Forbes’ 2019 Global 2000 list of the largest publicly traded companies is representative of 61 countries around the world. When you multiply the number of languages and cultures within each of these countries, it becomes truly apparent how diverse and cross-cultural multinational companies can be.
A global, diverse workforce is a boon to employers whose customer base reflects this diversity. Innovation, creativity, and alternative viewpoints are the necessary ingredients for success in a global, competitive marketplace. But there are hidden challenges to global organizations as well, especially in the realm of ethics.
Ethics can be a function of culture and when cultures diverge, it can be difficult to agree on what is right vs. wrong. Not every issue is easy to frame. And depending on one’s culture, fierce conversations about the proper path forward are not always welcome. What is acceptable in one culture might not be acceptable in another.
The Society for Human Resources Management (SHRM) and Globalization Partners’ 2019 Challenges and Benefits of Global Teams – An HR Perspective survey provides evidence that global offices, located geographically outside of centralized headquarters, lag behind the rest of the organization when it comes to trust, engagement, and feelings of connectedness. This sense of dislocation among global offices can be where ethics discussions break down.
Academics have also documented the difficulty of teaching ethics in a multicultural context. Judith A. Kolb, associate professor of workforce education and development at Penn State, looked closely at this issue. She offered:
“Teaching ethics or a module on ethics is a challenge in itself for those who do not have a background in this content. If an instructor is teaching in a multicultural classroom, the issues are magnified by the variety of cultural backgrounds and opinions represented in the students. The importance of balance comes into play when deciding how to value differences of opinion without leaving the impression that every action one chooses is appropriate. This same question is discussed among ethics scholars.”
In the context of business, leaders are often charged with clarifying for the organization what is acceptable in an ethical context versus what is universally understood. This is part of business leaders’ mandate to set the tone and to establish a culture of ethics.
One way leaders can establish an ethical culture is to encourage members of its workforce to affiliate themselves with professional associations that place an emphasis on ethics, such as IMA® (Institute of Management Accountants). For example IMA’s Statement of Ethical Professional Practice requires every IMA member to uphold the ethical practices established by IMA. These include:
- Maintaining an appropriate level of competence
- Applying accepted rules, confidentially
- Behaving with integrity
- Communicating with credibility
One of the ways IMA provides support in ethics to its members is via its anonymous helpline (to access the helpline in the U.S. call: (800) 245-1383) that any member may call to request how key elements of the IMA Statement of Ethical Professional Practice could be applied to an ethical issue. IMA also offers a wide range of free ethics training to its members and conducts ongoing research into leading ethics practices. IMA members are eligible to take one Ethics course for free (worth 2 credits), per membership year, using an annual token. Each year IMA creates a new Ethics course linked to the token. And when IMA members renew their membership, they are issued a new token for another Ethics course at no charge. IMA currently has six Ethics courses in its portfolio.
For leaders in multinational companies, IMA’s thought leadership in ethics as it applies in this context can be valuable. A recent Strategic Finance article, “Ethics Must Be Global,” shares best practices in implementing a universal ethical framework that does not vary from location to location or from culture to culture.
Authors, Jolene A. Lampton, Ph.D., CFE, CPA, CGMA, CFE, and Babu I. Razack, CMA, admonish leaders to consider the following:
“In international business, many companies operate according to the phrase ‘When in Rome, do as the Romans do,’ which means that when operating in a host country, you adopt that country’s cultural norms, ethics, and business procedures. To some degree, it makes sense to mold your company’s culture to best fit the local area. It’s important to understand cultural differences, but you should never compromise your company’s core ethical values.”
To operate globally without an ethical framework that is well-established throughout the organization is to risk organizational reputation as well as revenue. Consumers are pushing for greater transparency from companies in terms of how they treat employees, the environment, and the public interest. Ethical lapses in these areas can have real consequences on the bottom line. It is not enough for leaders to pay lip service to ethics; rather they must formulate an ethical code of conduct for all employees, at every level, that is universal, not local. This is a multi-step process, documented by IMA in its report “From Values to Inception.”
For more information on IMA’s resources on ethics, visit IMA’s Ethics Center.