AuteursChristian Dargham , Marion Marhuenda
21x29,7cm - 134 pages Issue #1, septembre 2020 12,90€
La compliance, une idée européenne ?
Faced with the growing legal and reputational risks, expectations of stakeholders as well as the emergence of obligations, in a number of jurisdictions to set up compliance rules, companies are now required to have programs of ethics and compliance aimed at preventing the major risks to which they may be exposed (anti-corruption, sanctions, business & human rights, etc.) 1 .
All the rules constituting the ethics and compliance program should enable the company’s employees to adopt a course of action in conformance with its requirements.However, multinational companies bring together within their structures a wide variety of cultures, languages, traditions and legal specificities. There are also differences in business cultures between the different functions (e.g. management, operational, commercial, support, etc.) operating within the same entity and in the same country.
Ensuring the respect, and therefore, the effectiveness of an ethics and compliance program in the presence of multiple cultures is a real challenge for multinational companies. This is all the more so since compliance is a concept that was first developed in the United States to meet the expectations of the US authorities. As a result, compliance rules are generally marked by Anglo-Saxon culture (although other jurisdictions such as France have upgraded their laws in this area), which can be misunderstood in other legal systems 2 .
For example, in Japan, unlike the United States, it can be difficult to implement a whistleblowing system. The values of courtesy and respect for hierarchy and experience are particularly strong and may constitute an obstacle when it comes to denouncing the reprehensible behaviour of a colleague or, worse, a hierarchical superior. Similarly, if for developed countries defeating child labour is an important fight, it may not necessarily be a priority in certain emerging countries where children work to provide additional income for their families.
Therefore, in order to ensure understanding, assimilation and respect for the rules laid down in its ethics and compliance program, the company must ensure that it is adapted to the different systems of thought and to the cultural specificities that exist within it.
However, accounting for this cultural diversity may not be limited to simply translating the company’s commitments, rules and procedures into local languages. Indeed, the company must also ensure that its program complies with the laws and regulations applicable locally, and that the rules set out are understood from a cultural point of view.
This cannot be achieved by setting up an ethics and compliance program with variable geometry depending on the place where the company’s activities are carried out. Such an approach would not only be very difficult to implement in practice, but most importantly, it would also be contrary to the principle of the uniformity of the program, and would entail significant legal risk in view of the extraterritorial scope of certain legislations, in particular as regards anti-corruption.
An effective ethics and compliance program must be based on a set of fundamental values which will constitute a culture of integrity common to the whole company and transcending cultural differences (1). This culture of common integrity can then be adapted to local cultural specificities (2).
1. Developing a culture of common integrity
Identify the fundamental values of the company
The first step in developing a culture of common integrity consists in identifying and recognizing, at the highest level of the hierarchy, the existence of not one, but several cultures within the company.
From this plurality, it is necessary to establish a common base of fundamental values to which all employees will adhere, because they constitute points of convergence between the different existing cultures. These common fundamental values will define the line between what is acceptable, and what is not 3 .
It is on the basis of these fundamental values that the company’s ethics and compliance program will be based. However, these must be sufficiently clear, general, and above all, limited in number so as to allow the adhesion of all employees. Moreover, these values must be identified in light of the specificities of the company itself, its activity, its mode of operation, or even its history.
The objective of the culture of integrity is also to provide a reading grid of the company’s commitments, which will allow employees to understand the ethics and compliance program. In fact, by tying the themes of its program back to the fundamental values it has identified, the company strengthens the legitimacy of its program, and therefore the adhesion by its employees. For example, civic engagement, trust or respect are universally recognized values that can serve as the basis for the implementation of an ethics and compliance program. Only the practical implementation of specific rules in which they result will significantly differ from one country to another, or rather from one culture to another.
Create a culture of strong common integrity
The mere display of the fundamental values constituting this culture of common integrity is not sufficient. These values must be systematically enforced and reaffirmed within the company by means of clear, regular and varied communication initiatives.
The company must reaffirm its commitments through traditional communication tools such as training, drafting of ethical charters, but also by adopting, itself, the behaviour which is consistent with the values it intends to defend.
Thus, if the company singles out trust as a fundamental value, it will, for example, have to adopt a transparent governance policy, guarantee protection against retaliation when employees report misconduct or refuse to pay bribes even if that means losing a contract.
Finally, putting in place a mechanism to reward the behaviour of employees participating in promoting the culture of corporate integrity, but also disciplinary sanctions for actions that do not comply with these values, will ensure the solidity of the company’s culture of common integrity, and therefore of its ethics and compliance program.
The choice of values common to all cultures remains a delicate task, yet this approach helps to:
- Avoid imposing a culturally oriented vision of integrity, which would be considered the only possible line of conduct ;
- Propose acceptable line of conduct for all employees ;
- Develop ethical standards which, while complying with local laws and regulations, will be more protective, than the local legal framework. For example, where local law allows child labor from the age of 12, the company could undertake not to employ minors under the age of 16 regardless of where it operates. Likewise, while some (few) jurisdictions allow facilitation payments, the company could adopt a policy that would not allow such an exception.
Once this base of fundamental values has been identified and communicated, it must be explained to and applied by all employees of the company regardless of their location and position.
2. The deployment of a locally adapted ethics and compliance program
Ethics and compliance programs must lay down clear and consistent rules while also offering enough flexibility to be adapted locally to different cultures.
Adaptation of the ethics and compliance program documentation
Codes of conduct, ethical charters and policies are the primary vectors of information on the company’s ethics and compliance program. They set the tone. It is therefore essential that they be carefully drafted to translate the fundamental values of business integrity. Opting for a succinct writing, limited to a few synthetic and incompressible ideas, has the advantage of the clarity and accessibility of the message, while leaving some latitude to the entities to adapt this message in their daily practice. Texts should be written simply, limiting the use of technical terms and with practical examples so that everyone can understand the text regardless of their position, experience and culture. Finally, as far as possible, the texts must be available in all the local languages of the company.
On a daily basis, line managers will therefore have some leeway to promote respect for the fundamental values of the company while respecting the local legal framework and local culture.
For example, as part of its anti-corruption effort, a company may prohibit gifts and invitations in principle. However, it is necessary to adopt some flexibility, especially when the local culture considers this practice as an essential component of business dealings. In China, for example, gifts are an integral part of Guanxi culture, that is, of networking and of social and business relationships, with no negative connotation that they could take on elsewhere. Rather than formally prohibiting every form of gifts, which could either result in the rule not being followed or locally limit the prospects for commercial development, the company may set maximum value thresholds for such gifts and invitations and/or subject them to a prior authorization or declaration obligation.
Consulting local compliance ambassadors
Consulting local compliance ambassadors may prove useful for the company to better understand the cultural subtleties. These local ambassadors may be compliance officers or operational managers of local entities. Crucially, consulting these ambassadors enables the company to assess the perception of the message by the employees of these entities, and most importantly, to adapt it if needed.
Adaptation of training programs
Training and communication tools are essential elements for the effectiveness of an ethics and compliance program. If the general message which the company wishes to deliver has universal bearing – for example, fight against discrimination or corruption – the approach must be adapted to the relevant cultural realities and functions.
During the 1970s and 1980s, an Asian airline had one of the worst safety records in the world, despite the use of high-performance equipment and handpicked personnel. It appeared that the training model chosen for pilots and co-pilots, modeled on the methods of western countries, was unsuitable. Co-pilots were unable to warn the older and more experienced pilot in an emergency. The culture of respect silenced them. Since this finding, the company has thoroughly reviewed its training programs and is now one of the safest companies in the world 4 .
This example illustrates the need to make prior adjustments before deploying a training program.
In order to facilitate such adaptation, the company may carry out training sessions in consultation with compliance ambassadors, local managers or other relevant departments. It should be emphasized that adapting these training courses and other communication tools does not in any way suggest leniency for bribes paid in an emerging country, while applying a more stringent standard in France or the United Kingdom. Instead, the rule remains the same for all jurisdictions, while the explanation of the text varies.
In addition, it is important to give priority to in-person trainings, in particular for employees with the highest exposure to the risk (as a result of a risk assessment exercise, such as sales representatives or procurement). Such trainings in-person have the advantage of being more adapted to the local reality than e-learnings. These trainings are also more effective, better understood and they provide an opportunity to receive a bottom-up feedback and get a better idea of the operations at the local level.
Finally, and rather intuitively, the adaptation of trainings must include the exercise of simplification in order to guarantee the accessibility of the content to all target audiences. When it is aimed at sophisticated audience, training can be technical as long as it is concrete. In all cases, it should be illustrated by concrete situations and show the audience how business could still be done in a compliant way.
This last recommendation is self-evident, yet must not be overlooked: there are still numerous examples of codes of conduct written in overly legal language emanating from the company’s headquarters, and of trainings delivered by people who do not speak the language of the target audience. Not only such mistakes mute the compliance message, but they may even lead to its rejection.
Take the time to explain
Certain conduct, which may appear to the head office of the company as contrary to the ethics and compliance program, is not necessarily perceived as such by all employees (this does not concern the obvious cases of corruption or other clear violations). Thus, in the event of a reprimand or sanctions for breach of the program it is advisable to avoid tensions (especially among the colleagues of the person concerned) by taking the time to explain, for example through new training, why the behavior in question constitutes a violation of the ethics and compliance program.
Providing explanation can also be useful to enable the company to maintain its good relationships with its external stakeholders. Thus, when the company conducts an anti-corruption audit of some of its intermediaries, they might, in certain regions, react badly due to them having an impression of being unjustly suspected of corruption and believing their honour to be under attack.
However, we know that this exercise is part of a classic anti-corruption scheme, and does not necessarily mean that the intermediary is involved in corruption. As the intermediary concerned is usually a partner of the company on which its local operations may depend and with whom it will often continue to work, it is again advisable to take the time to explain. It may therefore be clarified at the beginning of the exercise, that an audit of this type is common, that it is imposed by the rules of good management of an ethics and compliance program, and that it is in no way directed specifically and personally against the intermediary.
The recent evolution of laws and best practices increased awareness among most third parties interacting with global companies, making due diligence and audit exercises less complicated in some cases.
In conclusion, local employees are the best ambassadors for ethics and compliance, and they are the ones who apply the program on a daily basis; if they believe in the message, if they take it on, the company will have taken a big step.
- The content of this article is based on the one previously published in french in A. Gaudemet (dir.), La compliance, un monde nouveau ?, E. Panthéon-Assas, nov. 2016.
- B. Scholtens, L. Damsa, « Cultural Values and International Differences in Business Ethics », Journal of Business Ethics, 2007.
- T. Donalson, « Values in Tension: Ethics Aways from Home », Harvard Business Review, Sept – Oct.1996.
- N. Singh & T. J Bussen, “Why compliance professionals need to think about national cultures”, Compliance Ethics Professional, July 2014.
Christian Dargham, Marion Marhuenda, Compliance and cultural diversity, Groupe d'études géopolitiques, Juil 2021, 80-82.
à lire dans cette issuevoir toute la revue
Le droit à l’échelle pertinente
La Revue européenne du droit est née d'un constat. Celui que la quête d’une apparente neutralité et objectivité conduit à traduire toutes les problématiques contemporaines – qu’elles soient d’origine politique, sociale, sociétale ou économique – dans des concepts juridiques, dont la technicité est censée apaiser toutes les passions.lire l'article
The CLOUD Act: Unveiling European Powerlessness
Adopted without any real debate in 2018, the CLOUD Act continues to attract criticism in the United States and Europe from associations for the protection of fundamental rights and from those who are critical of the extraterritoriality, not always well understood, of American laws. Not without a good dose of approximations. For Emmanuelle Mignon, it reveals above all the powerlessness of the European Union.lire l'article
Édito : un nouveau paradigme
Que peut-on faire en France et en Europe pour développer des méthodes qui permettent à la fois d’assurer en effet un meilleur contrôle face aux manquements et aux violations qui sont mondiales tout en essayant de continuer d’assurer notre propre autonomie en la matière, c’est-à-dire de défendre notre place dans l’ordre mondial ?lire l'article