bottom line will be weighted, analyzed and otherwise parsed to assess their impact on share value.

Robert L. Dilenschneider formed The Dilenschneider Group in October, 1991.

Prior to forming his own firm, Mr. Dilenschneider served as president and chief executive officer of Hill and Knowlton, Inc. from 1986 to 1991, tripling that Firm's revenues to nearly $200 million and delivering more than $30 million in profit. Mr. Dilenschneider was with that organization for nearly 25 years.

Mr. Dilenschneider started in public relations in 1967 in New York, shortly after receiving an M.A. in journalism from Ohio State University, and a B.A. from the University of Notre Dame.

Experienced in a number of communications disciplines, Mr. Dilenschneider is frequently called upon by the media to provide commentary and strategic public relations insights on major news stories. He has counseled major corporations, professional groups, trade associations and educational institutions, and has assisted clients in dealings with regulatory agencies, labor unions, consumer groups and minorities, among others.

Mr. Dilenschneider is a member of the advisory boards of the Center for Strategic and International Studies, New York Presbyterian Hospital, and the North American Advisory Board of The Michael Smurfit School of Business at University College Dublin. He is a member of The Bretton Woods Committee and is also a member of the board of directors of Prep for Prep. He is a member of the Board of Governors of the Peter F. Drucker Foundation for Nonprofit Management, a trustee of the Institute of International Education, and a former member of the Board of Governors of the American Red Cross. He has served on numerous corporate boards.

Mr. Dilenschneider is a member of the Council on Foreign Relations, the U.S.-Japan Business Council, the Economic Clubs of New York and Chicago, and the Florida Council of 100. He also is a member of the Public Relations Society of America and the International Public Relations Association. He is a Fellow to the International Association of Business Communicators. In recognition of his contribution in promoting New York City, Mr. Dilenschneider received the City’s Big Apple award. In 2001, he received an honorary Doctorate of Public Service degree from Muskingum College.

Mr. Dilenschneider is widely published, having authored eight books including the best selling Power and Influence, A Briefing for Leaders, On Power, The Critical 14 Years of Your Professional Life, Moses: C.E.O, The Critical 2nd Phase of your Professional Life, and, most recently, 50 Plus!—Critical Career Decisions for the Rest of Your Life. He has lectured before scores of professional organizations and colleges, including the University of Notre Dame, Ohio State University, New York University and The Harvard Business School.