Know-How Exchange : Strategy

There a couple of ways (in a simplified world) to look at ethical dilemmas - the intention (means) and the result (ends). The RM had the right intentions - not paying a bribe - but his results did not have a good ROI for the company. He could have also paid the bribe - questionable means - but could have rec'd a good or bad result from an ROI perspective (we don't know).

Other people see this situation as the cost of doing business in certain countries. Make no mistake, this activity is done in the U.S. on a large-scale level as witnessed by reviewing campaign contribution disclosure reports. In my county (U.S.), the candidates running for state senate (for example) get all their contributions from Lawyers, Company PACs, Developers, etc. - those with a clear interest in gaining political access and favorable treatment. It's considered the cost of doing business - just a little more of a formal process than other countries.

I would have a sit down w/ the RM and the other senior leaders to discuss the company's policies in these matters and the proper course of action. I would not fire the RM as it sounds like the company did not have the procedures and processes in place to support the RM in an ethically difficult situation. This situation is part of doing a "what if" in each locality given local laws and customs.

I would also look at the situation from various perspectives - employee, investor, customer, etc. in terms of the ethical compass. For example, an investor might care about how it affects the stock price, while a ...

Wow. Tough question.

Is this a western (non-Indian) company? I am going to assume it is.

What should top mamagement do? That will be based on how important ethics are to the company. Hopefully the guy won't get sacked, but it wouldn't surprise me if they do.

Actually, a lot of how they will react will be based on whether he kept upper management informed on the situation and the risks. I've had cases in my last company where we heard that some of our products would be bought by a company in Singapore and then re-exported into Myanmar (Burma). US companies are not allowed to sell products there. We brought this to upper management, and they made the decision to cancel the sale. We lost hundreds of thousands of dollars in sales, but there were no negative reprecussions to the people in the field because we kept everyone in the loop.

On the question of whether there are times where one should comprimise their ethics, I am going to take the pragmatic view and say yes. The western way of doing business does not match the way of doing business in other countries. For example, if you have a press tour in China, you are expected to give each member of the press a red envelope with cash in it (often about $50 each). If you don't do this, you won't get any articles written about you. If you do, each member of the press will write about you. This is not acceptable in the US, but in China it is the way that they do business.

You have to choose what you are willing to bend and when. And of course, there should be some areas of your ethics which should not be reproachable. For example, if a person's life is at stake, you shouldn't bend your ethics.

Legal wise - if I remember right from my international law classes, paying bribes are actually legal by US law if they are used to make things go smoother. Basically, if they are just used to help a deal you would get anyway to move along, they are legal. If they are used to get new business you would not get without the bribe, then they are illegal. Been a while since these classes, so I could be wrong.

What is considered corrupt in our country is the price of doing business in others. Unfortunately your regional manager didn't let his superiors make the ethical/unethical decision and that has cost the company $$$ but it is great to know that your people aren't corrupt.

I can't see you punishing him for doing the right thing by U.S. standards but he should have brought it to the attention of his management team. Your management team on the other hand should have set policies in place to account for such things.

Can you send a message to your customers that you took the high road and didn't bend to a payoff, that your an honest company. This may help you in the long run with your customers. Don't punish the manager but praise him and put some policies in place to report future corruption.

dhinkle

There's an anecdote in the hi-tech industry about the manager who made a huge blunder that cost his employer a bundle. He fully expected to be fired.

The CEO's point of view: "Why on earth would I fire him? I just spent over $1 million educating him."

- Shelley

Your question (subject line) included "When to compromise?"

If your attitude reflects the company's - meaning that paying it would have been a compromise of the company's ethics policies or practices, then your RM was right. Now, however, the cost of the ethical standard has a known, and costly price.

If the company's standards are to not pay such "fees", then the company is now able to live up to its standards, and maybe could even make some PR lemonade out of the lemons...

If there is no known policy about such things, and the RM was within his purview to make this decision, then other policies the company must have are now important.

In either case, I do however agree that the RM failed to relay the situation and an assessment of its risks, upline. This is hazardous to the company's health. Do all RM's have such freedom because there's a lack of known policies or behaviors surrounding such risks and decisions?

When should the company compromise? I don't know. That's a corporate policy and culture issue, and possibly a legal issue as well. But the company will never have the chance to decide if reasonable and responsible communications can't or don't occur.

This wasn't a bribe, it was blackmail.

As long as your countries officials are allowed to operate in such a fashion, it will happen again, not matter who you hire.

Although I can see the both sides of the fence regarding fire or don't fire...it is up to you to gauge how important this person is and the example he made. Should he have gone to his upper management? Yes. On ther other hand, do the other employess look up to him for strength and as aleader with integrity? If so, he is worth more than $500,000.

Spend you money lobbying against corrupt officials versus getting backmailed every election.

I hope this helps.

The regional manager should be fired for not reporting a potentially serious situation to Senior Management. I agree with Vevolution, this was a serious error of omission.

Doing business internationally sometimes requires a certain amount of, shall we say, flexibility. If you can't stand the heat, get out of the kitchen.

So, what was the end result at the company? What did they do to the regional manager? What hapenned related to getting their license back?