What issues of ethics may companies face as they become truly international
in their operations? How do responsible companies build and
maintain high standards of ethics in highly diverse social and cultural
contexts? Steve Warren, ethics officer of Wendy's, opened the conversation
by saying that the philosophy and values of David Thomas, founder
and senior chairman of Wendy's, have been the basis for the way Wendy's
does business. DOING THE RIGHT THING is the concept instilled
in the work activities of all employees by Dave Thomas. As a result,
Wendy's has always had a code of conduct. This code was formalized in
the booklet, Standards of Business Practices, and is provided to all employees.
Steve Warren then introduced Dr. David C. Smith, president of
the Council for Ethics in Economics, who introduced the panelists.
John Wright noted that the rest of the world is not like the United States.
It is difficult "to get one's hands" around the rest of the world because it
is so different. Statistically, if the world were a village of 1,000 people,
we would find that:
60 have 50% of the income
500 are hungry
600 live in shanty towns
700 are illiterate
In going into other countries, business confronts these situations and
others. In addition, other countries have different value systems and
ethical situations. They are not necessarily right or wrong but are different.
Gift-giving to influence government officials or politicians, for example,
is widely practiced in many other places. U.S. companies are
subject to the Foreign Corrupt Practices Act, which Wendy's honors
strictly. In this law there is a section that allows for facilitation payments
under certain circumstances. The complexities and interpretations
of such circumstances, though, motivated Wendy's to require written
approval of the president of the International Division and the general
counsel before such payments can be made.
Wright explained that, at present, there are 256 countries in the world
and Wendy's participates in 33 of them. It plans to conduct business in
these countries according to its ethical platform. Wendy's will continue
to promote, to the degree that it can within a country,
the values and ethical standards outlined in our manual.
We find, unfortunately, that there are issues we confront
almost daily that conflict with these standards.
Much is not black-and-white, though, and all require value judgments. When all is said and done, if it is not possible to
maintain Wendy's standards in a particular country, then we will not
operate in that country.
Deepak Kanwar recounted his experience in being sent to manage an
office in Belgium where language and cultural differences divide the
country. Faced with many decisions, he found the company's statement
of core values the best help in deciding:
How do you treat customers?
How do you treat people?
What are your social responsibilities?
Business people going to other countries must take a course on the country,
the people, and their values to develop an understanding of situations
they may encounter. As an example, Kanwar described a huge
celebration he arranged following an important business achievement.
Several of his Belgian colleagues attended. Afterward he asked them
how they liked it. Their response was "It was OK." Kanwar thought
they disliked the celebration. Later, though, he found that their response
meant it was a very good celebration.
As a result of such experiences, Kanwar suggested that companies: a)
try to bring personnel from the other country back to the United States to
share their culture and b) develop a corporate culture that a company
can export and adapt to other countries. He ended his remarks by saying
THINK GLOBALLY AND ACT LOCALLY.
THE CONVERSATION
Has the collapse of communism also brought ahout a collapse of
democratic idealism, leaving only financial gain as a value?
Response: Values differences remain. At present the only guidelines
you have are the core values in your corporate culture. This doesn't
solve society's problems but it is a start.
How do you recruit or determine the people
who have the capability to help a company establish
itself in a foreign country and bring
the corporate culture to the new setting?
Response from Kanwar: In recruiting personnel, we believe the following expertise is needed:
Domain knowledge, that is, knowledge of the product we are selling.
Capability of bringing the corporate culture to the job and building
an organization with good communication with open channels.
Capability of building a bridge between the country and the U.S.
Response from Wright: In addition to the capabilities mentioned,
Wendy's wants a functional excellence, hence we spend a lot of time in
operations training and global strategies. We do this to have personnel
who can execute the product so it is acceptable anywhere in the world. In
addition we look for country-specific and language-specific expertise. We
try to put all of this together within a structure that makes sense in a
particular countries culture. We also try to incorporate Wendy's values in
the day-today operating system. Most of our businesses are franchised.
There has been a lot of press during the past few months about U.S.
companies partnering with suppliers overseas whose manufacturing
guidelines permit the hiring of underage youth to produce products.
We are often critical when practices in other countries don't conform
to our standards, but how do people in other countries perceive
the wage practices of U.S.-based multinationals? For example, do
they pay higher rates than are customary? I'm speaking of the partner
relationship that U.S. companies have.
Response: This is one of the toughest ethical dilemmas. What happens
in a Wendy's restaurant? The staff are local nationals who receive a wage
that is well-below the U.S. minimum wage rate. However, how does this
fit into their environment? In such settings the job and pay rate are con-sidered
to be very good. It is good because you get paid; get clothing (i.e.,
a uniform) for the job; and, more importantly, you get a job. When you
look at that in light of the overall environment, the value-added that we
provide for job growth to the franchisee and, in this case, the income we
provide to a young person who will augment the family income, brings
about a higher quality of life for the family.
You might ask why children in India work instead of going to school? It is
a contribution to the family so its members don't starve. When it comes to
the question of companies using sweatshops, the line you draw is (at)
child abuse.
Consider a question about real-world ethical business problems. A
very close friend of mine is a grain broker whose father is one of the
largest grain brokers in the United States. He was in a situation
where there was discussion about corn or beef with a broker in another
country. He said: Yes, we can supply that three times a year.
They said: Well, we have an RFP (request for proposal) and it would
be really nice, if you would like one of those RFPs, to write a check to
us for $100,000. My friend s grain brokerage house was offended and
said: We just can't do that. But, when the French faced the same
offer, they said: Not a problem. So they bid and delivered the RFP.
My question is: Who is God in this ethical role who says that our
ethical standards am superior to the French, or to the Germans, or to
the Belgians, each of which has different ways that are inseparable
from their cultures in doing business? That puts the ethical quiz on
it. Who is the God of ethics?
Response: In my answer to that I go back to my original comments.
When you look at ethics as culturally driven by your core values, and your
core values are set up primarily through a Judeo-Christian type of background
that is very direct, very clear, then right is right and wrong is
wrong. And when we see other cultures, it is not necessarily the way their
values have evolved.
This is what we confront internationally. There isn't a unified set of
values. In your example, your friend is constrained by the Foreign Corrupt
Practices Act.
Response from David Smith: When the Foreign Corrupt Practices Act
was first passed around 1978, the rest of the world did look at this as
sod of an American moralism or moralistic imperialism. But the tide is
timing. More than 50 countries have set up rules, at least on paper,
that are similar. The reason is that we are not looking at this as a
problem of greasing the palms of petty officials but one of large-scale
corruption; not as a moralistic issue, but as a problem that is truly siphoning
off the possible benefits of the global economy from a country
and even a whole continent! So today there are many voices in France
and Germany saying: Maybe these anti-bribery laws are not such a bad
idea. Does a German company, for example, really want to say that we
won the contract away from the Americans because they paid a bribe?
No, they would rather say superior German engineering did it. There
are now movements in Europe to try to pass anti-corruption laws. We
need to uplift the playing field of fair competition.
Question to Kanwar: In some situations you felt that the conre values
of the company were really more helpful to you in trying to
make judicious decisions when the regulations just didn't seem to
apply. What are some of those core values that you thought were
helpful in making decisions?
Response: Nearly all of them. The first is having an obsession with
serving your customer. An example is meeting a delivery date even
though you are expected to go on vacation Some of the others are:
Commitment to business excellence and quality.
Deep respect for the customer.
Team work.
Accountability and integrity.
Strong sense of social responsibility.
Are there situations where people in other countries see ethical
issues that we don't?
Response from Kanwar: I can think of one example-how we in the
United States treat people. In Europe, giving someone two weeks notice
of layoff or termination and then out the door is considered inhumane
treatment of people. One question I have been asked is: How can
you do that to people? Now, there is no easy answer to that question. If
is not a legal issue, maybe not an ethical issue, but an issue of the
treatment of people.
Response from Wright: This is clearly an ethical issue but one that
comes from a different approach. The United States is an intensely
competitive country. We believe in individualism and competitiveness.
The best rises to the top of the process. In other cultures, there is a kind
of collective approach to things. There is competition, but in addition,
the collective good of the overall entity is considered, such as the occasion
when we wanted to get together with others about software pricing.
In this country if we talked to a competitor about pricing, we
would be in trouble very quickly. In other cultures they would ask:
Why wouldn't you do that? Everybody gets the relative value and everybody
wins. This is a difference of approach that you confront in
other countries.
ABOUT THE PANELISTS
John W. Wright is president and chief operating officer of the International
Division of Wendy's. With a background in managing and strategic
planning for international food service companies, he is now responsible
for Wendy's operations involving 350 facilities in 33 countries and territories. John Wright is a trustee of the Council for Ethics in Economics.
Deepak V Kanwar is a Network Systems director for Lucent Technologies
in Columbus, Ohio. Previously he was located in Brussels,
with responsibilities for Europe, the Middle East, and Africa. He earned
his education in India and at The Ohio State University.
Council for Ethics in Economics
125 East Broad Street
Columbus, Ohio 43215-3605 U.S.A.
(614) 221-8661 FAX: (614) 221-8707
