I recently attended a UN global compact meeting with a focus on supply chain issues. One of the participants who is involved in procurement for a high value global brand, sought to ascertain the credentials of the factories they were using in China. Each of the 20 factories had been fully audited. The system showed that.
But when he pushed to see copies of each report he hit a wall. They weren’t kept on file. Not centrally. With further investigation he found there wasn’t clear information on even where all the factories actually were. Alarm bells rang, he escalated the issue and within weeks the Board had sanctioned an investigation and overhaul of the system. Reputational costs of a scandal related to any labour, health and safety or financial irregularities could be immense. So he and a team flew out visiting the factories first hand to ensure due diligence and risk was undertaken in true accordance with their company’s policies and statements with partners they could rely on.
The individual, to me, acted with true objectivity although short-term costs could increase, the overall interests of the business were served and a risk in the longer term averted. He no doubt annoyed a few colleagues when he first escalated to the Board, and asked the "difficult" (to me fundamental!) questions. But try to imagine the longer term fallout. The cost to the brand could be disasterous. The factories they work with now have assistance and guidance in both understanding and meeting global requirements. This helps support, in turn, their long term success and standing with other customers. Far preferable than just having ticked the right boxes, which without substance will not stand up under scrutiny. And neither would your character.
With the ethical conduct of business making front page news, CIMA has facilitated a number of roundtables with senior finance executives worldwide asking if they ever feel compromised not to do the right thing when partnering in the business and how to respond. The results, have been compiled into a global report Fact or Fiction – the independent business partner? which shows both commonalities and variations of the barriers faced by finance business partners across different markets.
Business today relies on partnering and collaboration and in turn finance needs to support and drive better decision making and value creation. Whilst technical skills are viewed as a given, individuals who wish to succeed need to have not only strong influencing and communication skills, but the ability to exhibit independence and objectivity in the interests of the business as a whole. The demand for these attributes is increasing in every market where we held discussions.
Finance professionals can feel pressured when trying to offer unbiased or unpopular assessments of sales targets, bonus payments, procurement deals etc and are at risk of losing their reputation for independence. For example, in South Africa maintaining independence and integrity are major problems vis-a-vis self-interest and in the UK a lack of leadership support can hinder finance business partnering. In Poland and Central Europe the use of business partnering is very new, but increasing and a cultural shift in Asia is needed, enabling individuals to feel comfortable challenging superiors on business critical issues.
As the focus increases on the unethical actions of companies worldwide acting with independence and guiding the organisation to do the right thing has never been more important. And the costs for not doing so have never been higher. So do you have the professional courage to challenge? Review the report and videos and take 15 minutes to do the reflection exercise to identify your strengths as well as what you may need to develop.