The most sustainable manner of inculcating a culture of integrity in Philippine society is to get the private sector--academe, civil society, business and the churches--to be the main agent of change. Although we should be happy that the Administration of President Benigno S. Aquino III has assigned the highest priority to fighting corruption in every sector, it would be prudent not to depend on the Government to be the prime mover in fostering honesty. There is no telling who the next President will be and what will be his priorities. Under the principle of subsidiarity, the private sector has the competence, the motivation and the energy to rid society of dishonesty, graft and corruption. It is, therefore, providential that there is now an Integrity Initiative which is a private sector-led campaign that aims to promote common ethical standards among various sectors of society. It operates on the principle of inclusion and collective action. This initiative is being implemented by theMakati Business Club and the European Chamber of Commerce of the Philippines and funded by Siemens.

Business has an important role in this Integrity Initiative. Oftentimes, some business enterprises are the co-conspirators of public officials in perpetrating corrupt practices. As more and more businesses in the Philippines commit themselves to this Initiative, the necessary critical mass of honest enterprises will be reached so that the practice can snowball and the Philippine business community can approximate the transparency of such role models as Switzerland, Singapore and Hong Kong, countries that always are on top of the yearly rankings of Transparency International. In order to explain to the owners and top management of firms in the Philippines what subscribing to the Integrity Initiative would entail, let me enumerate here the changes that will have to happen in every single department of a business.

In previous articles I wrote under this Column, Business and Society, I cited enthusiastically a new management paradigm called Management by Mission (MBM), which is built on older systems like Management by Tasks or Results and Management by Objectives (MBO). By adopting MBM, a company ensures that every one of its departments or units is directly contributing to the mission of the company. It is possible that in a management approach based on MBO, the silo mentality could exist among the various department or functional areas. For example, marketing and finance could be going in different directions as regards the corporate mission involving consumer welfare. Marketing could be doing everything possible to facilitate consumer credit while finance could be harassing the consumers with ever stricter credit terms. Under MBM, both departments would work very closely with one another to give the highest priority to consumer satisfaction.

Those who crafted the Integrity Initiative have come out with a perfect example of Management by Mission. Once an enterprise has signed the Integrity pledge, every one of its departments or functional areas commits itself to make a direct contribution to a culture of integrity. Obviously, the effort starts with top management. It leads by example by consistently demonstrating the value of conducting business with integrity. Its officers strongly communicate its organization's position against bribery, corruption, and unethical business practices within the company and the broader public; comply with all the requirements of government regulatory bodies; and prohibit cover-ups and falsified reports that conceal improper transactions. Management strongly supports integrity practices and allocates sufficient resources for their implementation.

The Human Resources department is committed to instilling a culture of integrity among the employees. It promulgates the policy that management maintains open lines of communication with employees, particularly on matters relating to honesty, transparency, and integrity in business transactions. In the spirit of fairness and due process, all employees have the right to file and respond to complaints against practices suspected to be illegal or unethical. HR assures appropriate tools to confidentially receive, monitor, and act on internal and external complaints. Employees filing complaints will be protected from all types of retaliation, while those involved in unethical practices will be subject to appropriate disciplinary actions. HR also conducts training programs on business ethics covering all levels of the organization.

For its part, Sales and Marketing communicates rules and guidelines on giving/receiving gifts, entertainment, tokens of hospitality, and contributions to/from public and private organizations and their representatives. Employees and all third parties engaged by the company to act as its intermediaries, agents, or representatives are not permitted to offer, promise, or give, as well as demand or accept concessions--direct or indirect--in order to obtain, retain, or secure any undue advantage in the conduct of business. The department abides by existing laws when transacting with government agencies (as stipulated under RA 6713--Code of Conduct and Ethical Standards for Public Officials and Employees and RA 3019--Anti-Graft and Corrupt Practices Act).

Needless to say, the Finance and Accounting department has the most direct contribution to fostering a culture of integrity. It will require all the employees to ensure that all books and records they create or are responsible for are complete and accurate. Its financial records conform to standard accounting principles, comply with Securities and Exchange Commission requirements on disclosure and transparency, and abide by anti-money laundering laws (RA 9160) and international conventions. This department ensures that the company pays all taxes in compliance with laws.

Procurement commits itself to abide with existing laws in vetting third party consultants, suppliers, intermediaries, and agents. It ensures transparent procurement procedures, provides equal opportunities for all suppliers, and prohibits collusion between and among the company's employees and suppliers. The Procurement department enters into integrity pacts with its suppliers and ensures that they comply with the provisions of the pact. It strictly prohibits the contracting of a third party to bribe or commit corrupt practices on behalf of the company.

The Logistics department complies with laws and regulations pertaining to supply chain management. It does not tolerate any breach in existing laws in exchange for undue advantage and unethical concessions or favors. It makes sure that the correct duties and taxes are paid based on transparent assessments of goods and services. Employees are not penalized for refusing to pay bribes or facilitation fees even if the result is failure to meet deadlines or loss of revenue.

Thanks to the Makati Business Club, the European Chamber of Commerce and Siemens, the whole literature on Management by Mission has been enriched by this very concrete illustration of how every unit or department of a business enterprise can contribute to the entire company's mission of inculcating a culture of integrity as it conducts its business. Companies who desire to be part of the Integrity Initiative may get in touch with j.cortez@mbc.com.ph or nonette.climaco@eccp.com. For comments, my email address is bernardo.villegas@uap.asia.

Source: Manila Bulletin; Business Bulletin; 05 Mar 2012