perception of business ethics in slovakia...to quantify their perception of business ethics (in the...

NA CESTE K TRANSPARENTNOSTI

Slovak Compliance Circle SurveyApril 2015

Perception of Business Ethics in Slovakia

Introduction Main topics Are companies familiar with and dedicated to the compliance topic?

How do they perceive sticking to the “fair play rules” in making business?

Does fair play represent a competitive advantage, or is it just the way to bankruptcy?

Can small companies afford to be fair, or is it a luxury for big players with a stable market position?

What are the main barriers for ethical business conduct?

How confident the respondents are about the ethical conduct of own employees and other business players?

What are the key factors determining internal ethical climate?

Can the internal ethical climate be influenced by activities aimed to improve the external environment?

1 © 2015 Slovak Compliance Circle

In 2014, SCC historically conducted its first survey focused on mapping the status of percep-tion of business ethics in Slovakia. Over one hun-dred Slovak companies of various size and business focus participated in the survey. This diversity contributed to the interpretation value of the survey.

Some important conclusions can be attained from the results of the survey and are presented in this report. The key message is that the Slovak busi-ness community realizes the gravity of the level of ethical standards generally accepted and applied by the Slovak business community and the impact thereof on their businesses. Compa-nies, regardless of their size, are not only engaged in the topic, but also ready to participate in related activities.

The companies seem to be quite sceptical of the conduct of other market players while expressingrelative confidence in ethical conduct inside their organisation.

Although many of them report experiences with losing business due to unethical behaviour of competitors, the respondents sent a very clear message that adherence to ethical principles while doing business is the right long-term strate-gy for development of their business.

On the following pages we would like to share the particular findings with you and provide a more detailed insight to particular areas of the survey.

For more details on the methodology of the survey refer to the section About the survey.

A taste of our findings

NA CESTE K TRANSPARENTNOSTI 2

88%of respondents perceive business ethics in Slovakia negatively

p. 4

“Relativity applies to physics, not ethics”Albert Einstein

48%of the companies confirm havingexperience with losing businessopportunities due to unethical conductby competitors over the last 3 years

p. 9

3.3 vs. 2.7 vs. 1.9were average scores (scale 1 to 5, 1being the best) assigned by respon-dents to the market, their sector and company when assessing the level of business ethics generally applied.

p. 4

65%of respondents feel confident that proper ethical business conduct cannot be destructive to their company

p. 9

Pointing fingers at others or fear from unknown?


3.3 2.7

1.9 2

3

1

4

5

Market Own sector Own company

4%

35%

53%

6%

2%

1%

21%

38%

31%

7%

2%

0%

16%

47%

35%

0% 20% 40% 60%

5

4

3

2

1

Assessment of internal climate

Assessment of their sector

Assessment of the market

An interesting trend was observed when compa- ring respondents’ perception of the overall market, their industry and own business from the point of business ethics: A rather negative perception of the overall market situation turns into a more positive assessment in the respective business sector and rather optimistic perception in their own company. This gives rise to several questions: Is the Slovak business community too sceptical about “the others” while being overly confident about their integrity? Could a lack of self-criticism or honesty have played its role? Or are the Slovak business players simply afraid anddistrustful of sectors and areas they do not know?

Respondents were asked the following questions: Market assessment: How would you assess the Slovak business environment from the perspec-tive of morale and business ethics applied in business conduct?Assessment of their industry: How would you assess the business environment within your sector in Slovakia from the perspective of morale and business ethics applied in business conduct?Assessment of their climate: How would you assess the internal climate of your company from the perspective of adherence to and respect of ethical norms?

To quantify their perception of business ethics (in the market, their industry or company) respondents graded it using a scale of 1 to 5 with 1 being the best and 5 being the worst.

•

•

•

On average, respondents consider the overall situation in the Slovak economy from the perspective of business ethics rather negatively grading it with an average score of 3.3, while 88% of respondents graded it 3 or 4.

Chart 1: Average perception of business ethics at the whole market, in their industry and company

Chart 2: Grades assigned by our respondents when assess-ing the whole market, their industry and own internal climate

Chart 3: Assessment of the market situation by positions*

Chart 4: Assessment of the market situation by industry*

*Average score (on scale 1 to 5, 1 being the best)

Chart 5: Primary cause of the market situation

12%

19%

23%

46%

0% 10% 20% 30% 40% 50%

Shortcoming in legislation and regulations

Other

Shortcoming concerninglaw enforcement

Cultural heritage, shared valuesand tolerance of misconduct

3.0

3.3

3.3

3.3

3.4

Other

Executive director,statutory representative

Compliance officer,inhouse counsellor

Manager

Owner / shareholder

3.2

3.2

3.3

3.3

3.4

3.4

3.5

1 2 3 4 5

1 2 3 4 5

Consumer goodsindustry

Other

Manufacturing

Telecommunications,Technology & Media

Service,Transport & Logistics

Financial services

Construction, RealEstate & Development


While the perception of the market situation was relatively consistent among all positions of the respondents, the view of company owners, was slightly more negative than the those of respon-dents in other positions.

The most negative perception is shown by repre-sentatives of the construction/real estate industry and service providers (combined average 3.5), compared to best perception which is shown by the consumer goods industry and other more niche sectors (average of 3.2).

Challenging heritage46% of respondents determined that cultural heritage, shared values, as well as overall tolerance of misconduct to be the greatest influence. Other respondents considered insufficient law enforcement (23%) and legislative deficiencies (12%), a combination of mentioned factors or the general state of the economy to be the main cause. The latter reasons were mostly named by respondents with more technical insight into the business ethics topic, e.g. those with responsibili-ty for compliance, legal or internal audit agenda.


*Average score (on scale 1 to 5, 1 being the best)

1.6

1.7

1.8

1.9

2.1

1.8

2.0

3.0

3.0

2.7

2.9

3.0

2.1

3.1

3.2

3.2

3.3

3.3

3.4

3.4

3.5

1 2 3 4 5

1 2 3 4 5

Consumer goodsindustry

Other

Manufacturing

Telecommunications,Technology & Media

Service,Transport & Logistics

Financial services

Construction, RealEstate & Development

2.0

2.0

2.1

1.6

1.4

2.6

3.1

2.2

3.0

3.0

3.0

3.3

3.3

3.3

3.4

Other

Manager

Compliance officer,in house counsellor

Executive director,statutory

representative

Owner / shareholder

Market Own industry Own climate

Market Own industry Own climate

Business owners are more critical of the ethics levels in the overall market than compared to their own businesses.The perception of the situation in their specific sector was, on average, considerably more posi-tive than of the entire economy, reaching an average score of 2.7 (see the Chart 1 and 2). It is interesting that even the sectors generally considered high risk from the point of unethical behaviour (for example construction or IT) rate the overall market considerably worse than their industry. This might be due to subjective factors,such as the overall social atmosphere and the power of media. The most confidence about the situation in their sector was demonstrated by respondents from the financial industry, grading the situation in their sector at 2.1.

Even more positive were respondents’ percep-tions with regard to the principles of ethical busi-ness conduct in their respective companies – the average self-assessment score reached 1.9. (see the Chart 1 and 2)

Certain interesting contrasts are observable when looking at responses through the position of the respondents: owners seem to be overly optimistic about the situation in their business (score 1.4), while being the most sceptical when assessing the situation in the overall market (average score of 3.4) or their industry (average score of 3.0). On the other side, compliance officers and lawyers were rather sceptical when assessing the situation in their own company (score 2.1) com-pared to other managers/business owners.

Chart 6: Comparison of perceptions of the market, their industry and their climate by different positions*

Chart 7: Comparison of perceptions of the market, their industry and their climate by different industries*


41%

46%

13%

Disagree Partially agree Agree

The biggest optimists are compliance officers and internal lawyers – 47% agreed and 47% partially agreed. The most sceptical is the group of managers – 28% disagreed with this statement.

14%

55%

31%

The most sceptical view was provided by executive officers and managers – almost 20% of such respondents agreed. The lowest rate of affirmative responses reported owners and compliance officers.

Ethical conduct seen as a competitive advantageA closer look at the perception of the situation in respondent’s own sector indicates an important message – the market does not see unethical conduct to be a success factor. Although most of the companies admit having suffered losses due to the unethical practices of others, they do not see a strict commitment to ethical principles when doing business to be a potential destruction factor for them. On the contrary, two out of three respondents see ethical business conduct as a competitive advantage with positive effects in a long-term perspective.

In spite of the fact that respondents perceive business ethics standards applied in their compa-ny much better than the situation in the respec-tive industry, they do not believe that most of the companies within their industry became success-ful with the support of unethical practices tolerated by management, only 13% respondents gave positive answers.

Chart 9: Majority of players in our industry strive to consistently implement ethical principles when doing business (for example by refusing corrupt behavior in practice, not only formally).

Chart 8: Do you agree that most of the companies within your industry became successful with the support of unethical practices (such as corruption) tolerated by management?

On the other side, the fact that almost half of the respondents partially agree with that statement suggests there is not too much optimism either about the conduct of competitors. This is confirmed by the fact that only 31% of respon-dents agree that the majority of the companies in their field strive to consistently adhere to ethical principles.

Sceptical Telco, IT and mediaThe encouraging results outlined above were achieved consistently among representatives of all industries, except for telecommunications/IT/ media sector – almost 42% of respondents from this group believe that most of the companies in their industry became successful with the support of unethical practices tolerated by management.

Disagree Partially agree Agree


Managers and owners were really sceptical - 2/3 of them answered yes, as compared to other position where affirmative answers were provided by cca 1/3 of respondents.

The most sceptical responses were obtained from the Finance sector - almost 2/3 of the respondents from the sector answered “yes” and none responded “no”. On the other side, these respondents assessed the situation with unethical conduct in their industry much more positively than other industries – see the Chart 7.Almost 3/4 of owners

and compliance officers refuse this statement. Mangers, executive and other positions are less convinced (56 – 62% refused the statement).

65%

31%

5%

Disagree Agree Strongly agree

48%

8%

44%

Yes No Not able to evaluate

Almost 50% of companies (especially from the transport/logistics, service, telecommunications/ IT and finance sector) confirm having experience with losing business opportunities due to unethical conduct by competitors.

Despite this fact, a comparable share (43%) of respondents consider the proper application of ethical principles in their business conduct as a basis for building a competitive advantage that will bring business success in the long-term horizon.

None of the respondents from this group agreed with the statement that most of the companies aim to consistently apply ethical principles when doing business, on the other side – only 25% totally disagreed with the statement (75% partially agreed).

A commitment to ethical conduct results in lost business, but it is not fatalIt is very positive that 65% of respondents expressed confidence that thorough ethical busi-ness conduct cannot be fatal to their company. In this regard, the view of professionals seem to be in strong contrast with the overall public’s percep-tion. The 5% of respondents who think ethical business conduct can be destructive are rather small companies that are more dependent on winning single business opportunities.

Chart 11: Do you believe that your company has lost a business opportunity in the last three years due to the unethical approach of competitors?

Chart 10: Enforcement of ethical principles in business practice in our country is destructive for the company.


2%

9%

10%

13%

23%

43%

0% 10% 20% 30% 40% 50%

Other

Business limitation withoutpotential to bring future

benefits in a long-term horizon

Business limitation withoutpotential to bring future

benefits in a short-term horizon

No significant impact

Competitive advantage thatbrings its benefits already today

Building competitive advantagethat will bring business success

in long-term horizon

An additional 23% of respondents are sure this competitive advantage brings its benefits already today. We are pleased to see that this opinion is not just the domain of compliance officers as more than 30% of CEOs and company owners shared this notion. The same portion of respon-dents are sure that most companies in their industry thoroughly pursue principles of business ethics, e.g. by refusing corruptive practices.

Only 19% of respondents see it as business limitation without potential to bring future benefits.

Chart 12: Which of the following best captures the impact of strict adherence to moral principles and ethics in business in your area for the successful run of your company?


Factor Score

"Tone at the top" - demonstrate the application of the defined values of leadership

1.7

Cultural environment and setting the values of the company

1.8

Values setting within the group (for multinational corporation)

1.8

Defining the values of society and accepting the ethical guidelines

1.9

Setting the control mechanisms within the company aimed at preventing corruption or unethical behaviour

2.0

Active and targeted work with employees, efforts to raise awareness of shared values and ethical standards among staff

2.0

Setting the formal rules within the company in order to avoid corruption or unethical behaviour (e.g. a code of ethics, guidelines, etc.)

2.1

Value setting within the Slovak business environment, respectively industry in which we operate and the behaviour of other market players in our sector

2.3

Morale demonstrated by the public sector 2.8

Looking at home – a confident viewRespondents were asked to grade listed factors based on how important they are for the climate of the company using the scale 1 to 5 with 1 being the key factor and 5 being a factor with no impact.

Cultural factors were named as the most influen-tial. These include “tone at the top” – living of values as demonstrated by management, cultural setup of the entire society or, in the case of inter-national companies, culture and values demon-strated by the parent company.

Other factors with a significant impact are trans-parent definitions and declarations of corporate values, combined with sensitive work with employ-ees in order to raise awareness of each. Design and implementation of preventive control mecha-nisms and formal rules of ethical conduct, were assessed on approximately the same level.

Companies apparently put a lot of focus on com-municating values – more than 60% of respon-dents declared that their employees are familiar with pursued and communicated corporate values.

It is interesting to observe that all eight out of nine factors scored between 1.7 and 2.3, while the morals demonstrated by the public sector scored 2.8. As the situation in the public sector is in general referred to as the key part of the corrup-tion problem in the Slovak environment, it is encouraging that there are many other factors through which the business community believes it can influence their integrity climate.

It was important to obtain respondents’ opinions on key factors that determine the level of busi-ness ethics in their corporation. Values – their existence, definition and demonstration of com-mitment to them was common for the top four ranked factors. Measures increasing awareness of ethical principles, establishing formal rules and control mechanisms are also perceived to be very important. On the other side, morality demon-strated within the public sector, which is often named as a significant driver for non-ethical prac-tices in general on the market, was ranked as the least important.


Chart 13: I believe that employees in their work consistently apply ethical principles.

Chart 14: Sporadically corrupt practices of employees may occur also in our organisation. We consistently intervene against such practices.

Chart 15: I believe that all employees understand the values that we promote and communicate.

58% 26%

16%

44% 54%

3%

62%

37%

1%

Small companies (1-100 employees) were the most confident in this – over 60% agreed.

2/3 of compliance officers, internal lawyers and statutory representatives go along with this statement.On the other side, almost 38% of owners disagree. This is probably attributable to the fact that owners in our population represent mainly smaller companies which have significantly higher trust and closer collaboration with their employees (33% of small companies disagreed).

We were curious to know how far along our respondents are in the process of creating an ethical culture. Although only 3% of respondents admitted that their employees do not consistently apply principles of ethical business conduct in their daily work, 54% of respondents were not able to give a clear answer to this question. On the other side, 62% of respondents believe that their employees understand the values promoted and communicated and an additional 37% partially agree with this.

Approximately the same portion of respondents (58%) declared that ad-hoc corruptive practice can occur in their respective companies, but these are thoroughly investigated and the effects mitigated.

One out of three respondents (mainly those from finance, consumption or service sectors) agree that in certain areas of their business there is significant susceptibility of employees to corruptive behaviour that requires constant effort in order to be reduced.

Answers from the above questions are consistent with the respondents’ opinion on how a typical employee would react in a dilemma situation – see the next page.

Respondents stated that leading by example is more important that any set of preventive or consequence measures or overall market atmo-sphere. It means that in order to achieve fair and ethical business conduct, companies must pass through the process of cultural change. Although the substantial ethical awareness of employees can be seen today, they also indicate their understand-ing that a long way is ahead of each of them to achieve adequate application of ethical principles.

Agree Partially agree Disagree




76%

18%

4% 2%

Chart 17: Imagine that your employee was a member of the selection board for internal supplier, where the contract is beingbid on by the company of their brother in law. How would the average employee of your company react:

Matter of principle, they would refuse their membership in theCommission because of thepotential bias.

It did not occur to them thatdecision may be influenced by family relations.

Employees would report on theconflict of interest in a situationwhere they are in a decision-making position towards apersonally related person, andtogether with their superiorwould agree on the solution.

Employee would feel theymight be unduly influencedin their decision, but wouldnot handle the situation at all.

Under another scenario respondents assumed the reaction of a typical employee in the situation where the colleague responsible for vendor contracts accepts valuable personal benefits from the company’s vendor. Similarly to the situation before, up to 80% of respondents expect their employees to either alert the colleague to related risks or directly notify the management.

Answers from the above questions are consistentwith the respondents’ opinion on how a typical employee react in a dilemma situation: 77% of them believe that their employees would report the conflict of interest in the situation when they are in decision-making position towards a related person, and together with their superior would agree on the solution. In the opposite, 18% of respondents think typical employee would feel he might be unduly influenced in his decision, but would not take any action to address the situation at all. In this regards respondents from medium enterprises (300 – 1000 employees) were the most sceptical about conduct of their employees.


How to achieve improvementIt seems that our respondents appreciate that not only their internal activities and measures deter-mine the internal climate of the company. They recognize the impact that external activities aimed to enhance the environment they operate in have in this respect. Most of them take steps to actively manage their business relationships, but a significant number get involved in various activities taking place within the wider business com-munity.

Respondents were asked to select the three most efficient means/measures to improve internal climate from the perspective of the business ethics applied. The top three choices included:

Tone at the topSet-up of control mechanisms within the com-pany aimed to manage risks related to corrupt practices and misconductIncreasing awareness of adopted values and accepted ethical norms among employees as well as continuous communication in this area

An absolute majority of respondents (80%) are confident that their activities aimed to improve business ethics in the business environment in which the company operates would have a posi-tive impact on the company’s internal climate. Over 80 % of the respondents confirm they carry out such activities. Approximately 58% of respon-dents’ companies actively manage relationships with their business partners (suppliers, customers, etc), half of them do so in combination with other sorts of activities.

Chart 18: Can activities focused on the improvement of business ethics in the environment in which your company operates have a positive impact on the internal climate of your company?

About 14% of respondents participate in specific initiatives, such as the Slovak Compliance Circle. The same number of respondents attend confe- rences or use various platforms to share their experiences. A positive observation is that involvement in such activities is not only the domain of large international companies, but also smaller local enterprises.

Nearly 19% of respondents stated that their com-panies do not execute systematic activities of this kind, however, a significant part of them are keen to do so.

It is apparent that Slovak companies use various scales of activities to bolster ethical business conduct in both internal and external environ-ments, but still there is substantial space for further penetration.

80%

3%

18%

Yes No Do not know

••

•


Commentaries from our members andexternal experts


Results are binding for the firmsSCC: Morals demonstrated by the extensively cricticised public sector do not appear to be considered by respondents to be a key factor determin-ing the climate within the organisation. Considering this in context of overall results of this survey – Can the role of the business sector in improvement of the environment be seen as key regardless of the situation in the public sector? How important are the activities and actions of the business communi-ty for development of the environment?

Respondent: Prof. PhDr. Anna Remišová PhD, Faculty of Management of the Comenius University

This outcome of the survey (p. 11) relates to two aspects: one is theoretical and the other one is historical. According to a prominent idea in the theory of business ethics, integration of ethics and economics takes place at four basic levels – individual, organizational, macro-level and global. At each level a different subject bears responsibil-ity for development of ethics in economy: a particular person at the individual level; owners and management at the organizational level; state, parliament and justice at the macro-level; international organisations with worldwide impact at the global level. Changes in business ethics at one level influence business ethics at the other levels – positively as well as negatively. The ideal situation for growth of business ethics in practice occurs when all levels demonstrate interest in systematic expansion of ethics in the economy.

In certain periods a situation may occur in the society, when the leading role in growth of business

ethics is taken over by one of these levels, or more precisely the subjects responsible for the growth at each level. In some cases these would be state insti-tutions and legislative bodies, in other cases organi-sations or individuals, for example employees or customers. Similarly, when adopted legislation is perceived by individuals and organisations as unjust, conditions in a society may arise, where frequent breaches of business ethics occur on both individual and organizational level.

The results of the SCC survey prove, that the deter-mining factors for development of business ethics within the examined organisations appear to be internal, not the incentives and stimuli from the mac-ro-level (public sector). Presented results may also be interpreted in the way that organisations apply ethics in their governance based on their own perception of importance of business ethics in the economic environment.

The survey finding (p. 11) suggesting that the organisations are not influenced in their develop-ment of business ethics by the macrolevel, correlates with the findings of our survey about codes of ethics from 1996. Based on the survey we came to conclu-sion that in conditions that apply in Slovakia, organi-sations, not the macro-level, will play the key role in development of the business ethics.

The cause of the situation goes back to 90’s, when intentional transformation from centralized to market economy began in Slovakia (then still Czechoslovakia). Politicians managing the process put emphasis on creating a legislative framework of a business conduct. The moral aspect was not important. On the contrary, it was deliberately trivialized.

Ideological father of the transformation Vaclav Klaus articulated it with the famous sentence: “The economy does not know dirty money”.

Privatisation and change of ownership did not demand responsibility nor fairness from the new owners.

When facing unethical conduct of “also entrepre-neurs”, the entrepreneurs who were serious about their business came to realize that in addi-tion to law, they need also code of ethics for their business conduct. For many years the institutions responsible for development of ethics in the society as such, have not been dealing with ethi-cal issues in the business conduct. Entrepreneurs had to deal with the business ethics on their own. Systemic and uncompromising fight against corruption, fair remuneration, just subsidies, appropriate taxes, strict sanctioning of fraud, asset misappropriation and intentional business contracts violation have not yet become an immi-nent problem that would require uniting all the political forces in the country. Even though there has been some change in the attitude of state institutions towards business ethics over the 25 years of existence of market economy, its influ-ence on organisations (and individuals) is weak.

Results of the SCC survey (p. 11) about key role in development of the business ethics in Slovakia are binding for the organisations – ethical organi-sations and socially responsible business conduct has tremendous importance for the change of ethical culture in our country.

Positive self-image isunderstandable

SCC: Respondents seem to be rather critical of the situation in the market, their view of the situation in their sector is less strict and the self-assessment (their company) seems to be almost indulgent. What do you see as the cause of this?

Respondent: doc. Mgr. Anna Lašáková, PhD., Faculty of Management, Comenius University

These distinctions between the managers’ selfass- essment (me and my company) and the assess-ment of others are understandable from my point of view, because they are so to speak normal for the rest of the population, too. The reasons are manifold. First, the positive self-image plays an important role in this context. In researches related to the realm of ethics and morality it is usual that people tend to perceive themselves as more ethical, that means more honest, responsible, caring, just, or objective, than they really are. Hence they responses to the survey questions could be positively biased. Second, the social desirability effect might also become a source of that bias, which means that people usually know what the socially desirable answers onto the ethics-related questions, if formulated straight-forward, are. These two reasons stem from more or less unconscious cognitive processes. Never-theless, the third motive for such a partiality in answers could be due to the fact that morality- related issues are for many people, the managerial


personnel being not an exception from that rule, a really sensitive internal matter. For the sake of a good public image of their respective compa-nies, or even the whole business sectors, they would manipulate their answers on a conscious basis. In the business world, being compared to the others in the matter of ethical conduct puts a psychological pressure especially onto the man-agers as they serve as the representatives of their companies. Hence, all the above mentioned issues should be taken into account when design-ing the research questions as well as the method-ological approach in relation to the research aims.

Nevertheless, the prevalent differentiation between the answers of respondents related to the “ethical standard in my company” versus “ethical standard ascribed to others” might stemalso from their first-hand encouraging experienc-es with application of ethics into the business operations in their respective companies in com-parison to their confrontational experiences with external stakeholders (competitors, public sector, clients, contractors, etc.). Furthermore, the Slovaks in general are rather hesitant and skeptic toward the ethical standards applied in almost every sphere of society, this being implied also for the sphere of the management. This implies that assumptions of the respondents related to the overall ethical situation in the Slovak business environment could reflect also the prevailing wider public opinion on the inclusion of ethical principles in the sphere of business.

Hope for IT and telcoSCC: Telco/IT/media sector class reported some interesting “against the mainstream” reactions (ref. to p. 7). How do you interpret the results?

Respondent: Ivan Skaloš, SCC Board member and ST Group Compliance officer, Slovak Telekom, a. s.

Apparently the skeptical look of respondents from the telecommunication/IT industry, as outlined in the survey, doesn’t sound surprising to me. The IT business in Slovakia is especially perceived as connected with a wide spectrum of unethical practices. This is underlined by two of three respondents who lost business due to unethical approaches by competitors. However, they also confirmed that systematic promotion and pursu-ing of ethical business conduct can significantly improve the current situation.

Positive momentum

SCC: What the results of the survey say about the status of the Slovak business community?

Respondent: Quentin Crossley, SCC Board member and Partner at KPMG.

It has been great to read the results of this survey as they clearly support the underlying concept and objectives of the Slovak Compliance Circle. Having been working and living in Slovakia over the last fifteen years, it has been clear to see the growing frustration within the Slovak business community about the level of ethics applied in general busi-ness conduct in the Slovak market place.


However, born out of this frustration, and the results of this survey bear witness to this, the local business community has begun to realise that it can take a leading role in making the busi-ness environment a fairer place, where competi-tion and innovation is allowed to flourish rather than be manipulated.

There is a growing momentum to apply ethical business practices to make a more healthy marketplace in Slovakia and rather than simply blaming incumbent governments for not doing enough, the Slovak business community is takingmore and more of this responsibility into their own hands. The existence and growth of the SCC is further evidence of this.

It is the ongoing mission of the SCC to promote within the Slovak business community that adher-ence to ethical business practices represents the best long term strategy for businesses them-selves as well as the Slovak marketplace as a whole. Almost half of the respondents to the survey agreed with this statement, while only 23% believe their businesses can benefit from this already now. There is still therefore a lot of work ahead of us all to improve the situation.

As participants in the Slovak business arena, we should all continue to strive for the change to take place as soon as possible – using those tools we have available to us within our own organisa-tions and passing the message onto our business partners.

The only possible way

SCC: How do you perceive activities of SCC, particularly this Survey and its results?

Respondent: Dajana Suchánková,Compliance officer, Siemens

Siemens s.r.o. considers the establishment of Slovak Compliance Circle as a great success in business ethics in Slovakia and I as the Regional Compliance Officer also personally applaud this achievement. We proudly support all the activi-ties of the association that contribute to creating of the fair and equal market conditions and help spreading the idea of “clean business” on our market.

The results of the first survey have yielded many interesting observations that I think will help the SCC with its future direction. In my opinion the most significant fact is that though even 88% respondents perceive business ethics in Slovakia negatively and also reported experience with losing business due to unethical behavior of com-petitors, they have also presented clear aware-ness that the business ethic is the only possible way of a long-term sustainable development.

Another important outcome of the survey is also the finding of the companies that leading by examples is more important that any preventive or consequent measure, not only inside of the company (Tone from the Top, Tone from the Middle) but also in relation to the other players on the market.



Banks – skeptical and optimistic

SCC: Banks seem to be the most skeptical about lost business due to the corrupt practices of com-petitors (Chart 11), while on the other side expressing confidence in their sector when grading it (Chart 7). What do you think about this paradox?

Respondent: Ján Vittek, Chairman of theBoard of Directors of SCC and Head ofCompliance and AML Department AT Tatrabanka

The apparent paradox arising from the skeptical perception of losing business opportunities because of the corrupt practices of competitors by respondents from the banking sector (see Chart 11) and on the other hand, above average confidence in the situation in their own sector (see Cart 7) can be caused by several factors. One may be that the financial sector due to the nature of its activities in business relations (not the bank - client relationship) are very limited especially towards higher risk sectors, and there-fore each individual business opportunity defeat-ed due the corrupt practice is considered very sensitive. On the other hand, in the financial services is usually integral part of the compliance profession also responsibility for monitoring clients and their transactions and possibly nega-tive experience from this area affected responses compliance professionals towards a more positive perception of their own sector.

A problem to fight with is the overall opinion that unethical behavior is generally accepted approach on the market

SCC: Being a compliance officer – what is your opinion on the results of the survey? Did any specific aspects surprise you?

Respondent: Zuzana Jankovič, Compliance Officer at ZUNO Bank AG

As a Compliance Officer I was especially curious about the opinion of other Compliance Officers on the situation in „their“ company and their point of view on the overall market situation.

The fact that Compliance Officers are generally less satisfied, and managers rather satisfied, with the level of compliance in the company is, based on my experience, common standard and I think it is fine. Compliance Officers should always look for improvements and never be satisfied with the status quo. Under such situation managers can feel safe about the compliance situation in their company what probably led to their rather posi-tive opinion in the survey.

What is still a problem to fight with is the overall opinion that unethical behavior is somehow generally accepted approach on the market. Based on the results in the survey I believe the situation is not so bad. Taking into consideration that respondents believe in ethical behavior in their company and also have implemented internal rules and measures to ensure it, it is obvious that the ethical environment is not so bad and has improving tendency.


About the surveyIn particular, the questions covered the following areas:

Basic information about the organisation and position of the respondents;Information about organisation of compliance within the organisation;Assessment of the environment (market, own industry) and conduct of other players from the perspective of business ethics generally applied; andAssessment of the own ethical climate, key determining factors and assessment of conduct of own employees.

This report was published mainly thanks to:

The survey was executed by members of the Slovak Compliance Circle. Special thanks for their effort and contribution to the execution of the survey and preparation of this report go to:

This survey was prepared and executed by the Slovak Compliance Circle in 2014.

Respondents of the circle include representatives of the SCC members as well as non-members. Portion of SCC member respondents did not exceed 20% of the total population of respon-dents.

The survey targeted companies of all size catego-ries. Population of respondents relatively evenly covers small, medium and large companies. It was also our aim to cover wide range of indus-tries and various geographic location.

The targeted respondents were individuals who given their position could be reasonably expected to have a relevant experience to able to provide answers to our questions. The population of respondents included members of top manage-ment, owners and statutory representatives of companies, as well as experts from compliance and related areas, such as legal or internal audit.

The survey was conducted on anonymous basis. Respondents could choose in which way to partic-ipate: using an online questionnaire, hardcopy questionnaire or electronic document question-naire.

Respondents replied to 20 questions, some of them divided into multiple sub-questions. We primarily focused on screening the perception of the business ethics topic and compliance in general in the Slovak business community.

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About Slovak Compliance CircleBackgroundThe Slovak Compliance Circle has evolved as a response to the sentiment in the Slovak business field with respect to the level of ethical conduct generally applied and accepted in the Slovak business market. To address the concerns of the Slovak business community, the Founding Mem-bers have developed and offered the concept of the Slovak Compliance Circle (SCC). Based on the strong interest and support of a number of key business leaders in Slovakia, the Founding Mem-bers have established the SCC with a mission to promote the principles of business ethics and compliance in Slovakia.

(Statutes of the SCC, Preamble)

MissionOur mission is to promote the principles of busi-ness ethics and compliance in Slovakia.

VisionOur vision is to be able to work in a transparent and ethical business environment in Slovakia.

ObjectivesSCC was established for the purpose of promo- ting the role of compliance and ethical behaviour within the Slovak business community by:

Sharing best practices in the area of compliance amongst the Slovak business communityPromoting the compliance officer function as well as the compliance officer profession in Slovakia; andPromoting ethical behaviour and compliance to the next generation of Slovak business leaders.

Members

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NA CESTE K TRANSPARENTNOSTI

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