VII HR Governance and Compliance

Introduction

When doing business, companies must abide by applicable laws and rules. Furthermore, companies are more and more expected to be “fair” and “transparent” from the perspective of civil society.

Therefore, on the one hand companies develop monitoring systems to make sure they act compliant, on the other hand they define their own catalogues of rules and guidelines to ensure internal consistency, fairness and transparency and external reliability, professionalism and quality. If a company has branches in different countries and/or different divisions, a major question is how far these internal rules and guidelines are binding for all countries/divisions or if those units are allowed to create their own. One of the big challenges therefore is to find a level that is globally applicable.

While HR governance describes the active part of steering major sensitive areas of HR (for example, compensation and benefits for executives, expatriates and sometimes middle-management, performance management, major rules of conduct, labor relations), HR compliance means processes to ensure that both the external and the internal rules are being followed (= “complied with”).

Business Ethics

Make Ethics and Values Tangible

When communicating about business ethics and company values, be as concrete as possible. General statements and philosophical terms will not help real-life implementation of ethics and values in a company. Concrete examples with a clear positioning of the company (“No, we will never accept discrimination between groups of people” and “Yes, we have policies on equal work—equal pay” and “Yes we encourage whistle-blowing and also protect the whistleblowers”) make it much more tangible.

Demonstrate Ethical Behavior Top–down

The “tone from the top” as well as corresponding behavior of top management is essential for a sustainable application of values and ethical behavior in the whole organization. People have to feel that it is not “just said” but “really meant.”

Train the Decision Makers

Ethical behavior is understood differently by each person and hence an organization must sensitize and train its decision makers, to achieve coherence in its value systems. This translates into implementing Integrity management programs to sensitize and update the managers around the world on the latest standards on corporate responsibility and corporate governance.

Adapt the Incentive Structures to Your Values

The corporate values would never get implemented in everyday business life if the recruitment and incentive structures do not match it. The employees' motivation to adhere to the firm's values must be in resonance with the personal financial implications of their decision making.

Communicate Regularly and Openly to the Stakeholders

The stakeholders should know the efforts made by the company to meet the standards of corporate responsibility and governance. It should go beyond glossy brochures with smiling faces and talk about the goals set for corporate responsibility, the results achieved and an explanation for non-achievement. In addition to winning their trust, such communication helps in fostering cooperation and support from the key stakeholders, especially in times of crisis.

Do Not Reduce It Just to “Compliance”

Do not suggest in your communication that formal compliance is the only important aspect of ethical behavior. As long as ethical conduct means following laws, rules and regulations, it is merely “compliant behavior.” Integrity Management should be aimed at, at all levels of management to inculcate a sense of integrity from top management to the lowest level of decision making. The real-life proof of ethical intentions and ethical behavior, however, is if:

• there are no laws, rules or regulations governing the decision and/or,

• ethical aspects are in conflict with applicable laws, rules or regulations and/or,

• the decision is in conflict with other targets, e.g. financial targets.

Don't Forget Cultural Differences When Communicating

While the core values of your company should be universal, do not copy and paste respective communication tools from your home/HQ country to the rest of the world. Some examples are just not understood in other cultures.

Don't Overpromise

The more one communicates as “the most responsible firm caring for the environment and the society” ,the more the stakeholders' and the general public's expectation would be. This could seriously damage credibility for the slightest intransigence.

 
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