Most people believe that governments are corrupt. In fact, fixing corruption in the U.S. government ranked number-two in a list of the most critical issues that should be addressed in the recent presidential election.
Large corporations are no strangers to corruption either. In a 2008 global survey by PricewaterhouseCoopers and The Economic Intelligence Unit, an increasing number of large companies said they recognized their vulnerability to corruption and the benefits of effective anti-corruption programs and controls.
Sixty-three percent indicated that they had experienced some form of actual or attempted corruption, and 45 percent have not entered a specific market or pursued a particular opportunity because of corruption risks. However, while 80 percent said they have some form of an anti-corruption program in place, only 22 percent were confident of the program’s effectiveness.
Corruption on a smaller scale is much more likely to get swept under the rug. We are far more likely to tolerate corruption in our small businesses because it doesn’t seem to have any long-term ill effects. But “seem” would be the operative word here. Regardless of the size of your business, corruption—defined as the misuse of entrusted power for private gain via bribery, conflicts of interest, extortion, embezzlement and fraud—will damage your organization’s reputation and may even have severe operational, financial, legal and regulatory consequences.
If you’re an owner, it’s in your best interest to expose and root out corrupt activities before they sabotage your culture. Here are a few recommended action steps.
Adopt A No-Nonsense Attitude
As an owner or manager, it’s your responsibility to clearly communicate that unethical behavior will not be tolerated in your organization. If you are not actively on board, you cannot expect your employees to be serious about fighting corruption. Do you have staff in other locations? You’ll have to work doubly hard to make sure the message gets across—and stays there.
Assess Your Risk
Proactively open a discussion to determine the situations in which your organization is most at risk of corruption. For example, are there certain existing business partners or payouts that are suspicious? Are there issues that are especially prevalent in your industry or type of organization? Don’t be afraid to get everything out in the open—better you discover it now than a third-party later.
Look Beyond The Obvious
Corrupt individuals are creative, and certain activities (paying a donation, for instance) may seem innocent at first consideration. Examine all of your organization’s operations through a strict ethical lens and make sure that everyone—from senior management down—is universally comfortable with how you are doing business. If there is disagreement, err on the side of caution.
Roll Out An Anti-Corruption Program
According to Jermyn Brooks, director of private sector programs at Transparency International and a cited expert in the PwC report, you should design a program that specifically addresses each major corruption risk uncovered in your assessment. Detailed explanation of and training on this program for all staff (including brand new hires) is very important, as is the adjustment of internal processes to ensure they are in lock-step.
Reinforce, Reinforce, Reinforce
Brooks suggests implementing sanctions so that employees understand that if they buck the policy, their jobs or promotion prospects will be in danger. You should also provide a help line that individual team members can call confidentially to ask for ethical advice. Finally, as with any company-wide initiative, your anti-corruption program should be subject to periodic review and adjustment so that it’s maximally effective.
How does your organization prevent corruption? What lessons have you learned in your quest to become a more ethical business?
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