JUNE 19, 2019
Navigating Culture One Facet of Ethics, Compliance in Latin America
Companies doing business in Latin America not only have the task of forging compliance programs based on ethical values and getting buy-in from employees at all levels of the organization, they must do so while addressing issues unique to the region’s culture.
An LRN webinar last week featured two ethics and compliance experts working in Latin America to talk about some of the ways they tailor their programs to better engage employees, regulators and other stakeholders in the region.
The webinar was moderated by LRN’s Susan Divers, who spoke with Reyna Torrecillas, chief compliance officer of Latin America for GE; and Juliana Darini, global ethics and compliance officer for Natura & Co.
One of the topics covered was about the Latin American culture of gift giving and facilitation payments, and the effort to educate workers about what is appropriate. As a U.S.-based multinational under the jurisdiction of the Foreign Corrupt Practices Act, Torrecillas said GE enforces a total ban on facilitation payments.
“We talk about that a lot, and make sure employees understand,” she said.
As for giving business gifts, or taking people to dinner, GE requires employees to get preapproval for spending above either threshold levels established by individual countries, or through limits set by the company, usually less than $50, she said.
“What is the purpose of the interaction? Are there any ongoing deals or negotiating with a particular government official? What is the business rationale to do it? Why not do it another way?” Torrecillas said of some of the questions that are asked. The compliance team then reviews the information, and rules on the request.
Natura has a different structure, as it is comprised of three companies--Natura, Body Shop, and Aesop--operating under the Natura & Co. umbrella, said Darini. So rather than cascade down a set of principles for employees at all three companies, Natura respects the different cultures that exist at each entity.
That said, there are some policies that are non-negotiable, such as no facilitation payments, and checking with legal and corporate affairs before entertaining a government official, she said. Values are reinforced through the code of conduct, communications, and training, with controls in place, as well.
Natura bases compliance officers in the regions in which it works to understand how business is conducted, said Darini. Officers hold the companies to the core standards, but allow for some flexibility in other parts of the operation, she said.
These compliance officers help drive the importance of ethics and compliance throughout the organization, and can help business leaders understand why the rules are needed, and what risks they are designed to mitigate, she said.
Knowing the why
Torrecillas said it’s important for employees to understand why policies are in place, and what risks are being prevented. This is something GE works to communicate, and to help drive awareness, she said.
“It really helps to drive engagement and commitment and to ensure the team is fully onboard,” said Torrecillas. It further matters if you want employees to report problematic behavior, but you can only drive that “when employees understand why they have that environment.”
To build that culture, GE relies on a network of “people leaders” who come from all ranks of the company, but who share a passion for ethics and compliance and can serve as ambassadors.
GE developed training and specific programs to help engage and inspire this group, and brings them together to connect in person, she said. The teams talk about compliance, and review real-life examples of incidents that happened at GE.
“We produce videos and use storytelling to understand what happened, why it happened, what we learned, and how to prevent it from happening again,” said Torrecillas.
In addition to reporting to the board’s auditing committee, Darini said compliance holds a separate meeting with business unit leaders to discuss trends raised through the hotline, and about the compliance program itself. They talk about recent scandals, and consider where they may be at risk of becoming a scandal themselves.
It’s vital to analyze data from the hotline and to address specific issues being raised, all while offering guarantees of no retaliation. When there are disciplinary decisions to be made, Darini said they are done by a group comprised of compliance, legal, HR and an employee representative.
“They are responsible for taking these types of decisions,” she said. “As the person responsible for global compliance, I make sure there is an aligning of all decisions to guarantee there is an equality among the different businesses.”
The practices outlined by Torrecillas and Darini are those seen in the high-profile ethics and compliance programs identified in LRN’s 2019 Program Effectiveness Report.
Those top-performing programs share five characteristics. They:
- Go beyond meeting regulatory requirements to emphasize ethical behavior;
- Directly affect business decisions;
- Permeate their organizations and stakeholder groups;
- Take concrete steps to drive ethical behavior; and
- Take a proactive and comprehensive approach to managing risk.
Each of the speakers illustrated key points in the report, said Divers. “Make it real, focus on values, make sure to work across corporate silos, involve stakeholders in the process,” she said.