Stay out of the shadows: Mexican companies, government move to improve business ethics and values.A trucker slips 500 pesos to a police officer to a void having his rig impounded. An executive seeking a contract with a foreign government pays a multi-million dollar "success fee" to the government's representative, a condition for winning the contract. A worker diverts money from his employer to his own small business.
Whether on a large or small scale, corrupt practices corrupt practices, in politics, fraud connected with elections. The term also refers to various offenses by public officials, including bribery, the sale of offices, granting of public contracts to favored firms or individuals, and granting of land or franchises in like these can drain businesses--and the economy--of millions of dollars each year. In Mexico, the World Bank estimates that corruption costs nearly 10% of the nation's gross domestic product, more than the government spends yearly on education.
In addition to wholesale corruption, many legal, but perhaps unethical unethical
said of conduct not conforming with professional ethics. , practices can make a business less efficient and less competitive. From gossip to excessive personal use of the Internet, the Internet, the, international computer network linking together thousands of individual networks at military and government agencies, educational institutions, nonprofit organizations, industrial and financial corporations of all sizes, and commercial enterprises way employees spend their time affects their company's reputation--and its bottom line.
To combat unethical--and sometimes illegal--practices and enhance competitiveness, a growing number of companies in Mexico are spelling out new ethical codes. More significantly, they are demanding employees live up to these standards, or face serious consequences.
Because corruption in business is intimately connected to government impropriety, the ethical climate will not change without the involvement of both the private and public sectors, human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. experts and government officials said. Although problems persist, government authorities are taking steps to reduce corruption and Mexico is party to several new international conventions that take aim at bribes and other unethical practices.
DARK PATH TO GOVERNMENT CONTRACTS
Last year, the anti-corruption watchdog Transparency International Transparency International (TI) is a leading international non-governmental organization addressing corruption. This includes, but is not limited to, political corruption. conducted a survey about bribes in what it called "15 emerging market countries," including Mexico and Argentina. It found that a large number of bribes are paid in developing countries, by both domestic businesses and those from industrialized in·dus·tri·al·ize
v. in·dus·tri·al·ized, in·dus·tri·al·iz·ing, in·dus·tri·al·iz·es
1. To develop industry in (a country or society, for example).
2. nations, despite the fact that there are anti-bribery laws on the books in many of those countries.
"The laws are not being properly enforced," said Transparency International Chairman Peter Eigen Peter Eigen (* June 11 1938 in Augsburg, Germany) is a jurist. Prof. Dr. Peter Eigen is founder and Chair of the Advisory Council of Transparency International (TI), a non-governmental organization promoting transparency and accountability in international development. when the survey results were released. There is "no doubt that large numbers of multinational corporations
Because laws vary widely from country to country, there is a movement afoot to establish an international, uniform set of anti-corruption rules. In the past several years, there has been tougher enforcement of some countries' anti-corruption laws, and several international conventions on corruption have been signed or are currently being negotiated.
Mexico is one of 35 countries that have signed the Organization for Economic Cooperation and Development Organization for Economic Cooperation and Development (OECD), international organization that came into being in 1961. It superseded the Organization for European Economic Cooperation, which had been founded in 1948 to coordinate the Marshall Plan for European (OECD OECD: see Organization for Economic Cooperation and Development. ) anti-bribery convention and one of 31 parties to the Inter-American Convention Against Corruption The Inter-American Convention Against Corruption (IACAC) was adopted by the member countries of the Organization of American States on 29 March 1996; it came into force on 6 March 1997. It was the first international convention to address the question of corruption. . In addition, a United Nations anti-corruption pact will be signed here in December.
Companies are taking note. Transparency International found nearly half its survey respondents said they were either reviewing their practices or already had a program in place to help them comply with the OECD convention.
"It's a matter of self-protection," said Aliza Chelminsky, who heads Mexico's transparency unit within the federal comptroller's office. "Under the conventions, companies can be fined hundreds of millions of dollars if they pay or take a bribe."
NO MORE MORDIDAS
In Mexico, there has long been an expectation that a mordida, or bribe, is often a necessary part of life.
"The culture is sometimes a little permissive in matters of ethics," said Horacio Andrade, a corporate culture expert at the consulting firm Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee
business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a Sinapsis. Although there is a movement for change, he added, "Mexico has had a reputation for corruption."
Chelminsky agreed. "Many business people have said that it is often easier to pay the bribe than to get through the regulations in Mexico," she said. Her office is charged with educating businesses, government offices and the general public about the benefits of integrity.
"Our main challenge is for the business community to understand that ethics is good business," she said. "If someone ... is issuing invoices for personal business, for example, there is a deviation of the company's human and financial resources."
She also noted that a lackluster ethical reputation could color a company's financial ratings.
"The international financial community, analysts, and the international banks are all paying more and more attention to a company's ethical conduct," she said.
Chelminsky also expects that Mexican consumers will soon begin to use their purchasing power Purchasing Power
1. The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you'd be able to purchase.
2. to rebuke unethical companies, similar to the way many U.S. shoppers chose not to buy Nike products when it was publicized pub·li·cize
tr.v. pub·li·cized, pub·li·ciz·ing, pub·li·ciz·es
To give publicity to.
Adj. 1. publicized - made known; especially made widely known
publicised that the firm was using child labor child labor, use of the young as workers in factories, farms, and mines. Child labor was first recognized as a social problem with the introduction of the factory system in late 18th-century Great Britain. .
To spread the word about ethics, Chelminsky's unit has created extensive training programs and promotional materials for companies and universities to use. They've also persuaded a number of companies--including bread company Bimbo and juice maker del Valle--to display the program's symbol: an unbitten apple with the words "For a Mexico with integrity, no more bribes."
All federal secretariats display the symbol, she said. More importantly, the official continued, each one is also involved in the anti-corruption fight by having its own integrity program and controls to prevent graft.
PUT IT IN WRITING
Increasingly, companies are beginning to formalize their ethical standards. Human resources professionals gave BUSINESS MEXICO some advice for companies just getting started.
First, when starting an integrity program, it is important to remember that ethics is a sensitive issue.
"No one wants to think that their company is not ethical," said Rogelio Villanueva, a representative for the Mayo Foundation and chair of the AMERICAN CHAMBER/MEXICO'S Education Advisorty Council. "But companies have to remember that if everyone knows they have an ethical company, their business will do better and their employees will be happy to work there."
To be successful, it is critical that ethics programs have the commitment of the firm's top executives.
"The program can't simply be left to the human resources department," Chelminsky said. "The ethical ideas must be kept not only in word, but in deed in fact; in truth; verily. See Indeed.
See also: Deed , by people at the highest levels in the company."
This has been put into practice at IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) , which is considered a model for ethics programs. IBM's Mexico general manager Eduardo Razzeto was the person who "put the idea on the table" at the company's semiannual meeting of top executives, said Angelica angelica (ănjĕl`ĭkə), any species of the genus Angelica, plants of the family Umbelliferae (parsley family), native to the Northern Hemisphere and New Zealand, valued for their potency as a medicament and protection against Galve, the computer giant's human resources director. IBM's top executives created the code's core principles and the personnel department fleshed them out, she said. About 18 high-level managers signed a copy of the ethics guidelines, which are prominently displayed in IBM's building.
To be useful, human resources professionals said, a firm's ethical code must be very clear.
"It must be black and white," Chelminsky said. "It must state very clearly what the company will accept and what it will not accept. It must also be clear that if the code is broken, there will be serious consequences."
Experts recommend the company formulate its own ethical codes rather than adopt a standard set of values.
"Only people in the company know how it works and what it needs," said business consultant Andrade. "Its leadership must decide for itself what direction the company will take."
Still, there are many values that companies have in common. AMCHAM/MEXICO'S Education Coordinating Group compared the ethics codes of 17 member companies and found many values shared by half or more of the firms, but the value echoed by all survey participants was integrity.
Andrade said most companies also have common values like quality, service, respect, teamwork and honesty.
Although the specifics may vary, certain values are considered essential. Experts said businesses seeking to implement high ethical standards must adopt a zero tolerance policy zero tolerance policy Substance abuse A stance taken by US government, that any type of drug abuse is punishable by incarceration. See Correctional facility, War on Drugs. toward bribes.
One Mexican food processing Food processing is the set of methods and techniques used to transform raw ingredients into food for consumption by humans or animals. The food processing industry utilises these processes. company, which Chelminsky declined to name, has adopted just such a policy.
"They have trained their drivers not to give any bribes," she said. "This company is willing to pay a fee, to have its trucks impounded and for perishable food to go bad. But it will not pay a mordida."
The policy has paid off financially. "The federal police know they won't pay bribes and they no longer stop them to extract money," she said. Over time, "they've saved more than US$100 million because they're not paying off officials."
Once the code has been written, it is important to share it with customers and other companies with which a firm does business.
"If you have a supplier who is unbound unbound
said of electrolytes, e.g. iron and calcium, and other substances which are circulating in the bloodstream and are not bound to plasma proteins so that they are available immediately for metabolic processes. See also calcium, iron. by ethics, they will harm you because they are part of your chain," Chelminsky said.
In fact, when choosing suppliers, some companies insist they display the same commitment to integrity and intolerance of corruption that the company does. For example, before U.S.-based Office Depot Office Depot (NYSE: ODP) is one of the world's leading suppliers of office products and services. The Company's selection of brand name office supplies includes business machines, computers, computer software and office furniture, while its business services encompass copying, signs a contract with any supplier, it asks to see the firm's integrity program. Cemex, GE, and Merck have similar requirements for their providers.
At IBM, "we share our ethical code with everyone from software suppliers to our food services food services Hospital services A 24/7 department in a hospital that provides for the nutritional needs of inpatients–eg, those needing special diets, preparing meals and transporting them to the floor and, through the cafeteria, the hospital staff and provider in the employee cafeteria," said Galve. "If we are going to offer a whole service and product to our customers, it is important our suppliers have similar values and attitudes as we do."
Although writing the code of ethics Code of Ethics can refer to:
"The company must ask itself, 'How will these values be converted into behaviors? What actions will be consistent with our values?'" Andrade said. "You can have a code that looks pretty on paper. It may read quite poetically, but it won't mean anything unless it is put into practice."
"You have to sell it to the people in the organization. Employees have to be willing to live the values of the organization," he said. "The ethical code must become a reference mark, so that everyone understands the same things."
Jennifer Dorrah iS BUSINESS MEXICO'S contributing editor A contributing editor is a magazine job title that varies in responsibilities. Most often, a contributing editor is a freelancer who has proven ability and readership draw. .
RELATED ARTICLE: * Taking Action
With the aim of monitoring members' needs in the area of business education and promoting programs for greater competitiveness in human resources departments, last summer AMCHAM/MEXICO invited the presidents of five member companies to form the Business Education Advisory Council. In October, that group asked 20 executives to form the Business Education Coordinating Group.
To gauge what AMCHAM should be doing in the area of education, the "Coordinating Group" conducted a survey over two months administered to both chief executives and human resource directors.
While revealing several diverging di·verge
v. di·verged, di·verg·ing, di·verg·es
1. To go or extend in different directions from a common point; branch out.
2. To differ, as in opinion or manner.
3. opinions, the results showed CEOs and personnel directors from member companies broadly agreed AMCHAM should focus its efforts on initiatives that reinforce all aspects related to positive values, ethics and integrity.
In a 2002 study by Transparencia Mexicana, Mexico City Mexico City
Spanish Ciudad de México
City (pop., 2000: city, 8,605,239; 2003 metro. area est., 18,660,000), capital of Mexico. Located at an elevation of 7,350 ft (2,240 m), it is officially coterminous with the Federal District, which occupies 571 sq mi and the State of Mexico The State of México (often abbreviated to "Edomex" from Estado de México in Spanish) is a state in the center of the nation of Mexico. The State's capital is the city of Toluca. were identified as the most corrupt entities in the country, a significant finding that helps justify the concerns of the AMCHAM survey participants.
Achievements made by corporations in the areas of ethics, integrity and values are already beginning to be recognized in Mexico by business organizations. Last November, the Confederation of the Industrial Chambers of Mexico (Concamin) awarded the IBM Corporation the first annual Ethics and Values in Industry prize.