// BY Fernanda Arreola & Gregory Unruh, Lincoln Center for Ethics at Thunderbird School of Global Management
Poland, a country that dates back to the 10th century, has a history of linking the East and West of the European Continent. It’s been involved in many European power struggles, most recently emerging from decades of communist rule in 1989 to become a member of the European Union (EU) in 2004. Since achieving EU membership, Poland has experienced a period of economic expansion with more than 6% annual GDP growth in the last two years. Poland is attractive to the business community for a variety of reasons: It has an abundance of natural resources, an educated workforce and a positive economic outlook. These attractive qualities are balanced, however, by potential risks, including turbulent relationships with its bordering neighbors (especially with Russia) and a bureaucratic governance system inherited from the days of communist rule.
THE ETHICAL CLIMATE FOR FOREIGN ENTERPRISES
Many of the compliance and ethics challenges currently facing Poland are a consequence of the country’s slow transition away from communist rule. Poland’s integration into the EU has accelerated the transition process and is now driving regulatory reforms. however, enforcement and institutionalization of the reforms continue to take time, particularly in the areas of accounting and auditing. Recent surveys indicate that managers dealing with contract negotiations, labor laws and local tax codes face frequent hurdles. For instance, when compared with 181 other countries in the World bank’s annual Doing business 2009 report, Poland ranks 145 for ease in starting a business, 158 for dealing with construction permits, 142 for paying taxes and 76 for overall ease of doing business.
Converting the new regulatory frameworks into effective and productive safeguards without the red tape inherited from its communist history is clearly a challenge for Poland. and recent political infighting between the center-right party, Civic Platform (Po), and the President’s law and Justice Party (PiS) has further delayed reform efforts. Political and economic analysts are now focusing on Poland’s upcoming 2010 elections as the next opportunity to advance market-oriented reform policies.
Parallel to the regulatory reforms are the challenges of privatizing the large number of state-owned companies remaining from the days of socialist rule. Efforts began in 1990 when the government presented privatization plans, which turned out to be nearly as complex and bureaucratic as the system they intended to simplify. and, in early 2007, the privatization plans stalled in part due to a political corruption scandal involving Poland’s former President and Prime Minister. both officials were charged with offering preferential treatment to foreign companies seeking to acquire state-owned companies in exchange for bribes. Despite the many challenges and setbacks, progress is taking place. In april of 2008, Poland’s current government announced an aggressive privatization plan that should ease the selling process of at least 700 state-owned firms.
ETIQUETTE TIPS YOU SHOULD KNOW BEFORE YOU GO
GREETINGS
In Poland, people shake hands firmly when they are first introduced. When greeting women, it is best to wait for the hand to be offered. although it is common for Poles greeting women to kiss on the cheek, it is not expected on the first introduction, and in some instances could be perceived as mockery. When greeting someone at a doorway, avoid shaking hands over a threshold as this is considered bad luck. also, unless requested otherwise, it is best to use a person’s surname and title when you meet them. you can address men with the word “Pan” (Mr.) followed by their surname and women with the word “Pani” (Mrs.).
BUSINESS MEETINGS
Poles follow many western business traditions. Meetings tend to start and end on time, so you should show up on time and call if you’re running late. Traditional business hours in Poland are the same as those in the United States. Meetings are typically scheduled between 9:00 and 11:00 aM or 2:00 and 4:00 PM. To avoid problems caused by frequent infrastructure travel delays, leave some extra travel time for complications. When negotiating, it is useful to take a consensus-building approach through frequent reiteration and clarification of the details and characteristics of the proposal. The Polish tend to dress in more conservative tones and cuts than some of their “fashion-focused” European neighbors. a dark suit is appropriate for both men and women, and men generally wear ties. at informal meetings, casual wear is suitable—although it is always acceptable and safe to dress more formally.
GIFT GIVING
Gifts are commonly exchanged in Poland among business partners, especially when starting new commercial relationships. always bring a gift for the host if attending a party at a private home, preferably flowers or a bottle of liquor other than vodka, which can be perceived as a cheap present. Expensive gifts should be avoided as they are not generally seen as appropriate. Instead, things like books and delicacies, especially traditional items from one’s home country are better received. avoid providing gifts bearing your company logo or advertising. also avoid odd numbers of flowers and bouquets of roses as they represent bad fortune. Chrysanthemums are associated with death. being a Catholic country, many Poles are named for Catholic Saints; therefore, days that celebrate these saints are often regarded to be as important as a Pole’s birthday —you can never go wrong recognizing these days if it applies to anyone in your party.
BUSINESS CARDS
Business cards are exchanged during introductions with no formal rituals. however, advanced university degrees and titles often lend credibility, so it makes sense to present your full qualifications as part of your personal information. although not mandatory, it is also appropriate to have the business card in both English and Polish.
DINNERS AND SOCIAL EVENTS
The poles are family-orientated and an invitation to share a meal at a business partner’s home should be considered an honor. Some families take their shoes off before entering the house. If you see that people are wearing slippers or there is a line of shoes arranged by the door, remove yours before walking any further. Sitting with an ankle resting on the opposite knee or standing with hands in pockets is considered impolite. also, it’s best to avoid discussing politics and money and, instead, to listen closely to what other people are discussing. and, as is the custom in most countries, you should never begin eating before your host does and always offer to help clear the table.
FIVE COMPLIANCE AND ETHICS ISSUES TO CONSIDER
01 // THE ROLE OF RELIGION
A large percentage of the educational system still incorporates Catholicism as the basis of ethical teachings in spite of Poland establishing the separation of church and state in 1989. The social acceptance of such a system reinforces the importance that religion plays in the role of the community. From a compliance perspective, most international organizations will find it difficult to establish a code of conduct that does not relate directly to foundational beliefs of the Catholic Church.
DEAL WITH IT
The Polish Constitution provides all citizens with religious freedom, and that can be the platform for operations in Poland. However, creating rules that follow the behavioral principles of the Catholic Church will facilitate the compliance and acceptance of employees. It is also important to have appropriate measurements to avoid discriminatory practices against any minorities or migrant groups coming from border countries.
02// PRIVATIZATION
One successful approach foreign companies have used to enter the Polish market is acquiring or participating in a recently privatized state-owned company. The complexity and politics of the privatization and investment process and the interactions with government employees present very real ethical risks.
DEAL WITH IT
Investing companies need to shun offers of potentially illegal assistance when trying to enter a new market. Appropriate guidance on partnerships and ethical policies can usually be provided by local management consulting companies, non-government organizations, trade agencies, embassies and the local chamber of commerce. Many will be aware of risky situations, and some can help facilitate business on solid legal and ethical terms, decreasing the reputational and legal risk exposure of foreign investors.
03 // TRUST
One of the legacies of an authoritarian government is a cautious attitude when it comes to trust. In Poland, people often lack trust when it comes to issues related to bureaucracy and government rulings. This lack of trust tends to carry over into commercial relationships.
DEAL WITH IT
Poles tend to associate trust with the strength of the relationship. They appreciate honesty combined with diplomatic directness and may judge others by their personal qualities. Getting to know potential business partners on a personal level is therefore valued and can help establish stronger business ties.
04 // POLITICAL CORRUPTION
The country has witnessed an important political corruption scandal involving the use of Poland’s antiCorruption bureau (Cba) as a tool for targeting members of the opposite political party. The scandal attracted concern about Poland meeting the European Union’s ascension standards, a concern underscored by the country’s ranking last among its European peers in Transparency International’s corruption perceptions index.
DEAL WITH IT
Poland’s membership in the EU establishes anti-corruption mechanisms and provides the country with assistance in implementing anti-corruption programs. The new administration has worked to reform the CBA, which is now working to solidify its position as an effective enforcer. Companies dealing with corruption issues are expected to present their concerns to the CBA.
05 // COMPLIANCE MECHANISMS
Poland recently received a compliance score of 36.67 out of 100 in an analysis performed by the Financial Standards Foundation. This is a result of the slow changes that have taken place since Poland’s integration to the European Union. The public concern is that although there is a strong regulatory structure, public agencies have not been able to put the appropriate enforcement mechanisms in place.
DEAL WITH IT
Reports from the U.S. Department of State have shown that U.S. firms that maintain their U.S. compliance and enforcement policies in Poland have been able to build better reputations and control their operations more effectively. Certain compliance measures such as traditional whistle-blowing mechanisms may not be easy to implement, however. There is some evidence, for example, that a high level of loyalty in the form of “inner-collectivism” can inhibit people from reporting compliance concerns. This may require some adaptation for companies seeking to achieve compliance goals.
