The Political-Legal Environment

The Political-Legal Environment

Politics is the art (or science) of public influence or control.

The Politicization of Management

Issues management: Ongoing process of identifying, evaluating, and responding to important social and political issues is concern about issue management. Purpose: Minimize “surprises” and make more systematic and effective responses to issues.

General political responses: Defending the status quo against all comers, adopting a “wait and see” approach and proactively trying to identify and respond to issues.

Management’s Political Response Continuum

Specific Political Strategies

Campaign financing: Political action committees (PACs)

Lobbying: Garnering political support

Coalition building: Common rallying points

Indirect lobbying: Advocacy advertising

Increased Personal Legal Accountability

Increases in Demands for Accountability

Sarbanes-Oxley Act (2002)

1.      Increased penalties for accounting fraud

2.      Established a new felony with stiff prison term for securities fraud

Political and Legal Implications for Management

Increased use of legal audits: A review of all operations to pinpoint possible legal liabilities or problems is legal audit.

Use of alternative dispute resolution (ADR): Settling disputes with less costly methods, including arbitration and mediation.