Tackling corrupt corporate culture

Calls for change in how businesses are done, is growing louder, by the day.
Massive banking scandals and corporate failures across countries have left people, both in leadership and ordinary citizens, screaming and demanding for transformation.
Since the 1980s, after banking scandals such as at Bank of Credit and Commerce International (BCCI), we have heard strong and growing cries for change.

We have seen targeted and piecemeal changes, addressing legal and regulatory frameworks, governance structures, and so forth.
These are reactions which typically limit change to targeted and limited areas.
Thus, in recent banking scandals involving lending rates among banks, in the United Kingdom and United States, stakeholders are calling for changes in the banking culture.

Likewise in Zimbabwe, in the recent challenges faced at Interfin Banking Corporation, we have again heard calls for change in the banking culture.
What does the banking culture change to? What is it that we want to see our banking systems do for us? How should the transformed

banking systems and culture look like?
This vision is missing from the various architectures of change, not just in the banking sector, but across all other economic and business sectors.

It is true that the banking business has metamorphosed from simple retail banking, which encouraged savings, to complex systems, which only a few of the bankers understand, and encourages spending.
Mervyn King, the Bank of England Governor, described this change in the banking industry, as having been, from excessive levels of compensation, to shoddy treatment of customers, to a deceitful manipulation of one of the most important interest rates.

His reaction was that there was need for a real change in the banking industry culture.
We know that corruption and corporate scandals are now widespread in all sectors of economies.
We also know that many people are being hurt by this rampant behaviour in corporations. It is also a common knowledge that corruption destroys economies and countries.

Neither peace, nor development, nor human rights can flourish in an atmosphere of corruption. It is now described as a number one enemy of peace and development, even worse than terrorism. This enemy of the people and societies somehow escapes the full attention of authorities.

Each one defers the responsibility to root out culture of corruption, to the next authority.
In many corporations, people know that there is corruption taking place, they see it all the time, and except for a few top officials, most employees dislike this culture in their organisations. For some, corruption is so unprofessional and so uncool.

Transforming the culture of an organisation may be the most difficult job for a CEO to perform. The culture in an organisation or department is shaped over years of relations among organisational members.
The change process requires statistics, cautious study and good consideration of results.

In Zimbabwe, for instance, we know that the roots of corruption fortified during the period 1998-2008, the 10 years of chronic hyperinflation.
We also know that there is a remnant of upright officials and employees dying to see a culture of integrity once again.
Talking to people, it is easily discernable, that only a minority is benefiting from corruption, the majority are struggling. Look at our

corporations, even those that did suffer much financial challenges, look rugged due to corrupt behaviours.

I believe it is now time for a holistic transformation of corporate culture, to one which upholds profitable business practices, against a culture of stealing.

Holistic, yes but it has to be one organisation at a time. How this be done?
The following discussion contains excerpts from a case study on Siemens, a German engineering and communications company, and how it transformed from a culture of corruption.

The background to this case study is that, up until 1999 bribing foreign officials to secure contracts was not only authorised, but tax deductible in Germany. Siemens was allowed to pay legal fees for employees who got arrested or prosecuted abroad for bribery. The company adopted a culture in which corruption was “a likely business strategy” to enter into emerging markets. As Siemens built its reputation and world class technical achievements, innovations and internationality over 160 years, it also collected a series of corruption scandals and fines. Siemens was blacklisted in Nigeria by Federal Government of Nigeria (Felix Onuah, 2007). As a result reputation and trust were battered. Siemens had no choice but to change its corporate culture and leadership style in order to get rid of corruption.

It must be observed that, Siemens had solid vision and mission statements; it had clear and communicated corporate values, which espoused integrity, but were never followed.

It is true that when leadership in an organisation adopts a certain way of behaviour, employees of that company also follow suit.
The board and senior executives are at the core of corporate culture. It is often argued that if this team is not corrupt, then it becomes easy to rout out corruption.

Siemens tackled its governance structures, by removing top notch CEO, Klaus Kleinfeld, and replaced him with an Austrian. Ethics and compliance functions, to ensure strict compliance to company regulations and values, were introduced at management levels.
Leadership team should also work closely with unions and employees when fighting to remove corruption.
This comes from the wisdom that, though organisational culture transformations start from the top, there must be a buy in from all employees.

Thus, for effective change, leadership must begin to pay more attention and thought to controls and measures on a regular basis.
How do they respond to crises and critical situations?
How do they assign limited resources, promotions, contracts, deals, rewards and status?
All these factors describe the culture that has developed in an organisation.

Corruption is a man-made weapon of destruction, which requires man to detect and dismantle.
Like every change, transforming a corporate culture of corruption, requires renewal of the mind. It takes a higher level of thinking which is above the line of reasoning, previously engaged. If we understand this, then we might not be in a hurry to dismiss company leaderships, but rather make then change agents.

This is particularly relevant in Zimbabwe where the hyperinflationary challenges were a major causal factor for the widespread corrupt tendencies.

In other words, as the economy struggles to rise up and walk, leadership and officials should raise their thinking and voices to explain that corrupt tendencies of the yesteryears are no longer acceptable.
Make that position clear, with boards and executives restraining from sending mixed signals, for instance on promotions, procurement, financial accountability etc, then we can begin to transform companies.

In this, we should be seeing more offices of ethics and compliance being introduced in organisational structures.
Public listed companies and banks should make these functions compulsory.
While it is true that banks have compliance functions within their structures, it is imperative that organisations have ethics officers, basically to encourage and enforce corporate values, which we see inscribed on the walls of many organisations.

Human resources practitioners should be made more active in training and providing mentorship to employees.
In tackling the rampant corruption culture, Siemens restructured its compliance structure and engaged on a comprehensive compliance program.

Siemens hired a co-founder of Transparency International to consult on compliance and hired a well-known United States law firm to investigate bribery scandals.

Top officials and divisional heads were asked to submit joint bids for projects, a measure designed to remove corruption.
The corporate compliance programme engaged by Siemens, focused on three important factors; prevent, detect, and respond.
Under the prevent programme, Siemens concentrated on providing training, propagating awareness and understanding and implemented a control system in order to overcome deficiencies.

To avoid unethical business practices, Siemens provided anti-corruption programmes as part of training for more than 15,000 employees.
In addition, Siemens launched a web based anti-corruption training programme for more than 120 000 employees.
Under the detect programme, the company relied on the loyalty of its employees towards the company, to detect and identify potential problems at the early stages. They motivated and encouraged their employees to actively participate in developing a culture of reliability by

not allowing anybody to violate it in the organisation.

They launched a helpdesk with “Tell us” and “Ask us” functions, so employees were asked to inform the helpdesk if anybody violates the rules.
The response programme forced Siemens to start responding to non-compliance, violation and misconduct through regular and proper sanctioning across each and every departments of the business.

According to the study report, this enforcement saw more than 500 employees being penalised during their fiscal year 2007.
Lastly, communication at Siemens was raised in order to incorporate its new strategic direction of superior ethical behaviour, corporate social responsibility and transparency.

Where there is a will, there is always a way. Corruption is destroying our companies, our economies, our societies, our nations, our future and humanity.

There is need for increased will to transform this culture of corruption, through renewed ways of thinking and visioning. Can there be a greater cause than this?