Your Supply Chain is as Strong as the Weakest Link – Part I

Photo credit: James Mann

This article originally appeared in the TFM Magazine, Volume 2 Number 13, 2018, p. 32 – 35.

Is the question ‘WIIFM’?

“What’s in it for me?” (WIIFM)

This is the modus operandi most human beings use when making any decision in life. Mostly, making decisions based on this mentality does not cross any of the moral or ethical boundaries that guide society. However, what happens when the ‘WIIFM’ crosses the boundaries of ethics?

Daily, we are confronted by news reports which continually unveil corrupt activities. Of late, there have been email leaks alluding to clandestine operations, the implication of government officials in self-enrichment schemes, poor management of taxpayers’ money, as well as corporate giants supporting suspicious business transactions. For too long there has been a perception that corruption is a victimless crime. However, corruption robs our youth of opportunities and impacts the lives of everyone in any society. There are those corrupt activities which make the headlines; however, there are many more that continue on with impunity and remain under the radar.

One of the most significant barriers to targeting and eradicating corruption is that many do not recognise what it is. It is not a ‘cloak and dagger’ interaction that takes place in some dark alley, rather it is often an open direct communication between two willing participants. For too many, corruption has become part and parcel of doing business today in South Africa. Essentially, corruption is accepting or giving a gift or money, doing a favour to secure or maintain business or turning a blind eye to corrupt activities.

Larger, more established organisations have processes in place to mitigate corruption risks. They understand the extra-territorial reach of international regulators, the reputational damage, and the legal fees associated with an investigation into corrupt activities. They have provided their employees and third-party representatives with training and therefore realise the social, legal or reputational impact of corruption. In many instances, those working for larger more established organisations have witnessed consequences of corruption, such as a colleague being dismissed upon being found guilty of misconduct. However, rarely these processes consider the impact that an unscrupulous supplier might have on an organisation.

Generally, small and medium-sized enterprises (SME) do not have the resources to implement processes to detect corruption. Worse still, corrupt activities are often interpreted as an overall cost of doing business. What SMEs must consider is that any misrepresentation of credentials, payments or favours in furtherance of obtaining or retaining business, participating in anti-competitive business activities, or ignoring such practices, is deemed misconduct.

Preparing for Change

As in any change process, the first step is awareness. In creating awareness, a full understanding of all risks and subsequent consequences of corruption for all parties needs to be laid out clearly. Unfortunately, many SMEs believe that the consequences of corruption are reserved for the larger, more established organisations. In reality, they apply to all organisations, regardless of size.

Let’s face it, communicating the impact of international regulators such as the US Department of Justice or the UK’s Serious Fraud Office will probably not resonate with most SMEs, as they generally conduct business within the confines of the South African financial system.
Therefore, it is imperative that awareness surrounding the consequences of corruption is communicated on a national platform, which targets all types and sizes of organisations. Essentially, South Africa has to remove the ‘WIIFM’ mentality of doing business.

Identifying ‘WIIFM’

Although South Africa has a robust legislative framework to fight corrupt practices, there are rarely consequences that adequately address it. However, the most significant challenge is organisations having the ability to identify corruption in the way they conduct business.

An example of this is Jeremy, who owns a small business distributing and installing solar street lamps. His local Ward Counsellor has advised him that the Local Council is interested in purchasing street lamps through his organisation. However, the Ward Councillor needs his support in the next local election in order to direct this business through to Jeremy’s organisation. This may seem like a regular conversation, however, this is clearly patronage. Unfortunately, Jeremy views this as a fair exchange for securing a sustainable new contract.

Without knowing what constitutes corruption, Jeremy is oblivious to the devastating consequences of such an agreement. Unfortunately, from Jeremy’s perspective and that of many other SMEs, the consequences of him being corrupt do not resonate in this early stage of developing his business. Similarly, telling Jeremy that such a transaction based on collusion would have a dire impact on his business further down the line does not add up.

It is imperative that Jeremy and other such SME’s have a full understanding of what constitutes corruption and the consequences therein. The message must be clear: corruption, no matter the size or the WIIFM mentality, robs society. Additionally, Jeremy’s organisation could be blacklisted or worse, Jeremy could be prosecuted. Once Jeremy and other small business owners are educated and become aware of what constitutes corruption, as well as the devastating consequences of it, there will be a desire to replace the WIIFM mentality with a “Clean Business is Good Business” culture.

This will further instill an understanding that SMEs need ethical leadership to curb the scourge of corruption in South Africa today.

Wybrand Ganzevoort is the Managing Director of Collective Value Creation, which specialises in the development and implementation of Enterprise and Supplier Development (ESD) strategies, with a specific focus on Lean ESD.

Yolelwa Sikunyana is the Founder and Director of Sikunyana Incorporated. She is an attorney with more 14 years in-the-field experience. She has worked with the private and public sectors, specialises in anti-corruption compliance, contractual law and funding agreements.

Your Supply Chain is as Strong as the Weakest Link – Part II coming soon!