Recognising Different Perspectives Concerning Ethics

Recognising Different Perspectives Concerning Ethics

To address external threats, some managers seek to rig the table in their favour rather than being subject to adverse headwinds. So, beyond gathering market intelligence or engaging in legitimate, legal lobbying activities, you can find some engaging in industrial espionage to understand the strategies and plans of their competitors or to obtain their know‐how and intellectual property. This may be done via third parties or by hiring employees with know‐how from, or intelligence about, other companies.

Sometimes managers will participate in cartels, where competitors share information and try to work ‘in step’ to protect prices and market shares. Of course, such activity is illegal, but that doesn't mean it doesn't take place.5 We also have bribery and corruption, where payments are made to secure lucrative contracts or block adverse regulatory changes.6 Payments can be organised through third parties to maintain a shield of respectability. And since this can sometimes involve senior managers or be made via intermediaries, it can be (i) challenging to spot and (ii) even harder to prove.

The paradox is that whilst questionable or illegal behaviour creates exposure for an organisation, it can translate into a business that seems – on the surface – to be ‘in control’.7 Alan Dixon explains:

‘I have seen the best and the worst of what can happen with overseas organisations. When it goes well, you have an experienced, respected company president who understands business and does this all above board. They are supported by a solid team of local managers and by some secondees from headquarters. With this combination, you hope to get the best of both worlds: commercial savvy in the market and people who understand how the organisation “back home” works. This is what happens most of the time.

But some of the senior people you recruit or work with through agents and distributors may not be everything they seem. The very things that have brought them success and status are things that can create a significant risk for your organisation. According to our standards, excessively close connections can cross a line. However, in the context of the culture of the other country and its culture, it may not be regarded as anything particularly out of the ordinary.

Consider business activities with connected parties, such as family members or friends we go on holiday with. Of course, most companies want connections to be declared because of a potential or actual conflict of interest. But in that country, suggesting that work be done by an uncle's company, or the company of a trusted friend is, for them, about choosing someone they know that they trust and – from their perspective – not at all corrupt.

Another point to remember when working in some cultures is that sometimes regulators and law enforcement agencies may operate in a questionable or corrupt way. So, following the law or reporting something to a regulator has a different meaning overseas.

I'm a great believer in companies trying to do their very best to emphasise their values and to offer ways for people to escalate concerns or blow the whistle, but you must understand that these efforts are often up against the whole way a local system is set up. Indeed, they can be up against the entire way a country or business sector operates. It's why efforts to tackle these issues must be savvy because, over the years, I have learned never to be surprised by what some people will do to get on.’

Andrew Wright offers his perspective when considering overseas investments:

‘I have worked for many years in Asia and South America. I have learned to love these cultures and the people there. However, sometimes you must be very level‐headed about what you can and can't do overseas.

As a board member and consultant, I've worked with colleagues with plans to expand overseas. I will learn, for example, that there is an opportunity to acquire some land through a local consultant who has said that they know a reputable builder who can help with construction. And their references may seem to be great. I also see the organisation's planning to send trusted managers to the country to represent its interests as the new overseas entity develops.

And I will say, “There is a significant risk that the person you plan to send over to the country, at great expense, will not be the de facto leader of the local organisation.” I can offer this warning without ever having met that person. Because time and time again, this is not how things work in some countries. There are networks and unofficial alliances that are hard to see from the outside. As a result, it's easy for overseas secondees to become isolated, even if they are nationals and speak the language.

The best you might get from them is an information channel. And even then, unless they are very good, they will sometimes be excluded from some of the things that are going on in the detail. Or it may be as simple as not having the bandwidth to monitor everything that's happening in the depot or when procuring products and services.

So, I tend to say, “You can arrange for a new factory to be built but be careful how you structure your ownership. Because if you are not very careful, you can put a lot of money at risk and find that, if there is an upside, it's not as big as you thought. Even worse, you might find that if something goes wrong, such as a legal or environmental difficulty, the allies that you thought you had cannot or will not help you, so you will be the one left carrying the can.”

No matter how big you are, no matter how much due diligence you do and no matter how good your processes are in some countries, sometimes you simply won't have the understanding, the horsepower, the networks or the place in the culture to guarantee no surprises. I say this not only because I've got the T‐shirt from working in countries such as China or Brazil, etc., but I also say this because I have now learned that no matter how long you have worked overseas and no matter how well you think you know another culture, you can never know all the underlying motivations of people and other players.

After all, even with someone you know and trust, if a family member of theirs gets into trouble and gets involved with the wrong people, it might impact the behaviour of your trusted person and your business despite decades of reliable behaviour before that.’

So, when it comes to overseas countries, third‐party suppliers, agents, distributors, etc., managers need to keep their wits about them and prepare for the unexpected.8 If they hear rumblings of trouble, they need to switch from a mindset that says: ‘They have worked for us for years, that can't be true’, to one that is a bit more open to the possibilities of either bad or ‘grey zone’, behaviour and therefore tackle emerging issues robustly and without undue delay.

Learning to see what is ‘behind the mask’ is a crucial skill to develop, and it's worth remembering that it can happen in your own country, not just elsewhere.