Case Study (1): Opinion 2

Ethics & Compliance Magazine | Year 1, 2016, Issue #1 | Author(s): Ovidiu Virgil Tacu (GRC Professional, Insurance Industry)

Two entities get acquainted. One is enthusiastic, young and eager to prove itself and has a “foreign mother” deciding that it must grow but without sharing the model or rules. The other one is used to handle public resources and it is more aware of the opportunity which repre sen ts itself than the needs it has.

The relationship between the two entities is confronted with two different issues. But, for a new company which desires sustainable growth through an already successful product/business model, it could be more than a bad start, a dange rous business culture and an image that could work against its goals.

The provider’s first business lesson in the public sector was that for winning the contract, collecting the fee and for making the shareholders happy, one has to (i) know the right person, (ii) respond positively to some unnecessary protocol expenses, (iii) give up some margin to a company that happens to be there for unexpected deadlines and uses fiscal paradise bank accounts, (iv) offer access to international internships and (v) even accept to write a recommendation for someone he doesn’t know. On one hand, this kind of compromise will weaken the sales force which in turn will make him realize that not the product, its skills or the client’s needs are determinant for the success of the business. On the other hand, it represents a long living example of the misunderstanding of fairness and values, which may affect other business opportunities in the future.

The second and more important exposure is the company’s image in the eyes of both future clients’ and competitors’ and providers’. They all learned their con ve nient lesson: some for justifying their performance, others for their failure.

Of course, some of the examples of inappropriate conduct could have been prevented if the public institution would have had a proper acquisition system which could offer transparency, multiple offers, non-concentrated decision, values and an internal control system. The company entered the game without any kind of preparatory measures or risk assessment, and also without comparing the facts with company’s rules or values, ignoring all the red flags and making compromise after compromise. Another important mistake was the fact that the same stakeholders with the same pressures were involved in making the business decision, whereas no inde pen dent stakeholder or professional with the necessary ethics and compliance expertise was included.

The negative effect of the image and “new emergent business culture” corro borated with future challenges of the market will make the road to success much harder for the company than if they would share and respect some well established values and rules.

The lesson should be that the values are very important, the rules are necessary and not being illegal does not necessary mean it is the right thing to do.

“Compromise is a word found only in the vocabulary of those who have no will to fight.” Josemaría Escrivá

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