Beware Cultural Pitfalls in Drafting A Global Code of Ethics, Expert Warns

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By Yin Wilczek

April 7 — When creating a global code of ethics, there are many cultural challenges that may trap the unwary, a consultant said April 7.

“One reason why” cultural differences are so difficult to navigate is that “all of us are going to suffer from cultural myopia to one degree or another” where “we see the world through our own cultural lenses,” said Lori Tansey Martens, founder and chief executive officer of the International Business Ethics Institute, a nonprofit organization that helps multinational businesses develop global ethics and compliance programs.

The more that ethics and compliance professionals understand their own cultural contexts, the easier it will be for them to recognize cultural issues in other countries and how they can meet corporate requirements while still displaying cultural sensitivity, Tansey Martens said.

She spoke at a webinar sponsored by The Network.

Cultural Perspectives 

In addition to cultural myopia, conflict also can arise in how people all over the world view the importance of rules versus relationships, and power and hierarchy, Tansey Martens said. She noted, for example, that many Asian and African cultures place a premium on relationships rather than on rules and requirements.

Many cultures also don't share the American view that everyone is equal and rules should apply across the board, Tansey Martens said. “There are a lot of cultures where status bring privileges,” where the expectation is that “senior management will follow a different rule set.” That is particularly challenging for an ethics and compliance program because employees in those cultures will not report misconduct by their supervisors, she said.

Recognizing these cultural dissonances could make the difference between having a global ethics program that is followed or one to which employees pay little more than lip service, Tansey Martens said. Although most corporations have a fairly detailed code that applies to all their global operations, it may be better for others to use a “hybrid approach” where they have a high-level principles-based code with variations tailored to local jurisdictions and cultures, she said.

Tansey Martens also warned that there are certain issues that companies may trip over while drafting their codes. These include:

• conflicts of interest;

• facilitation payments;

• gifts and gratuities;

• privacy versus personal life; and

• internal reporting.

 

No Universal View 

These issues are viewed differently in various parts of the world, Tansey Martens observed. In addressing them, companies must look for opportunities to embed culturally based rationales and stay away from blanket prohibitions that could drive undesirable practices underground, she said.

Moreover, they must recognize that certain undesirable practices will occur in parts of their global operations and ensure there are processes in place to manage them, she said.

For example, business cannot be done in many countries without facilitation payments, Tansey Martens said. If an employer implements a strict policy forbidding such payments, that could make it “almost impossible for employees to do business in certain parts of the world.”

In such a situation, it may be better for the employer to allow exceptions for the payments, such as when there is a risk to company personnel or property, she said. “You want people to surface the issue” and discuss it rather than have an unworkable policy that is not followed in some parts of the company's operations.

Tansey Martens said the different view of privacy and personal life is particularly an issue between Europe and North America. For example, while Americans think nothing of answering work e-mails after work, that is not accepted in Europe, she said. Europeans demand more respect for their private lives. To address the differing cultural perspectives, companies should ensure in crafting their global codes that what they're trying to control is within the workplace and not outside of it, she said.

Things get more tricky if the company is under a legal mandate—such as a corporate integrity agreement reached with U.K. authorities—to do something, Tansey Martens said. In such a situation, she suggested that the company find ways, such as through training, to explain to employees that it has no choice but to comply with the policy.

Tansey Martens added that she has been “trying to sensitize some of these regulatory bodies on some of these issues,” telling them that unless they pay heed to cultural perspectives, their mandates “could be counterproductive to what they're trying” to accomplish.

Internal Reporting 

As to encouraging employees to report problems internally, Tansey Martens suggested that companies look for ways to explain it in culturally acceptable terms. For example, Confucius-based societies may prefer to discuss internal reporting in terms of protecting the company and co-workers, or addressing issues before they become detrimental, she said.

She also suggested that it may be helpful in some cultures to avoid the word “report.” The word “has got a finger-pointing aspect to it,” she said, adding that it may be better to phrase it as “speaking up” or “raising concerns.” Moreover, some cultures prefer using electronic communication rather than picking up the phone, she said.

Summing up, Tansey Martens recommended four guiding principles in creating a global code of ethics:

• look for creative ways to maintain core standards while respecting local customs;

• determine which standards/values are sacred and which allow for cultural sensitivity;

• in explaining requirements, business-based rationales often are better than abstract appeals to ethics; and

• involve local personnel in all aspects of the program development and implementation.

 

Seriously?

Meanwhile, Tansey Martens quipped that companies should treat with skepticism certain statements by their offshore operations. These include:

• “Send us your compliance documents and we'll deal with the dissemination and training here”; or

• “We're used to dealing with Americans”; or

• “Everyone speaks English here.”

 

“Send us your documents” is code for “it'll sit here” unopened for “a couple of years,” she said. “We're used to dealing with Americans” could mean they'll do it their own way without really listening to you.

Tansey Martens added that companies should be “highly suspicious” when told by their partners that everyone at their international operations speaks English. Instead, she urged companies to ensure their codes are translated, preferably through a translator who is versed in literature or fiction, rather than a technical translator, so that the nuances are captured.

When sending documents for translation, companies also should include lots of notes and comments to the translator, such as where they want particular language to be included, Tansey Martens continued. They also should “always get somebody in the company to do a back translation.”

To contact the reporter on this story: Yin Wilczek in Washington at ywilczek@bna.com

To contact the editor responsible for this story: Ryan Tuck at rtuck@bna.com