In early September Deutsche Telekom launched a project to place its own corporate culture under the microscope. It is co-chaired by University of Constance professor Stephan Grüninger. An expert in compliance, he explains in an interview why it is sometimes so difficult for companies to act ethically. And how they can make a success of it nonetheless.
Prof. Grüninger you are considered a recognized expert in good corporate governance. What was your first thought when you heard that Deutsche Telekom was placing its corporate culture under a microscope?
Stephan Grüninger: My first thought was: that's brave of them! There are always critics who are just waiting for proof of immoral behavior. They will be very emboldened by such a public announcement. And, of course, Deutsche Telekom now has to deliver. Words must now become actions. My second thought was: at last! At last a company is taking this path. And I am very happy to be able to support Deutsche Telekom in this.
Do you know of any other companies that have launched this sort of project?
Grüninger: Not in this way. There are, of course, companies that measure their culture using compliance and integrity barometers. But I don't know of any that do it so publicly, far less any that have set up a body of undoubtedly independent experts. This shows that Deutsche Telekom is very serious. It is baring all, if you want to put it that way, in the full knowledge that unflattering aspects will also be seen.
Why should companies look at their cultures at all?
Grüninger: Let's not kid ourselves. It's not just for moral reasons, but because demands have risen. There's the risk of ending up in court, but also of reputational loss. And that can be very expensive, as we've seen recently... On higher demands: In Germany, until the 1990s, you were allowed to deduct bribes paid in foreign countries from your taxes. The rules were changed because of pressure, mainly from the USA. Companies now realize that strictly legal compliance management that only respects legislative requirements is not enough. If they really want to prevent systematic misconduct, companies have to tackle their culture. They have to reach employees' hearts and minds.
How does it work?
Grüninger: Analyzing your existing corporate culture is certainly the right place to start. Then the main thing is training: managers and employees should tackle ethical dilemmas using practical examples. It fires discussion. It is the only way to equip them to take appropriate decisions. A compliance-oriented corporate culture definitely requires persistence. Something like that doesn’t just happen overnight. And there will be setbacks.
How does misconduct happen?
Grüninger: The most important reason are improper incentives. Few people harbor a criminal motivation to break laws and other rules. They do so because they believe they must in order to achieve certain goals. That is why goals must be realistic and sustainable. Doubling profits in just a couple of years is certainly not realistic or sustainable. We also have to start with corporate management: they must be a credible proponent of ethical behavior. Employees have highly attuned antennas for this sort of thing. And ethical behavior must permeate all levels of corporate hierarchy. Because employees take their cue mainly from their line managers. And, overall, there must be an open discussion about ethical behavior in the company.
"Ethical behavior" sounds very abstract...
Grüninger: Yes, it sounds excessive, metaphorical or even religious. But companies don't have to look for a "light version of Jesus." Their goal remains to be financially successful and, to do so, they must look out for their own interests. But corporate ethics are still important. Companies need to find an agreement about how they want to behave, and craft rules to that end. But ethics means that rules must be justified. That makes the difference.
Some employees have criticized Deutsche Telekom's project. Does that surprise you?
Grüninger: No. There is always criticism of these projects. The company has to endure the debate. Companies don't just have a single culture, they also have subcultures. And if there is a poor team leader in a store somewhere in Croatia, employees affected by that may use the opportunity to contradict when the company opens a moral discussion. After all, this doesn't fit in with what they are seeing every day. But we should also be realistic about what such projects can achieve. It certainly won't be heaven on Earth. But it can be an important step on the path to a better culture. And it can protect the company from great damage.