Ethics and Integrity: Differentiators in the XXI CenturyBy Cinthya Alaniz Salazar | Tue, 09/06/2022 - 12:20
Q: How has F&C appealed to Mexico’s business community? Why should organizations be incentivized to be proactive about integrity and compliance?
A: F&C has attempted to appeal to the image Mexico’s business community would like to project and be regarded for on the global stage. The United States, its most important strategic economic trading partner, hosts investment shareholders that are increasingly conscious of Mexico’s sociopolitical risks and in turn have increasingly raised expectations regarding integrity and compliance. To mitigate these potential risks, US stakeholders are increasingly conducting due diligence prior to selecting new business partners in Mexico, effectively placing integrity and ethics above potential business earnings. In practice, these increasingly prevalent expectations have had significant influence on Mexican companies looking to differentiate themselves, capture investment and conduct business with international and multinational companies. Consequently, companies with demonstrably mature indicators have a greater competitive advantage over other market competitors.
On the other hand, despite the fact that Mexico has a national anti-corruption system, there has been little to no enforcement in practice. With a lack of accountability at the federal level, the private sector is effectively charged with monitoring themselves, thus representing a conspicuous conflict interest.
Q: How does the preservation and transmission of an organization's reputation differ from company branding and why should organizations prioritize it?
A: Let me put this into context, Mexico is a complex market, host to multiple challenges including bribery, theft and cartel-related concerns that require constant vigilance even from the biggest of organizations. The indiscriminate nature of these crimes forces companies, regardless of size, to consider how these potentialities could affect both their company and brand. Beyond immediate consequential losses, damage to a company's reputation could be devastating now that end-consumers are increasingly assessing the ethical standing of the companies they consume from. Ultimately, an organization’s continuity rests on a strict adherence to a set of ethical standards which condemn the use of child labor, forced labor and hazardous working conditions among others.
Q: Where does the assessment process begin for organizations and what is the minimum organizations should consider pursuing?
A: This is a tricky question because F&C’s approach depends entirely on the type of client and their objectives, leading either to a compliance paper programs which looks to establish and verify basic anti-corruption and conflict of interest policy standards; or a risk-based approach assess processes, procedures and preparedness in relation to five fields: corruption, bribery, money laundering, antitrust and criminal compliance.
The most efficient way of conducting the latter is to reference a map of all processes and procedures, but almost 99 percent of companies lack an updated version, especially amidst such seismic evolutionary pressures introduced by the COVID-19 pandemic. This is necessary to understanding the operational flow of an organization and identifying potential risks. An analysis which should be conducted on a casa-by-case basis considering no one organization will be the same, even from within the same industry. Only then can organizations begin building policy procedures and controls that account for perceived risks. Equally as important is the training of personnel and providing a safe space where they will be encouraged to report heard or observed ethical violations.
Q:How well-versed are companies in dispute resolution both inside their own structure and with peers, clients and suppliers?
A: Companies have a tendency to look for shortcuts regarding ethical or integrity issues when they arise; often opting to ignore a clear organizational problem by terminating the person, area or contract in question. The problem with this approach is that it fails to attempt to understand what conditions or lack of controls allowed for this issue to manifest itself in the first place. Getting to the root cause of such challenges requires investigation and multilateral expertise in order to identify causation, opportunity and methodology. The more insight that is collected from these events the more information organizations can utilize to identify risks and develop controls around them.
Q:What integrity risks or opportunities did the COVID-19 pandemic engender that organizations should be aware of?
A: The COVID-19 pandemic changed the way of doing business forever, starting with having a greater number of people working from home from unsecure connections. A channel that leaves organizations vulnerable to potential risks of corporate espionage, business intelligence leaks and cybersecurity, among others. At the same time, some organizations opted to introduce pay cuts and layoffs, with it germinating significant stress within organizations only to be compounded by a lack of transparency at the executive level, assurance of wage recuperation and most recently macroeconomic inflationary pressures. The protracted road to economic recovery and lack of oversight has in turn created incentives for people to look for opportunities to misappropriate assets, violate controls and take advantage of companies.
F&C Consulting Group is a global consulting firm focused on emerging markets, promoting an integrity culture in people to transform the business world.