3/21/2013. XXXXXXXXX XXXXXXXXXXX Sally J. March Drummond March Ltd. SCCE 2013 European Compliance & Ethics Institute London.

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1 XXXXXXXXX XXXXXXXXXXX Sally J. March Drummond March Ltd London SCCE 2013 European Compliance & Ethics Institute London 2 1

2 A visionary company exports its core values and purpose to all of its operations in every country, but tailors its practices and strategies to local cultural norms and market conditions. Jim Collins and Jerry I. Portas, Built to Last 3 Ethics is a branch of philosophy which addresses questions about morality that is, concepts such as good and bad, noble and the ignoble, right and wrong, justice, and virtue. Compliance is the act of adhering to, and demonstrating adherence to, a standard or regulation. Culture is the set of shared attitudes, values, goals, and practices that characterizes an institution, organization or group. Wikipedia 4 2

3 Culture is a set of shared attitudes and values... Values are key to creating a corporate culture that transcends national/ethnic cultures Rules are important and should link back to the Values Easy to understand and access, clear meaning throughout the corporate culture Consequences for breaches: transparent and consistent 5 You f***ing Americans. Who are you to tell us, the rest of the world, that we re not going to deal with Iranians. Standard Chartered Bank executive in response to the bank s US chief when he expressed concerns that dealing with Iran has the potential to cause very serious or even catastrophic reputational damage to the group. The Telegraph 2012 Fines to date = $667M Expected cost to settle accusations = $1B 6 3

4 7 Ethics & Compliance Programmes must be both Global and Local Headquarters requirements Stem from culture, risk assessment, risk appetite Be aware of cultural aspects of risk assessment Regional and local requirements Does your program cover local regulatory risks? How does it tailor practices to local norms? 8 4

5 Intuitive impressions have a pervasive influence on our thoughts and behaviours. Understanding the science behind stereotypes. 9 Examples of different characteristics evident among different cultures include: Individualism vs. Collectivism Individualistic need to arrive at a solution quickly, settle conflict without considering the relationships focus on own image, not the group s competitive, dominating Collectivist long term view of relationships trust building mutual face preservation 10 5

6 11 Universalist Particularist Universalism rules, codes, laws, standards, generalizations Particularism exceptions, circumstances, relationships North America and Western Europe universalistic cultures Latin America, Asia and Africa particularistic cultures 12 6

7 Communications with headquarters, or Not France and Germany again... Understanding why Engagement of local management Understand drivers of accountability -- corporate culture, clarity around roles and expected behavior, or cultural factors such as particularism or importance of face Key roles of the Boards of subsidiaries, Compliance Councils, Works Councils, and support functions 13 Do your homework and listen Build a network across borders and cultures State the obvious it may not be obvious to others Be clear about the Rules of the Game supported by: shared values and clear plans, roles & responsibilities objective policies and procedures local accountabilities 14 7

8 Risk Assessment What is familiar to us seems less risky Standards and Procedures Making the Code of Conduct relevant What is the cultural uncertainty avoidance factor? Communication of the program Languages Media Channels for reporting concerns Continental Europe Asia Latin America No Yes 0 If you saw misconduct, would you report it? IBE 2012 Survey of Employee Views of Ethics at Work 16 8

9 Effective incident response and enforcement Allegations from collectivist cultures Addressing breaches consistently Cultural aspects of monitoring the effectiveness of the program, e.g., Level of reliability of employee surveys and hotline statistics In-person interaction - engaging with different management levels across areas and cultures 17 Sally J. March, JD, LL.M., CCEP, CCEP-I Director, Drummond March Limited London sjmarch10@gmail.com 18 9