Building an ethical corporate culture can be daunting under even the best of circumstances. Add to the mix a workforce located in multiple countries, each with its own culture, language, and legal system, and the challenges are magnified.
Yet, companies can't ignore these obstacles, given the increasingly global economy. In 2011, nearly half (46 percent) of revenue of the S&P 500 companies that provide information on global sales came from outside the United States. New anti-corruption laws around the globe and stricter enforcement of existing laws provide another strong incentive for companies to make it a priority to foster an ethical culture.
Companies are also having a more difficult time separating their activities in one part of the globe from their presence in another. “There's no distance between the vegetable seller in Tunis, the global markets in London, and policy makers in D.C.,” notes Wayne Brody, ethics and compliance advisor at consulting firm LRN.
Even though many cultures share at least a few common values, compliance officers still face substantive challenges in fostering a positive, ethical global culture. As a starting point, the behavior that emanates from those values can vary considerably, Brody says. “While we can argue that people do share values across cultures, we know that the behaviors driven by the values are very different.” For example, the actions deemed to show respect in China differ from those in South America.
While legal and cultural standards vary from one part of the world to the next as well, ethical standards are much more shared, says Alan Richter, president of QED Consulting. Most cultures “are in agreement that lying, cheating, and stealing are wrong.” Even in the business world, many people of different backgrounds agree on just what constitutes, for instance, a conflict of interest, Richter adds. “There's more agreement than disagreement on some key ethical values.”
So, what about areas across the globe in which bribery or corruption are rampant? That typically reflects a breakdown in the society, not a belief among the citizens that such actions are acceptable, Richter says. “It's a gap between what people believe in an ideal world and the reality.”
A recent report by LCW on global ethics and compliance programs identified several conflicting trends concerning companies' approaches to cross-border compliance initiatives. While site visits to international locations more than doubled between 2009 and 2011, rising from 24 to 51 percent of respondents, cross-cultural training specific to ethics and compliance dropped from 47 to 26 percent. Among the factors that may have contributed to the decrease in cross-cultural training is the fact that some companies' previous efforts were poorly executed and seemed to offer little value, according to the survey.
It can also be difficult for compliance and other professionals to honestly assess how they're allocating time and resources between locations. It's often natural to focus ethics and compliance efforts within the organization's home country, says Monica Marcel, a partner with Chicago-based Language & Culture Worldwide (LCW). The question to ask, Marcel says, is: “Are you doing this because the biggest risks and challenges truly are in the home country?” Or, are you taking this approach because it's more difficult to tackle these challenges elsewhere?
For example, companies may pay less attention to how employees use whistleblower hotlines in offices abroad, says Marcel. In the home country, management periodically runs tests to see how effectively the calls are handled. In locations outside the home country, however, the company relies on the service provider to run those tests, without adequately assessing whether the provider understands the culture and language, as well as the company itself. When tackling compliance issues abroad, “it's easier to have things fall through the cracks,” Marcel adds.
Compliance professionals working to developing a positive culture also may encounter resistance from others who believe that culture is a take it or leave it proposition; that it's basically set and impervious to efforts to shape it, Brody says. Of course, to mold a culture, employees first need to perceive it as something over which they have some control.
Steps to Building a Better Culture
Despite these challenges, compliance officers can take several steps to help them foster an ethical culture across the globe. A first one is to think in terms of the performance the company wants to achieve, since performance is driven by behavior, Brody points out. In the most successful organizations, employees take on the mission of the company themselves. “The goal is to inspire, across cultures, the behaviors you want to see more of,” he says.
“While we can argue that people do share values across cultures, we know that the behaviors driven by the values are very different.”
—Wayne Brody,
Ethics and Compliance Advisor,
LRN
Actions speak loader than words, when it comes to improving behavior, says Brody. For example, if a plant manager in charge of bringing back operations after a facility was down for routine maintenance refuses to take short cuts and ensures that all safety checks are completed, it conveys the idea that the company values safety. “That inspires both confidence and an understanding of the rank-order of corporate values that employees can use in making their own decisions,” Brody says. This is critical in situations in which it's difficult to find a specific rule that fits perfectly.
Where words are necessary, companies need to consider the local languages. “It's shocking the number of organizations that expect people to speak English,” Marcel says. True, much of business is conducted in English. When given a choice, however, most people revert to their native tongue. To reach employees at all levels around the globe, compliance initiatives usually need to be conducted in multiple languages.
Leveraging local resources also is critical, Marcel points out. That may mean designating an employee on the ground as an ethics champion for the local office or plant. In the case of the company implementing an employee tip line, the local employee could run tests along with the vendor; he or she may be more likely to pick up shortcomings or quirks the vendor is missing. And, simply having a local person work with the system may lend it credibility. “Just having the tool is not the same as people trusting it and using it,” Marcel says.
In addition, a local employee often can provide feedback that an outsider—even one from the corporate headquarters—might miss. For instance, they should be able to offer an informed opinion on whether the corporate code of conduct truly is embraced by employees, or merely a check-the-box exercise. “You have to see things through the eyes of the people on the ground,” Marcel says.
In fact, more companies are leveraging local resources for input, although growth is slow, the LCW survey shows. In 2011, 71 percent of respondents had local ethics or compliance representatives at their international locations, up from 64 percent two years earlier.
Along with working with local people in the various locations, the headquarters staff needs appropriate skills and training in order to work across cultures, Marcel says. After all, it wouldn't be unusual for a compliance person from headquarters to work with another location to develop solutions that are ethical and legal to compliance challenges.
For example, companies can say they will not tolerate bribery, but in locations where it's routine, the compliance officer may need to work with the location to develop an alternate solution that both keeps the customer happy and is ethical, Marcel points out. Developing an effective and ethical corporate culture across the globe, like many business challenges, often requires collaboration and thinking creatively.
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