For
an ethical company procurement corruption is a nightmare. At times corruption
is evident, but sometimes it is delicately complex and appears harmless such as
when procurement division receives small gifts from suppliers. Even though it
seems insignificant, procurement corruption can affect a company`s financial
well being and its repute. However, there are ways to avert it.
Ethical
culture is one the best things which can be established in a company to avoid
procurement consultancy. This will eliminate people who might be susceptible to
act unethically while encouraging appropriate conduct. Ethical culture must be
adopted first by top level. Every employee in a company from CEO down must be
seen virtuous and accountable in all
facets of their day-to-day.
Establishing ethical
policies and procedures through a code of conduct is a good place to start. This
helps employees make good decisions and provides a framework for dealing with
situations that may be questionable. Hiring individuals who are known for
ethical behavior and training employees to spot red flags encourages workers to
conduct themselves appropriately. It also sends a message that your
organization takes unethical behavior seriously.
Working with ethical
people extends well beyond your organization. Conduct thorough background
checks on all suppliers to ensure they conduct themselves legally and
ethically. Get references and check for potential conflicts of interest between
your organization and suppliers. If you can, learn about their business
culture. Do they focus on ethical practices? Do their values align with your
company’s?
Suppliers may be
subcontracting out. If you don’t want this, make it clear in your contract and
ensure that your supplier has the capacity to fulfill its obligations without
subcontractors.
If you are okay with
subcontracting, obtain a list of the companies your suppliers subcontract
to and look into them. Just because you aren’t dealing with the
subcontractors directly doesn’t mean their (potentially) bad behavior won’t
affect you.
If possible, segment
the procurement process so no individual is responsible for an entire
transaction. This keeps at least two sets of eyes on every step, increasing the
possibility that someone will notice anything that seems ‘off’ and take action.
Among the warning
signs to watch for, according to Deloitte, are poor record-keeping, personal messages between your staff and suppliers
(such as communications via personal phones), conflicts of interests, excessive
gifts from suppliers, overriding of internal controls and resistance from your
staff to last-minute audits.
If your code of conduct
is violated, make sure there are consequences for these types of less-than-favorable
actions-regardless of who violates them. Having policies and practices in place
to discourage unethical behavior goes a long way to preventing procurement
corruption and protects your company’s reputation.