I recently moderated a panel discussion focused on the impact of COVID-19 in Latin American business. It was co-created with our partners at Refinitiv—an LSEG (London Stock Exchange Group) business and one of the world’s largest providers of financial markets data and infrastructure. The panel, “Compliance before and after Covid-19: What has changed and what can we expect for the future?,” explored how some of the region’s leading companies are addressing the COVID-19 crisis and how they are adapting their ethics and compliance programs as a result, turning to their values and technology to overcome the challenges. Panelists included:
- Dalma Parisi, Head of Compliance for South America at Siemens
- Laura Ramos, Head of Compliance at Blackrock Mexico
- Sebastian Segovia, Corporate Manager of Governance, Ethics, and Compliance at Falabella
While the panelists spoke from the perspective of working for multinational companies with a strong regional presence, they shared insights on corporate culture, ethics, and compliance that resonate specifically with the current challenges and opportunities facing Latin American businesses today. Here are four main takeaways from the discussion.
Company values help organizations cope with COVID-19
The panel agreed that companies with effective ethics and compliance programs have been using the pandemic crisis as an opportunity to cascade their values, improve systems and procedures, have a technology upgrade, and strengthen the relationship with the business. This is consistent with findings from the LRN 2021 Ethics & Compliance Program Effectiveness Report, where 82% of respondents (legal, ethics, and compliance professionals) stated that they emphasized values rather than compliance rules and procedures to motivate employees to do the right thing during the crisis.
Panelists also discussed how companies with values-based E&C programs integrated into their business before the pandemic have only seen their programs become more necessary and relevant during the crisis. Meanwhile, companies with “check-the-box" programs are experiencing more challenges where the E&C function is often isolated and sidelined. Data from the LRN report echoes these sentiments as well:
- 85% of respondents states that leaders responded to the challenges in a way that is consistent with the company’s purpose and values.
- Nearly eight out of 10 (78%) reported that their company’s ethical culture is stronger as a result of it navigated COVID-19.
Collaboration remains key to navigating E&C challenges
Panelists talked about how the main challenge ethics and compliance functions face is the need to balance being agile—helping the business adapt and respond to the crisis—without weakening controls. According to the Refinitiv 2021 Global Risk and Compliance Report, 73% of respondents (risk and compliance professionals) agreed that they were under extreme pressure to increase revenue. Another 65% said the pandemic had forced them to take shortcuts.
But how are organizations navigating the COVID-19 crisis? Taking a multidisciplinary approach has been critical. Ethics and compliance functions served as connectors, helping put together the right teams and areas to lead the crisis response. The panel agreed that alliances with other department areas are key to forming effective strategies. There would have been no way to address the main risks of the pandemic without understanding that this was a collective challenge. “Think of cybersecurity and data privacy risks related to the shift to remote work,” said Ramos. “Without collaboration with the IT department, HR, and internal communications teams, many organizations wouldn’t have been able to do anything.”
This is particularly relevant for the Latin American region. Ethics and compliance functions are still relatively new to Latin American businesses and therefore don’t have sufficient staff and budget to have the impact they need. In a 2019 article from Americas Quarterly, Maria Fernanda Teixeira, CEO of Integrow, shared that while most companies in Brazil have one or two workers in compliance and risk management to meet regulations, they are not always the best talent, “have no power,” and often do not have access to top management. “They just follow orders” because their bosses are focused solely on boosting profits, she said. In the same article, Matías Nahón of Berkeley Research Group stated that it will take a couple of decades for Latin American businesses to view ethics and compliance as “an asset to support long-term growth” rather than “a cost that slows decision-making.” Despite recent research that shows considerable business value right now.
Employees can help amplify ethics and compliance efforts
Panelists discussed how E&C teams of Latin American businesses can harness the power of their fellow employees to reinforce key initiatives. One way to do this is by developing an ethics liaison program (also referred to “ethics champions” or “ethics ambassadors”) in which employees of different areas serve as ambassadors of the ethics and compliance function. Ethics liaisons help maintain constant connection between employees and the E&C staff, cascade key messages, and identify gaps and new risks.
In order for this type of program to be successful, ethics liaisons need to be empowered and know that the organization’s senior leadership truly values their efforts. For instance, Parisi talked about how ambassadors at Siemens are selected after a rigorous process and then informed through a letter signed by the CEO and their direct supervisor. Also, the company publicly acknowledges and thanks its ethics ambassadors through external communications.
Remote work has made communication with E&C teams even more important
The panel talked at length about the challenges organizations in Latin America have faced by “going virtual” and working remotely. In a region were face-to-face interactions are critical, most companies had their ethics and compliance activities in person before the pandemic. However, panelists argued that remote work has advantages and disadvantages:
- On the one hand, remote work made many cultures “flatter,” more horizontal. Employees now have more access to senior leaders, and people are showing more vulnerability with each other.
- On the other hand, working remotely has made it even more difficult for E&C teams to identify issues and gaps. When working at the office, employees would usually stop by the office of the chief ethics and compliance officer to raise a concern or even ask questions. Now, communication feels more disconnected.
Remote work has also impacted the process of reporting misconduct. Segovia mentioned that Falabella created a weekly summary of all helpline reports related to the COVID-19 crisis that was sent directly to the business unit. The summary helped the business make better—and faster—decisions. The company also trained its investigators, using psychologists and behavioral experts, to develop tools and skills in order to perform online interviews effectively.
The key takeaway
Companies that are either based in Latin America or have activity in the region have a responsibility to structure their ethics and compliance programs around corporate values. Tapping into other departments as well as the broader employee base to communicate those values is an essential part of the process. To learn more, check out these additional resources:
- What is a “best practice” when we’ve never been here before?
- 2021 Ethics & Compliance Program Effectiveness Report: Meeting the Covid-19 Challenge
- Ethics liaisons: 6 best practices for compliance program effectiveness
You can also learn about our E&C initiatives in Latin America by going to the LRN Latinoamérica section of our website.