KUNUNU honors us: "Top Company 2022"
We have been honored!
Senator Executive Search Partners is among the top five percent of the most popular employers in Germany .
We are delighted!
Legal challenges in introducing codes of conduct (Part 1)
Legal requirements must be observed when developing and introducing codes of conduct.
1. Introduction
When entering markets in developing and emerging countries, considerations of corporate responsibility are becoming increasingly relevant. In many host countries, companies are often confronted with unfamiliar realities: foreign cultural norms, legal uncertainty, volatile political conditions, unpredictable administrative bodies, or irresponsible treatment of the environment, corruption, and violations of internationally recognized labor standards and human rights.
The company must actively address these conditions, as it is expected to apply the high standards of responsible business practices that are customary in its home country within its sphere of influence (suppliers, employees, locations, etc.) as well as in the countries where it sources, produces, and exports.
A well-established tool for avoiding potential interference from stakeholders in a company's sphere of influence is the code of conduct. With a customized code of conduct, a company establishes specific guidelines for action to comply with its core ethical and moral obligations. This instrument has a regulatory (suppliers) and communicative (stakeholders) component and, through practical development and credible implementation, can make a major contribution to the credibility of the company.
2. Reasons for introducing codes of conduct
On the one hand, the reasons for introducing a code of conduct lie in the aforementioned risks, which originate from the internationalization of companies and increasing globalization. On the other hand, the reasons result from dependencies such as the US Sarbanes Oxley Act. This requires listed companies in the US to ensure that misconduct in the areas of accounting and banking, as well as white-collar crime – which covers a wide range of possible offences – is detected and eliminated as quickly as possible. German companies are subject to the obligations of the Sarbanes Oxley Act if their parent company is listed on the US stock exchange.
The measures required to comply with the Sarbanes Oxley Act are implemented in the form of codes of conduct within companies. Specific behavioral guidelines are intended to reduce or minimize the liability risks for companies.
In Germany, there is a growing trend for companies that are not listed on the stock exchange and do not have a listed parent company to commit to introducing codes of conduct and setting up reporting systems for regulatory violations. There are many different reasons for this form of voluntary commitment – from planning an IPO to the realization that a code of conduct is a modern instrument of corporate governance that is expected by stakeholders.
3. Objectives and content of codes of conduct
The objectives of codes of conduct are largely comparable, while their content can vary greatly from company to company.
The main objective—although often formulated in very different ways—is to minimize liability risks by specifying concrete rules of conduct. These usually relate to different organizational units (e.g., sales, human resources, etc.) as well as different processes. In a sense, the company "transfers" the risks arising from misconduct to the individuals involved, thereby claiming a possibility of exculpation. The fact that this is only relative in nature is ultimately demonstrated by the fact that it is usually the company and not the individual employee who is pilloried in the media – with the exception of members of the board of directors or management.
The content, on the other hand, usually varies greatly: some companies limit themselves to briefly and concisely obliging their employees to comply with applicable laws and internal instructions and to report violations. However, most companies' codes of conduct contain a large number of specific, situation-related rules of conduct that, taken together, go far beyond what is required by the Sarbanes-Oxley Act. Here are a few examples:
- confidentiality obligations
- Acceptance of gifts
- Prohibition of alcohol, drugs, and intoxicating medications
- Use of company facilities (telephone, machines, vehicles)
- Non-acceptance of child labor
- Violations of environmental protection
- Employment of family members at competitors
The establishment of rules of conduct is also accompanied by sanctions that are imposed in the event of violations of the rules of conduct. These range from simple disciplinary measures to termination without notice and criminal charges.
Another component of codes of conduct are so-called "reporting systems" (English: whistleblowing systems), through which violations are reported. These are usually hotlines or special email addresses—anonymity and discretion are basic requirements without which such a reporting system would hardly work in practice (who wants to be seen as a "snitch," even if they are obliged to report violations under the code of conduct?
If we compare the development of codes of conduct in the US and Germany, the high number of specific rules of conduct in US codes of conduct can be explained historically by the fact that labor law in the US is much less regulated than in Germany. However, even in Germany, there is sometimes a pronounced "regulatory frenzy" on the part of those responsible for compliance, even though many of the regulated issues have been legally assessed both in substantive labor law and in labor law case law, which has been developed over decades.
About the author
Eckart Achauer, studied law and business administration, postgraduate studies leading to a Master of Business Administration (MBA). In-service training as a European Quality Manager (DGQ), mediator specializing in business mediation, and Certified Compliance Manager (TÜV).
He worked for around 10 years in the international insurance industry in various management positions at a Swiss insurance group (claims department, sales, assistance) before moving into management and business consulting in 1997.
As a consultant and managing director of various consulting firms, Mr. Achauer has specialized in organizational and process optimization as well as the development and implementation of management systems—quality management, risk and compliance management.
At Senator Executive Search Partners, Mr. Achauer is responsible for compliance management. As part of compliance audits, he analyzes their organizational "compliance fitness," raises awareness and trains management, executives, and employees, and supports companies in setting up and implementing individual compliance management systems. In doing so, he always takes into account the specific risk situation of the companies. Thanks to his many years of experience as a manager and consultant, he is very familiar with the practical challenges of business.
Negotiating in China (Part 2)
Like at the bazaar?
"At first, everything proceeded very correctly and formally. The longer the negotiations went on,
and the deeper it went into the details, the more it felt like being at a bazaar. People literally haggled over details for hours on end." That was the experience of the chief negotiator for a German automotive supplier.
Chinese negotiators have immense stamina when it comes to clarifying details that are important to them. They expect the same from their negotiating partners. The phases of negotiation in which concessions are made take a long time. Remain as tenacious as your counterpart, but at the same time maintain a positive atmosphere. Concessions should always be discussed in terms of balance and win-win situations. Don't forget reciprocity ("if..., then...") as a basis and link a demand from the other side with a demand of your own.
Work in Progress: The Contract
In China, it is quite common to modify agreements once they have been made in the next round of negotiations. There is not always a sense of "contractual consistency" or an obligation to adhere to agreements that have been concluded. For this reason, all negotiation results should be recorded in detail in writing, regardless of whether the agreement has been reached in part or in full. Verbal commitments usually do not last long.
At the start of negotiations, it is advisable to clarify the powers of the other party. Are they authorized to conclude a deal, or should they first gather information and test the waters so that another employee can conclude a binding agreement in the next round of negotiations? Since China is a socialist country, trade is usually conducted by state-owned enterprises or government agencies. With a few exceptions, such as rental agreements, the drafting of contracts is relatively free. Certain regulations are specified, but experience has shown that these can be fulfilled with "pro forma content." For domestic transactions, it should be borne in mind that a corresponding contract law has only been in existence for a few years and that the issuance of licenses, which are required for many transactions, can take a long time.
Complex legal situation
In China, lawyers play an important role for foreign business partners. Lawyers serve not only as legal advisors, but often also as interpreters. When considering hiring a lawyer, the question arises as to whether to choose a Chinese lawyer or a foreign lawyer working for an international firm in China. Whichever option you choose, there are still pitfalls: on the one hand, a Chinese lawyer loses their license to practice law in China if they join an international law firm in China.
On the other hand, a lawyer licensed abroad is not authorized to provide expert opinions on Chinese law. The best choice is a lawyer from an international law firm who understands the Chinese mentality and is not dependent on the government. International law firms often employ Chinese lawyers who have studied abroad. They are familiar with both Western and Chinese ways of thinking. Much of what is considered standard negotiating practice in Germany must be set down in writing in China. As mentioned, the Chinese treat contracts like laws: they are worded vaguely so that there is room for different interpretations. According to the Chinese view, this type of contract conclusion encompasses the "human side," and the "legalistic approach" of Western managers is often met with incomprehension.
When it comes to the Chinese sense of justice, choosing the right lawyer pays off just as much as imagination in marketing and negotiation. Example: When we talk about brand piracy, the Chinese tend to focus more on the attractiveness of the product, and any imitations are seen as a mark of distinction for the original.
This situation can be overcome, as the example of Coca Cola shows: before production began, the company launched a wide-ranging media campaign. It explained to citizens what a registered trademark is, what the Coca Cola brand stands for, that its purpose is to ensure quality, and that imitations are illegal and inferior. Such campaigns pay off: despite concrete trademark piracy in China, Coca Cola is very successfully positioned on the market there.
Working hours (Part 2)
The second form of working time is part-time work. In this case, employees regularly work shorter hours than comparable full-time employees. Women with children in particular benefit from part-time work. There are just under 9 million people in part-time jobs. Almost 80% of them are female.
A current topic is the decision on the law introducing so-called bridge part-time work. Employees who agree to work part-time after January 1, 2019, are affected by this regulation.
However, the right to bridge part-time work only applies to companies with more than 45 employees. Only then can a temporary part-time phase of between one and five years be applied for. However, almost 15 million people already work in companies with fewer than 45 employees. The new regulation does not apply to this group at all.
Employees who work for companies with up to 200 employees are also affected by a special rule. Only one in every 15 employees must be granted the right to bridge part-time work.
The new law on bridge part-time work is therefore not applicable to all employees. And the "part-time trap" remains in place for most people. Although bridge part-time work is well-intentioned, the law was watered down too much during negotiations.
It is clear that there are always new ideas and laws relating to working hours. However, it always takes time for these to be implemented.
About the author
After completing his studies in automotive engineering and industrial engineering, he began his professional career in the automotive industry in the areas of sales, development, and marketing, and also spent a year in Japan with one of the largest automotive suppliers.
He then moved to a world-renowned premium car manufacturer, where he was responsible for product marketing for Japan and South America as well as marketing strategy for North and South America.
In 1994, he decided to become self-employed and founded a personnel consulting firm in Munich, where he has been driving development and expansion for over 20 years. As managing director, his industry focus is naturally on the automotive world as well as mechanical and plant engineering.
His doctorate in the field of aptitude diagnostics ideally complements his areas of expertise, particularly in relation to human resources and management consulting. His dissertation deals with the identification and verification of typical personality traits of engineers and the definition of areas of development for a successful career.
These are scientifically derived and presented in the book "Eignungsdiagnostik im Praxiseinsatz" (Aptitude Diagnostics in Practical Use).
At the same time, he focuses on establishing networks and cooperation models as well as the continuous development of systems and processes in HR consulting.
Over the past 20 years in HR consulting, he has developed several brands that continue to operate successfully on the market today.
Negotiating in China (Part 1)
In recent years, the People's Republic of China has grown to become a major global economic player. The financial crisis has done nothing to change this; quite the contrary. Furthermore, China is becoming an increasingly important partner for Europe due to recent political developments in America. Rapid growth in China has slowed during the political turmoil and uncertainty of the recent past – albeit with a still above-average increase of approximately 6% to 7% ("the new normal"). The Chinese market remains attractive to German investors and cooperation partners, particularly because of its considerable domestic market potential. Conversely, we are seeing a trend whereby Chinese companies are increasingly beginning to invest in Europe, especially in German-speaking countries.
It is not only global players such as Volkswagen, BASF, Bayer, Coca Cola, Henkel, and Procter & Gamble, to name but a few, that are represented in the Middle Kingdom. German SMEs are now also very actively involved in a variety of ways. But is this vast empire really a rapidly developing and promising market of the future that justifies sustainable and long-term investment? China is not China. The People's Republic is a world unto itself, with over 4,000 years of history, different languages and dialects, and diverse social conditions and behaviors. The size of the country, its gradual opening to the West, and rapid economic growth make China an important growth market that is highly attractive to foreign investors. According to Volkswagen, China is the fastest-growing market in the world. But not every economic venture is crowned with success. Many companies have not achieved the quick returns they had hoped for. What mistakes do Western entrepreneurs make when doing business in China? What are the particularities of negotiating and doing business, as well as operating a company locally?
The middleman
Western businesspeople have little chance of closing a deal in China without a middleman, also known as a "zhong-jian ren." This middleman is familiar with the specific, personal, and reciprocal relationship system that prevails in China and goes beyond conventional networking in the Western sense. In the West, we often tend to trust others until we have reason not to.
In China, things are a little different: in business, you cannot build trust, because any kind of business relationship cannot even come about without trust. Instead, trust must be conveyed with the help of "guanxi." This Chinese
This term refers to the network of personal relationships in China, i.e. it stands for mutual give and take. This means, for example, that a business partner you trust will refer you to business partners whom they in turn trust. The decisive first step in China in this phase of the negotiation, also known as the "exploratory phase," helps you establish personal contacts with the respective company or managing director.
A talented Chinese middleman is also indispensable after the first meeting. Consider what happens during a typical negotiation session between Chinese and Western businesspeople. Rather than saying no outright, Chinese businesspeople prefer to change the subject, remain silent, ask another question, or respond using ambiguous or vaguely positive expressions that have a slightly negative undertone.
A native Chinese speaker can accurately interpret and explain the moods, facial expressions, and body language displayed by Chinese negotiating partners during a formal meeting. Often, only the intermediary can determine what is happening. If an impatient negotiating partner from the Western world wants to know what the Chinese think of the proposal, they will invariably respond in an evasive manner, such as "Let's see" or "Let's check it out" – even if they think there is something wrong with the proposal. This is one of the situations in which the middleman can intervene, because his job is less about translating words and more about mediating between cultures.
It often happens that both parties can openly say things to the middleman that they would not be able to communicate directly to each other. In China, it is the middleman, not the actual negotiating partner, who first brings up the business topic to be discussed. In addition, he can often smooth over differences. In fact, a good middleman can succeed in significantly reducing complex situations and considerable differences of opinion.
Working hours (Part 1)
In 2018, there are currently more than 44 million people in employment in Germany. The vast majority of them work full-time or part-time. But what new ideas and regulations are there with regard to working hours?
Full-time employment is defined as working between 36 and 40 hours per week. The standard is to work 8 hours a day, 5 days a week, provided that no overtime is required. Germany ranks high in terms of overtime, with 1.7 billion hours worked in 2017.
However, too much work can have psychological and physical consequences. This fact has long been no secret. More than half of employees complain of back and joint pain. Exhaustion ranks second, followed by headaches in third place.
But what can be done about it? Is it possible to reduce working hours by 20 percent while keeping salaries the same? One study already suggests that around 18 million people in this country would like to work fewer hours.
This is precisely what a New Zealand company tested for two months. They introduced a four-day week. A team of researchers from Auckland University monitored the experiment. The only condition for employees was that they had to achieve their weekly work targets.
The result of this test was clear. Employees were more productive and happier than before. Stress levels also dropped significantly.
Admittedly, at first glance it seems paradoxical. A four-day week could conceal some problems. For example, personnel costs would rise because more employees would be needed. Nevertheless, researchers believe that savings are possible.
Another way to reduce the working hours of a full-time position is to introduce a six-hour day with full pay. After all, people can be just as productive in six hours as they are in eight. Studies have already shown that many people can only really concentrate on their work for a few hours a day.
Some companies have even tried a six-hour day. And with success. Their sales increased.
However, there is also a major disadvantage here in the form of higher personnel costs.
The second form of working time is part-time work. You can find out more in the next article .
About the author
After completing his studies in automotive engineering and industrial engineering, he began his professional career in the automotive industry in the areas of sales, development, and marketing, and also spent a year in Japan with one of the largest automotive suppliers.
He then moved to a world-renowned premium car manufacturer, where he was responsible for product marketing for Japan and South America as well as marketing strategy for North and South America.
In 1994, he decided to become self-employed and founded a personnel consulting firm in Munich, where he has been driving development and expansion for over 20 years. As managing director, his industry focus is naturally on the automotive world as well as mechanical and plant engineering.
His doctorate in the field of aptitude diagnostics ideally complements his areas of expertise, particularly in relation to human resources and management consulting. His dissertation deals with the identification and verification of typical personality traits of engineers and the definition of areas of development for a successful career.
These are scientifically derived and presented in the book "Eignungsdiagnostik im Praxiseinsatz" (Aptitude Diagnostics in Practical Use).
At the same time, he focuses on establishing networks and cooperation models as well as the continuous development of systems and processes in HR consulting.
Over the past 20 years in HR consulting, he has developed several brands that continue to operate successfully on the market today.
