Ethics

Two of Europe s best-known interculturalists, Fons Trompenaars and Charles Hampden-Turner, have conducted research among businesspeople from a host of international companies for many years to pinpoint differences in the behavior and values of employees from different cultures. The research has involved asking the participants a battery of questions and processing the answers to get objective, quantifiable results. The results of the study are impressive, but I have to confess that what I remember most from the study is not so much the answers as one of the questions they put to the participants . I still ponder it from time to time and wonder how I would have answered if they had asked me.

The question goes something like this. You were traveling as a passenger in a close friend s car. Your friend hit a pedestrian while driving at 35 miles per hour in an area where the maximum allowed speed was 20. You are the only witness , and you know that if you lie under oath you can save your friend from serious consequences. Should your friend expect you to lie to protect him from prosecution ?

The results were used to show different attitudes toward rules and laws, and toward relationships. But of course the situation also revealed different views as to what constituted right and wrong behavior. In many places (like the Scandinavian countries , the U.S., Canada, Australia, and the U.K.), the vast majority of participants thought it was right to obey the rule of law regardless. For others (South Korea, Russia, Venezuela, China, and India), it was seen as the right thing to do to protect a friend, and the fact that you had to tell a lie to do so was not so important ”the end justified the means.

We are faced with ethical dilemmas all the time, both at home and at work, though in most cases the situation is not so dramatic, nor the consequences so momentous, as the case quoted above. But making even minor decisions based on what s right and wrong challenges us at a very deep level, because it forces us to look at the ethical standards we learned in childhood from our culture in general and our family in particular. I realized this a few years ago when I was shopping for potatoes at home in Sweden. It was a year when the quality of potatoes was particularly bad, and in my local supermarket a sign above the container said, In the interest of fairness use the scoop provided. People had obviously been hand-picking the good ones and leaving the rest. The Swedish staff obviously believed strongly in fairness. I believed that too, but I also believed that the free market was, on the whole, a good thing, and did not see why I should buy produce I could clearly see was bad. However, I couldn t solve that particular ethical dilemma ”so I bought pasta instead.

In some cases ethical standards may be the consequence of religious laws. It is for religious as well as ethical reasons that practicing Muslims neither borrow nor lend money with interest. This means that special Islamic banks have been set up to ensure that both their customers religious and business requirements are met. But religion is far from being the only influence on business ethics. Values, the core beliefs that guide or motivate attitudes or actions, may be quite different in cultures that share the same religion but will nevertheless have a key role in shaping attitudes about right and wrong.

You cannot run a business without considering what is right and fair, whatever your position within a company and whatever your nationality . Ethics and business go together. That s why it can cause a national scandal when a CEO (whether in the U.S., the U.K., or anywhere else) is awarded a fat bonus by his colleagues on the board when the company is doing so badly it has to lay people off.

At the other end of the spectrum, anti-capitalist protests at the G7 and G8 trade summit meetings have been about ethical considerations. Protesters at these meetings of the world s richest nations believe strongly that the actions of global corporations, whether moving their production facilities around the world to find the cheapest source of labor, or outsourcing production as a convenient way of avoiding responsibility for pay or working conditions, amount to the strong exploiting the weak. And interestingly, what seems to unite this protest movement is not the nationalities of the protesters, but their age. It is ironic that the global corporations that have created a generation of young consumers who wear the same clothes, eat at the same hamburger restaurants , listen to the same music, and wear the same sneakers, whether in Moscow or Miami, will find these same internationally minded young people throwing bricks at them and condemning their business practices as unethical.

This is something global corporations are taking seriously, and has resulted in companies cultivating ethical profiles, working to become environmentally friendly, or giving donations to organizations like Greenpeace or Amnesty International. Even ethics is big business now.

LETTERS 158 “159

When personal loyalty clashes with our loyalty to a system of values, we are likely to feel very uncomfortable.

Is this fair? Letter 158

FROM THE U.K. ABOUT SOUTH KOREA

I work for a company that has a subsidiary in Korea, so I go there quite frequently on business. I have a good relationship with a highly esteemed Korean manager who has worked for us for many years. We now need to find a local firm to supply a component, and this manager has strongly recommended his brother s company. I am rather wary about this and feel that this manager has put me in an awkward position. I don t want to lay myself open to accusations of favoritism or even corruption. Anyway, I am going to put the job out to bid, but feel that by doing so I am risking creating ill feeling within my own company.

In South Korea loyalty to one s family is a duty, and your manager would be failing in his duty if he did not try to help his brother win the order. On the other hand, he appears to be a loyal member of your company too, and may genuinely feel that his brother s company is likely to be your best supplier. Certainly personal relationships can facilitate business wherever in the world you find yourself, and in Eastern Asia knowledge of someone s background and family is seen as providing a form of guarantee of their personal commitment to your business. Naturally you should listen to what other companies have to offer, but be prepared to spend time in discussions with the company your manager recommended. It would be silly to exclude the best contender because of an exaggerated sense of fairness, and certainly most Indians, East Asians, and Latin Americans would find such a decision totally incomprehensible.

Outright dishonesty Letter 159

FROM THE U.K. ABOUT TURKEY

I have Turkish parents but was brought up and educated in the U.K. Now after college I am living and working in Turkey in a small company owned by a cousin. My relatives are extremely kind and supportive and the business is flourishing. However, I noticed that when we send out invoices to certain customers they are regularly wrong and the error is always in our favor. I ve raised this with my uncle, but he just laughs and shrugs. This practice is not only unethical, but by trying to cheat his customers he risks losing them in the long run.

You sound rather shocked, but your uncle s customers, though angry , probably wouldn t be surprised. Although most Turks have an extremely strict code of honor when it comes to doing business within the family or with people they know well, when there is no pre-existing personal relationship with people, there is no duty to show the same consideration. Your uncle would probably say that it was up to his customers to check their invoices more thoroughly, otherwise they have only themselves to blame. Coming from the U.K. you may find it hard to accept a system where you have one set of standards for people you know and another for strangers, but this is common in many other cultures, including Latin American and Asian countries, where there is one code of conduct for friends and family, who are members of the in- group , and an entirely different one for strangers or acquaintances , the out-group.

LETTERS 160 “161

If our beliefs about what is right and wrong are challenged by those from another culture we are likely to feel threatened, for it is according to these standards that we live our lives.

Is this bribery? Letter 160

FROM AUSTRALIA ABOUT INDONESIA

My company is trying to get planning permission to open a small factory in Indonesia. We have been told that quite a modest payment to a local official will speed up the process considerably, but we really do not like this sort of thing and feel that it s the start of a slippery slope.

When you say this kind of thing I guess you are thinking in terms of bribery. There is an international organization called Transparency International (www.transparency.org) that claims to show which countries are most likely to offer bribes, and Australia (followed by Sweden, Switzerland, Austria, and Canada) is the country where this behavior is least accepted. This explains why you are so uncomfortable with the suggestion. Perhaps there is a lot of time and trouble involved in getting planning permission, in which case the official deserves payment. When local salaries are very low, as they are in Indonesia, this is an accepted way for employees to make ends meet, and it is certainly not regarded as immoral. It is hardly surprising that those countries at the bottom of the Corruption Perceptions Index, which relates to perceptions of the degree of corruption of individual countries, are dirt poor. (As a matter of interest they are, in descending order, Angola, Madagascar, Paraguay, Nigeria, and Bangladesh.) It is easy for those of us with comparatively good salaries to claim the moral high ground here, but we should perhaps consider how we would act if our families lived in poverty, and we were in this official s shoes.

If after doing a little research you decide that there is some time-consuming administration involved and you will make the payment, make sure it goes through your company account (perhaps as consultancy fees ) so that you don t lay yourself open to charges of bribery at a later stage. But in the long term you will have to decide how you will come to terms with locally accepted ways of doing business, because if you are going to open a factory in Indonesia you will run across this sort of thing all the time.

Blood suckers Letter 161

FROM RUSSIA ABOUT A U.S.-OWNED MULTINATIONAL

I work for a foreign-owned hotel chain in Russia, and even though we have plenty of guests and are making a lot of money, there is constant pressure on us to cut costs and focus only on the bottom line. This means that the employees at the bottom of the pile, like the cleaners, are making much less than those at the top, even though they work just as hard. Our employers are exploiting us by giving the money we have earned to rich people on the other side of the world.

Russia, and indeed the whole of Eastern Europe, has been subjected to a crash course in capitalism in the last few years, and it hasn t been an easy lesson. Few people would say that capitalism is fair, for it favors those who are clever and well-educated, are fit and healthy , have the right connections, are ambitious, and prepared to work very hard. But it s those people who were the most successful under the communists too. And there are, of course, greedy and unscrupulous capitalists, just as there were greedy and unscrupulous communists. However, from what you have said it does not sound as if your employers are exploiting you. You do not say how well you are paid in comparison with other Russians workers, but usually people are glad to work for foreign companies because they earn more than by working for local firms.

In keeping costs down so that it can pay its shareholders a good return on their investment, the company is merely following one of the founding principles of capitalism that says that nobody is going to lend you money to set up or expand your business unless they are going to earn a profit from doing so. Similarly, by paying people with qualifications and leadership skills more than those without, your employers are following the law of supply and demand that says you pay more for what there is less of, and there are usually more unskilled workers than skilled around. There is a huge amount of injustice and unfairness associated with the capitalist system that you, coming to it as an outsider with a non-capitalist background, find hard to accept. I can only say, consider the alternatives.

LETTER 162

How employees are treated and treat each other is a reflection of both national and corporate culture.

Is this ethical? Letter 162

FROM POLAND ABOUT THE U.S.

The American company I work for here in Poland has set up a confidential telephone line that we are supposed to use to report our colleagues if we find out that they have been doing something the company wouldn t like. They describe this as a way of protecting the company s ethical standards, but to me it s extremely unethical to get people to spy on their colleagues. It reminds me of our communist past.

I have to admit that this is a difficult issue. The reason your U.S. bosses have introduced this measure is to make sure that the sort of criminality and corrupt practices that can drain the resources of corporations and whole countries alike do not get a grip on your company. You just have to look at the example of the way organized crime in Russia is discouraging foreign investment to see what management is up against. Americans believe strongly that everyone should follow the same rules and that nobody is above the law, and they certainly believe that by giving employees the chance to report wrong-doing anonymously they are protecting the whistle -blower from reprisals. I agree that these measures have to be handled with great sensitivity. To work together efficiently in organizations employees have to be able to trust each other. Let s hope that this measure does not encourage employees to be suspicious of each other instead.

IN A NUTSHELL: Ethics

GLOBAL WARNING

The same behavior can be regarded in very different lights depending on which culture you come from. A lot depends on the word you use:

• Bribery or consultancy services

• Nepotism or cronyism or networking

• Commission or kickback

In the list below, T.I.C.P.I. refers to the 2003 Transparency International Corruption Perception Index, and T.I.B.P.I. is the 2002 Transparency International Bribe Payers Index. For more information about these, go to www.transparency.org.

 

• Argentina: The duty to help a friend is much more important than the duty to keep to the law or obey rules. Of the 33 countries in this book, Argentina is perceived as being the third most corrupt on the T.I.C.P.I. (See Letter 158.)

• Australia: According to the T.I.B.P.I., Australia is the country least likely to offer bribes. It is also perceived as being one of the least corrupt countries in the world on the T.I.C.P.I. They believe everyone should be subject to the same rules. (See Letter 160.)

• Austria: There is a natural trust in and compliance with rules and regulations in society and business. (See Letter 160.)

• Belgium: Loyalty to an individual s linguistic and ethnic group may override observance of rules sometimes.

• Brazil: Rules are for your enemies. The duty to help a friend is much more important than the duty to keep to the law or obey rules. (See Letter 158.)

• Canada: Everyone is subject to the same rules. Canada is perceived as being among the most honest on the T.I.C.P.I. (See Letter 160.)

• China: Family and friends are entitled to help and favors. Rules can be bent and exceptions made depending on the circumstances. China is one of the countries most likely to offer bribes according to the T.I.B.P.I. (See Letter 158.)

• Denmark: Denmark is perceived as being the (joint) third least corrupt country in the T.I.C.P.I.

• Finland: Finns believe everyone is subject to the same rules. Finland is perceived as being the least corrupt country in the T.I.C.P.I.

• France: Companies have many rules and regulations, but people accept that there are ways to get around them. There is always room for an exception or a special case.

• Germany: There is a natural trust in and compliance with rules and regulations, large and small, in society and business.

• Hong Kong: Family and friends are entitled to help and favors. (See China.) (See Letter 158.)

• India: Family and friends are entitled to help and favors. Rules can be bent and exceptions made depending on the circumstances. Of the 33 countries in this book, it is one of those regarded as most corrupt on the T.I.C.P.I. (See Letters 158 and 159.)

• Indonesia: Indonesia is perceived as being one of the most corrupt countries in the world according to the T.I.C.P.I. (See Letters 158 and 160.)

• Italy: Family and friends are entitled to help and favors. Italy is perceived as being the most corrupt country in Western Europe according to the T.I.C.P.I.

• Japan: The Japanese use gift giving to build relationships, but despite rules governing gift giving, sometimes it is hard to tell where gifts and favors become bribery and corruption. (See Letter 158.)

• Mexico: Family and friends are entitled to help and favors. Rules can be bent and exceptions made depending on the circumstances. (See Letter 158.)

• Netherlands: The Netherlands is perceived as being among the most honest on the T.I.C.P.I.

• Norway: The belief is that everyone is subject to the same rules, and Norwegians do not accept bribery as a way of doing business.

• Poland: Family and friends are entitled to help and favors, but the rest of the world may be treated with suspicion. (See Letters 161 and 162.)

• Russia: See Poland. Rules can be bent and exceptions made depending on the circumstances. It is perceived as being one of the more corrupt countries of the 33 in this book in the T.I.C.P.I. It s also one of those most likely to offer bribes according to the T.I.B.P.I. (See Letter 161.)

• Saudi Arabia: Ethical standards are based on interpretations of Islamic law. Family and friends are entitled to help and favors.

• South Africa: Family and friends are entitled to help and favors. Crime rates are rising and corruption rates with them.

• South Korea: See Mexico. One of the countries most likely to offer bribes according to the T.I.P.B.I. (See Letter 158.)

• Spain: Family and friends are entitled to help and favors.

• Sweden: See Switzerland. Sweden is also one of the least corrupt in the T.I.C.P.I. (See Letter 160.)

• Switzerland: Everyone is subject to the same rules. This is one of the countries least likely to offer bribes according to the T.I.B.P.I. (See Letter 160.)

• Taiwan: See China. (See Letter 158.)

• Thailand: See Spain. (See Letter 158.)

• Turkey: There is a general distrust of administration and bureaucracy. See Poland. (See Letter 159.)

• UK: They believe everyone is subject to the same rules. Offering bribes is strongly disapproved of. (See Letters 159 and 160.)

• US: U.S. Americans believe everyone is subject to the same rules. (See Letters 161 and 162.)

• Venezuela: See Mexico. It is perceived as being one of the more corrupt countries in the T.I.C.P.I. (See Letter 158.)