Noticias

How to achieve an ethical culture within companies

This article first appeared in La Tercera on April 28, 2021.

Eleven years ago, Chile became familiar with compliance with the Law on Criminal Liability of Legal Entities, as a sudden discovery of the role of companies in the prevention of corruption and, therefore, of the importance of taking action on the matter. And, although this law was not dictated under a strategic view and a vision of the future by our congressmen or the government of the day, it was a requirement to integrate the select group of OECD countries, which together with incipient scandals, made companies see that they were responsible for the crimes committed by their employees if they did nothing to prevent them.

Thus, the law has led companies to implement compliance in the crimes contained in it, but often leaving aside the prevention of other risks that may affect it, but that are not part of the regulations.

And today, when we see an important advance of corruption, which has been accentuated with the pandemic, is when companies should care more about prevention through effective controls, which not only consider what is required, but also go beyond the minimum level imposed by the law and manage to look inward, analyzing their own risks. But are Chilean companies prepared for this?

The report “Good intentions, Bad outcomes?” of the World Economic Forum points out that a solid culture of integrity within companies is the key for an organization to behave more easily in an ethical manner, because it is incorporated as part of the heart of the business, and not as a mere compliance with the law or a series of measures to identify and punish individual misconduct.

The document points out that this culture must start with the recognition of the good intentions of its employees, but, at the same time, consider that they are constantly confronted with ethical grey areas, which if not properly dealt with can lead to the entire company being involved in a corruption scandal. Therefore, it is essential to consider individual ethics and cognitive biases, training employees not only on what the law says, but also on ethical dilemmas they may face within the company; at the same time building a psychological security that invites them to speak up without fear if they see something that does not correspond, thus identifying risks in a timely manner. On the contrary, in very hierarchical cultures, the fear of speaking up prevails, facilitating the way for the corrupt.

On the other hand, in this culture of integrity, incentives must have a long-term view, where it matters how to achieve the goals and not only how to reach them, thus preventing people with good intentions from diverting their objectives for short-term gains. At the same time, change must be encouraged through innovative examples that promote ethical behavior as an intrinsic value of its members, and not as a manual to learn or answer a test.

Another fundamental point is to design a holistic approach to ethics and organizational leadership, where the board of directors understands its role in the company -and the role it plays in society-, based on ESG criteria, where the different areas act together in pursuit of integrity and sustainability, with a clear purpose, in which ethical leadership and diversity are promoted, and which allows measuring the trust of stakeholders.

Only in this way will companies be able to face the new era (which is already today) and be sustainable in the long term. It is not about a fight between compliance and strategy, nor about how much time the board dedicates to compliance issues, but about understanding how compliance is part of the strategy, and that how results are achieved is as important as or more important than the results themselves. What is the point of growing at twice the rate or reducing costs, if any tactic is worthwhile to achieve it?

The Corpesca case is a good example of this. The company was condemned for its responsibility as a legal entity, when it was irrefutably proven that it did not comply with the duty imposed by its own crime prevention model, since these were carried out without major obstacles by its general manager, because the legal controls within the organization were not reviewed. This reflects that it is not enough to have a compliance program if there is no real supervision of it and no real conviction of the company’s role with its environment. Surely, Corpesca was not born with the idea of bribing parliamentarians, however, it forgot that it does not matter how to achieve the results.

A culture of corporate integrity can make the difference in the fight against corruption, preventing people who act ethically from falling into temptation and those with bad intentions from being stopped in time.

By: Susana Sierra

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