Corporate Governance on Gift

by Obella Marie D. Ronsairo and Francis J. Custodio, DECEMBER 2021

The end-of-year festive season can have an impact on business life beyond office parties and time off work. Ethics and compliance specialists may dread this time of year, as the subject of gifts and hospitality brings up a number of ethical challenges. You may feel like the office Grinch dictating that gifts and hospitality cannot be given or accepted.

There is no doubt that the giving and accepting of gifts and hospitality have an important role in facilitating business relationships and practice. A meal out with a supplier can help build a relationship; a pen with your firm’s name on it can remind a customer of you when they need a quote.

At times, however, the line between what constitutes a gift or hospitality and what constitutes a bribe can be unclear and the acceptance of gifts, services, and hospitality can leave an organization vulnerable to accusations of unethical, or even unlawful conduct.

When is a gift not a gift? First, consider what the point of the gift or hospitality is. Is it to influence a relationship or induce improper conduct? Or is it simply a token of thanks?

Photo by Jill Wellington on Pexels.com

What’s the expectation?

It goes without saying that if the aim is to create an expectation of a “favorable” act in return for the gift or hospitality, then it probably isn’t a gift.

Timing is also of key importance. Are you on the brink of closing a large deal with a customer that if secured, would increase your end-of-year bonus by a not-insignificant amount? Or are you being offered a gift shortly before or during a tendering process?

Consider the appropriateness of the gift and whether it is proportional to the level of the recipient. If a middle manager seeking a new job offers center court Wimbledon tickets to a senior manager in another company, would that be considered appropriate or proportional? Common sense would suggest not.

What constitutes a “lavish” gift or hospitality can be difficult to judge. For example, the duties of senior staff may require them to attend or sponsor events where hospitality is generous. What may seem minor to a senior manager could be significantly more valuable to a junior employee. Sometimes, the exact value of a gift or hospitality can be hard to determine. 

Photo by Anastasia Shuraeva on Pexels.com

Pick the person

Who is the gift for? Giving gifts or hospitality to certain persons, for example, public officials are often construed as a facilitation payment and arouses suspicions.

A principle sometimes applied to determine what is an appropriate level of gift-giving or hospitality is that of reciprocity, i.e., if I accept an offer, am I able to offer the equivalent in value in return? For example: “If my supplier offers me tickets to the theatre, would I be able to reciprocate?” If the answer is “no”, then it may be seen as an attempt to buy favor and it is advisable not to accept.

How can companies support staff? Many companies take a zero-tolerance approach to gift and hospitality giving and receiving. However, this isn’t always the most practical approach and can mean employees find themselves in awkward situations having to publically decline the gift or hospitality.

This is particularly true for employees of multinational companies operating in countries where gift-giving is an important cultural tradition and instrumental in building professional relationships such as the giving of red envelopes for the Chinese new year. Some companies have opted not to implement a global blanket ban, but rather they have set out locally determined limits for the value of gifts and hospitality that may be given or received.

Additional policies might be put in place, such as lowering the value limit on gifts/hospitality or requiring employees to obtain management approval, regardless of the value.

Clear policy

Employees need guidance on the company’s protocol on giving or accepting gifts or hospitality. This includes seeking approval from their line manager or someone more senior, recording it in a gift and hospitality register. Sometimes gifts of a high value might be required to be donated to charity or to the company. Gifts of high value can then be auctioned at the end of the year to raise funds for charity, for example.

Guidance is usually found in a company’s code of ethics or gift and hospitality policy. This will outline the company’s position on gifts and hospitality, what constitutes gift-giving and hospitality, and set out good practices for employees. A gifts and hospitality policy needs to be consistent with all other aspects of an organization’s ethics program in encouraging high standards of honesty and integrity in decision-making and behavior.

So, there’s no need to be a Grinch. Communicate your gifts and hospitality policy to employees and others you do business with; encourage employees to consider the ethical implications before giving and receiving gifts, and offer additional support for those who work in cultures with different gift-giving norms.

This will save both sides embarrassment and, potentially, your organization’s reputation.

Source:

https://www.reutersevents.com/sustainability/business-strategy/how-corporate-gift-giving-can-be-ethical

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About the writer:

Obella Marie D. Ronsairo. Loves to feature life and see the beauty of every side of the stories. Have been with the newsletter team for almost two years since becoming part of the MPTSouth family. Gained a lot of fun, experience and knowledge through this growing team and helped her to develop more of her skills in writing and creativity.

Francis J. Custodio. Is a Industrial Engineer who loves to think outside the box.  Also like the saying “Work Smart not Hard”. Always curious and that curiosity led him to join the Southlink Newsletter. Loves to know “what make things tick”.

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