Gift giving vs. Grease payments – A slippery slope

Gift giving is an intrinsic part of investing into the emotional bank accounts/ relationships when you work with your Asian counterparts. For example, you may have heard of the term ‘guanxi’ from the Chinese cultural context, as an act of reciprocation or returning a favor. Understanding the role of Guanxi in business is fundamental to building relationships in China. Giving gifts and returning a favor is a matter of maintaining equilibrium in business relationships.

As business operations expand across cultural boundaries, it is important for leaders to understand the boundaries of culturally acceptable practices vs. landing in border line ethical issues (i.e. making grease payments/ bribery for any improper advantage). This is all the more pertinent when working with government officials in foreign countries.

There are several U.S. laws that address the manner in which U.S. firms operate internationally, two of which are Foreign Corrupt Practices Act (FCPA) and the Alien Tort Claims Act (ATCA) ¹. You may find the interpretation of some of these interesting:

·         Paying a government official to expedite a safety inspection does not violate the FCPA¹

·         Reimbursing his or her travel expenses for the site visit does not violate the FCPA¹

·         Offering the inspector money to ignore hazardous findings does violate the FCPA¹

It is important to understand that cultural differences exist with respect to gift giving and grease payments. This will allow businesses to navigate through the interesting challenges of work with diverse national cultures.

Note:

‘Cultural Imperialism’ is the belief that one’s culture is right and others are wrong.

‘Cultural Relativism’ the belief that right or wrong is determined by one’s culture and there are no universal principles of right or wrong (or good or bad) across cultures.

Neither approach is ideal. While global firms must understand that practices in other countries are often different rather than unethical, they must also ensure that certain minimum standards are upheld. Cultural Competence is a subject that allows you to recognize, respect and reconcile on value differences between nations and avoid making judgments of right and wrong.

 

¹ SHRM- International Employee Relations and Regulations

Seemingly innocuous actions may be offensive to your customer

Is cultural competence more important in one industry than others? Well, let’s take the case of the healthcare industry. Generally we visit healthcare providers in a state of anxiety or vulnerability i.e. when something is not going right. Simply put, we generally do not go to a hospital when we are feeling good right?

The need for cultural competence manifests itself more acutely in situations where we deal with people in a state of anxiety and vulnerability. And when it comes to healthcare, anything and everything is ‘personal’ which makes it a unique challenge. A little story…The day my first son was born, I was in the delivery room with my wife, our new born and my mother-in-law.

The nurse walks into the room and simply does what she usually does as a matter of routine. She is just following the procedure i.e. asking questions to my wife. The conversation goes something like this:

a)      Pointing to me, the nurse asks ‘Is this your husband?’, and my wife says ‘Yes’

b)      The nurse continues to ask, ‘Is he the father of your child?’, at which point my mother-in-law cannot believe her ears.

What a defamatory question is that? How insulting? What a character assassination?

Well, I have to acknowledge that every culture and society has a certain norm around morality. However, in certain cultures the sanctity of marriage and the relationship of a man and wife is sanctity. In many cultures, having a child outside of marriage or being a single mom is a taboo, it is a matter of family honor. Sometimes, seemingly innocuous actions may be offensive to customers/ peers from a diverse cultural group.

What has been your experience in this context? Have you run into cultural challenges specific to any industry? Share your thoughts and insights.