Lessons learnt following brush with the law in the United States
A little over a year ago, Daimler AG launched its first truck in India made from its brand new plant at Oragadam near Chennai. With that, the German multinational redefined the competitive landscape of the commercial vehicles market in the country, not just in terms of quality but also the way trucks are marketed.
Now, following a brush with the law in the United States, Daimler, which has taken a pledge to build its business along with a reputation for integrity, has proclaimed that it would run a clean and transparent operation in India.
Daimler’s decision to bring about a culture of integrity across its business entities worldwide came after it was dragged to court in US over bribery charges a few years ago. The company paid $185 million in 2010 to settle with the U.S. Department of Justice and decided soon after to implement a compliance programme to fight corruption in its business processes. As part of this exercise, Daimler seeks ethical conduct not only of its employees and managers but also of business partners and suppliers. It also created a position in the supervisory board of management for compliance, legal affairs and ethical issues.
“It is a very good example of how companies can learn from their previous mistakes. We are aware that our employees face conflicts especially in the area of corruption. But it is not just a one country phenomena, corruption is an issue everywhere in the world including Germany. Of course there is different order of magnitude. But this is a huge opportunity for us to make a difference and set an example for others. This comes with some commitments and is the only way to change things,” Member – integrity & legal affairs, Daimler Board of Management, Dr Christine Hohmann- Dennhardt, a former judge, told The Hindu during her visit last week to Daimler India Commercial Vehicles Pvt. Ltd.’s (DICV) plant at Oragadam near Chennai.
Dr. Hohmann-Dennhardt, 63, joined Daimler's management board effective February 16, 2011, and is also the first woman on the management board in Daimler's 127-year old history. Her responsibilities include global compliance, legal organisation and business ethics and integrity issues within Daimler.Integrity code
Taking short-cuts in business by resorting to corrupt practices will not only harm the company’s reputation but also damage its interests in the long run, she pointed out.
“There is no use of short term benefits if it is chartered on a very risky territory. Laws are stringent now as it comes with hefty fine. So, organisations have to suffer from sanctions, and, of course, the bigger damage will be loss of reputation and credibility of the brand and products among all stakeholders,” she said adding, “what is the point of having wonderful products — good, reliable and robust trucks — if you are not a fair business player? Losing reputation is much more expensive in the longer run than indulging in practices for short term gains.”
Dr. Hohmann-Dennhardt, who was in DICV’s Chennai plant for an integrity dialogue with employees, expressed satisfaction over the kind of support for such an anti-corruption drive in many markets.
“Regardless of the degree of corruption of various countries, we found that people were always supportive of integrity and convinced about activities pertaining to that,” she added.
Compliance is a central theme at Daimler now. Local Compliance Managers — there are two in India who report to her and to the CEO and Managing Director of DICV Marc Llistosella — are also appointed around the world to provide on-site advice. Besides, the company offers training courses for business and sales partners so that they are familiar with its integrity and compliance codes.
“Our new integrity code was developed based on the dialogue with our employees,” she said.
Dr. Hohmann-Dennhardt also said the compliance team in India is very active in engaging the workforce for integrity issues.The challenge
But how do you meet the challenge of operating in an environment where competitors do not follow the high values that you have set for yourself? Will this not lead to losing business opportunities?
“People of course say that it is a disadvantage if you act differently from the others and the world follows a different logic. We have learnt our lessons and this has been a very painful experience and I can only say good luck to our competitors. It is only a question of time before they are taken to court and they will have to face the law. It is always better to learn from the mistakes of others,” Dr. Hohmann-Dennhardt shot back!
Echoing her views Mr. Llistosella said building social behaviour was as important as developing good quality products and plants for companies.
“If you want to be a front runner in technology, if you want to claim to be the best you have to be front runner in this case too.” DICV, says Mr. Llistosella, is willing to lose business if it comes at the cost of values. “Our understanding is that in the long run reputation goes first, reputation builds trust, trust builds confidence and confidence builds retail. Some people do shortcuts. In this country, we have masters of shortcuts and we also face masters of shortcuts. But we are doing it in a different way and we see already the perception is changing. We see that our suppliers are pleased by what we do with transparency and there are no kickbacks in any of our transactions with suppliers or other stakeholders.”