Saturday, December 1, 2012

Integrity Policies: Intent & Practice

A recent conversation about Integrity Policies of large corporations had me fuming!  Big companies love strict policies that prohibit their managers from taking that sixty dollar pen from a client on Christmas.  Unfortunately, in many cases, that is about the biggest impact the policy makes on the company’s societal behavior.
The policies one sees commonly often have only one objective: to ensure the company keeps its hands clean when things go wrong… "we told you not to do it!"

The problem is not with the idea of an integrity policy.  It is with the Management that wants the policy, but not its full impact.  They still want that business in that "third world" country, and that contract from the company which demands something more than the price.  It does not have to be procurement alone that is involved.  In fact it may not be a purchase or sale at all.  It could be the rights to build an office or dam, carry on business in a place the locals (or the local government) do not want, or even access to a market protected by local mafia.
Most companies I know have difficulty letting that business go away to competition (always on the presumption that competition does not have any issue with such deals).  They want the job.  Most smart managers in these companies -- steeped in its culture --  know exactly what to do.  They may, at best, bring it up while having a drink with the boss.  Most savvy managers would not do even that.  They know the boss knows.  They just 'fix' the problem. 
The best known solution is to outsource the entire function to a local entity that knows its way around.  The cost of the transaction and the demands of all related parties are taken care of via a ‘transparent’ procurement policy.  A clean invoice is produced for valid, legitimate services and nobody could be wiser.
Lesser managers take undue risks.  They arrange pay offs within their powers, disguising them with legitimate descriptions, and take credit for "achieving the impossible".  These ‘practical’ managers are often celebrated -- as long as things are going fine.  A hall mark of such managers is that they tend to be kept in the same position for a long time.  Designations may change, but they are kept responsible for that job, so the company gets to benefit from their excellent relations with locals.
I hope these managers realize they are risking their careers for the sake of some temporary gains, and, importantly, that they subsidize the jobs of their bosses.  The bosses who protect these managers are real evil.  They are the ones who enjoy the upside of the transaction, while remaining the “guardians of integrity” in their company and put the careers of naïve managers at risk, often knowingly.
For the company, these bosses are the critical, “must have” people who make Integrity Policies work while facilitating operations.
My problem with such integrity policies is the mockery it makes of the concept and the way it is used to trap naïve lower level management, whose loyalty to the company (or fear of losing the job) overshadows both personal and corporate values.   Indeed, many of those responsible for making such policies are not unaware of the ways in which it can be bent where required, and often ‘facilitate’ practical exceptions through appropriate use of language and governance mechanisms.   
This is in fact a different policy in the guise of integrity.  It’s called, "Don't ask, don't tell".
The sad part is that it works – at least in the short term.  The seniors are protected; the masses – both inside and outside the company -- are ’inspired’ by the policy; the naïve loyals, who are few and carefully chosen, are rewarded for their loyalty.  The company grows without hindrance.
In fact, even when things go wrong, it can be handled discreetly, by “letting go” the misguided employee and reiterating the integrity policy to the press, as well as internally.
The only thing that does not work is integrity.

-- Sri