EMERGING MARKETS:

Navigating a clash between corporate governance and local customs

 

CHALLENGE

A multinational company operating in emerging markets discovered an individual who had access to the company float was taking money out of the company but replacing it before the new accounting cycle. With strong corporate governance rules immediate dismissal seemed to be the natural decision. However, a board member knew this was out of character and not the norm from one of their best and longest standing employees. They asked me to look into it.

 

INSIGHT

Understanding local customs was the key to resolution.

Traditionally, the village elders were responsible for members of the community, helping where and when needed. Time and technology may have moved on, but customs and traditions tend to remain. The company had built a great deal of trust in the region and within the community. What no-one realised was the company’s reputation in effect made this individual a modern day ‘elder’. Hence, when asked for help, it was his duty to do so. In effect, the company’s success brought unintended consequences and potentially nasty repercussions for local hires.

So how could the company navigate its commitment to building local economies while ensuring adherence to strict governance practices?

 

SOLUTION & OUTCOME

  • Investigated if anyone else was being asked to assist members of the community and themes
  • Created a fund with guidelines on how it was to be used
  • Developed an innovation challenge to find more sustainable solutions
  • Adjusted how the company found and integrated local talent

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