CASE STUDY DONE BY MY CONSULTING FIRM IN A COMPANY WITH PROBLEMS OF CORRUPTION

1. Juan A. Florez
September 14,2017
HOW TO PUT AN END TO THE
CORRUPTION CYCLE BETWEEN
EMPLOYEE AND EMPLOYER IN
COLOMBIA.
Colombia has been an attractive country to many multinationals; its popularity took fly in the
year 2006, with the signing of the free trade agreement with the USA. Its strategic location with in Latin
America and the affordable and capable work force were strong reasons to establish their LATAM
headquarters in the country. Nevertheless, most firms have fall victims of a socioeconomic problem that
permeates into the deepest roots of its culture; corruption.

2. The corruption has been one of the issues that most companies face as they try to enter the
country and unfortunately many of them have fallen into the never ending cycle and chose to pay to do
business. The Brazilian construction firm Odebrecht involved in one of the largest global corruption
scandal ever is a clear example that red tape is a well-known practice and reaches high places within our
governments.
Today, I like to share my experience with the corruption at the work place; while at the same
time, I like to spread a message of hope to those professionals and directors that have to deal with this
phenomenon that affects every industry and share what I think is the main factor causing this anomaly.
More importantly, I like to share what I believe to be the solution.
In my last assignment as a commercial director, one of the main tasks given was to put a stop to
the fact that employees were stealing clients, time, money or goods from the company. In my research I
learned that most of the employees that were suspected of participating in such acts, in fact, were
acting like this in a form of rebellion; since they felt that the company was doing it to them they had to
do it in return, and is here where the corruption cycle begins.
The main goal as I initiated my investigation and due diligence, was to develop a more
capable, and versatile sales department; and in order to make it so, I needed to find out what exactly
was holding the company from becoming a more corporate entity and stop operating as a disorganized
Mom & Pop´s business. I knew that to do so we had to start making changes that will prompt us in that
direction. In my initial research, which consisted of listening to the main parties (the ownership, the
work force, past and existing clients) we discovered that the rabbit hold when deeper of what I
expected. The inside information acquired from the sources lead me to one of the main causes of
discomfort and help me to develop a strategy to resolve this situation.
The first part took over two months and it leads us to realize that the company was
experiencing a massive exodus of clients because they were not receiving the attention they deserved,
and fixing this situation became one of our priorities; but all point out directly to the fact that a very low
sense of pertinence among the employees existed and in order to come to a meeting of the minds and
change this work environment, I had to develop a compensation plan that benefited the employees not
only monetarily but psychologically ; Since most of the employees did not feel appreciated or motivated;
instead felt exploited.

3. Since, we look at these types of scenarios, with the seriousness a surgeon should analyze a
patient brought into their operating room; we felt that it was fundamental to develop a corrective and
integral plan of action, design to overcome all obstacles, and continue to monitor all phases that the
industry could manifest to the company. It became obvious during our research that we needed to stop
the bleeding by minimizing the massive exodus of clients that the company was experiencing at the time
of my arrival.
That’s why the second part of the plan also included it listening to the active and inactive clients,
this part of the research demanded the creation of two new departments and the unrestricted use of
the entire data base of clients that the company had acquired since they went on business ; but
unfortunately the administration never supply such list nor the approval to create a customer service
department or quality control department, which I thought were necessary in order to find out the true
cause of desertion among the clients and put in place a contingency plan to stop it; but instead, once
more we received nothing, just like when we ask for the financial reports needed to do a complete
financial analysis of the company; it never came to surface.
With the creation of this two departments we intended to minimized or stop the exodus of
existing clients and help regain those clients that had stop using our services and products. It will also
help to put in practice a preventive and quick reaction plan design to close this gap and star regaining
clients trust, taking under consideration that is easier and more cost effective to recover past clients,
than to find new ones; since companies could easily spend at least 10% of their profits into it.
At this interception is where I came across one of the most recent case studies released by
Federick F. Reichheld, a renowned business strategist. He points out how to deal with this type of
situations, and I did my best to integrate some of his philosophy and advice into to my plan of action
even though , that within the paper a warning to the reader manifested that conducting this type of
analysis in any company, could offer some resistance from other directors or even other high ranking
employees which may perceive it as an external treat, generating some risk especially for those
conducting the analysis.
The warning that Dr. Reichheld had mentioned on his paper became a reality, but of course it
was not his fault, his paper was designed for companies in the U.S. Even some relatives and fellow
associates call me crazy and advise me to keep quiet if I wanted to keep my employment and even my
own life; they told me I had to lay low; because unfortunately here in Colombia being honest can cost
you more than a job. It was strange to find associates and other professionals telling me that this
politics may work only in the US and that they wouldn’t work here in Colombia, and of course, I refuse
to believe that. I continue pushing forward, as any honest entrepreneur with a little bit of character and
ethics would have done. My argument is, and always will be, that ethics are needed more in Colombia
that on any other part of the world and that now of days being ethical is a rare but necessary quality in
order to succeed in the business world in the long run.

4. Since; our due- diligence was to our client we did not paid much attention to the constant
attacks and cons presented by some employees ; at least not until it became clear that the main
resistance was coming all the way from the top, and some relatives of the owner that hold key positions
within the company . On the other hand; I realized that there was no real leadership in the company and
instead selfishness reign. Per example, all employees were giving contracts for no longer than six
months in order to avoid paying them vacations and other benefits they will be entitled under the law,
some of them were not even given a contract at all, and those who were given one, were reported as
receiving only the minimum wage instead of the full pay, because this way the company could save
some money; an prevent their employees from obtaining a student or home loan, directly affecting their
way of living.
I wanted to put in place politics to change this around, what I did not expected was that the
owner would not do anything about it and instead will retaliate against those that promoted this idea.
All these actions lead me to realize that the reason why I never received the financial stamens was
because there were discrepancies that I was not meant to find out; but that eventually came to light
during my last month of work, were I discover that the owner was not only abusing of its employees job
security and wellbeing, but that they also were involved in the evasion of taxes and laundering of money
for others; a very common practice in Colombia. This alone gave me more than enough reasons to
depart ways and made it clear to me that it had to do so in order to protect my own career and my
integrity and therefore I decided that my job there was done and immediately presented my
resignation.
I an occasion the owner said to me personally that he wanted to let go of some personal
(around 50% of its employees and affect 50 families without remorse) in order to purchase another
$300,000 thousand dollar vehicle, but he was cut in a huge scandal of physically abusing his mistress a
cheerleader of the soccer team of the region; case that hit the news and media, putting off his plans of
buying the car he wanted; but speeding the massive fairing of his employees anyway.
I don’t know if he did it because of bad financial decisions or because he wanted to continue
living an over-luxurious life style, instead of investing in the future of the company and the well-being of
its employees. It was clear to me that these acts and the lack of professionalism and business ethics
more than likely will cause the speed decline of the company and more than likely take them out of
business.

5. At this point; I arrived at the conclusion that sometimes is best not to be employed by a
company in particular, and that being independent gives us the liberty to choose a different path if
deem necessary; in particular, if you realize that the company does not comply with your principals and
instead behaves unethically.
One thing I have always perceive since I started investing and working with Colombian
companies; is that the labor is not well compensated and that a huge gap exists between the rich and
the poor and until this gap is not narrowed down, we will continue to experience corruption.
As the new leaders of the business world, I urge my colleges that somehow we most incorporate
ethics, and character to our carriers; this is the only way we can solve the corruption problem that we
face in our industries here in Colombia. I know for a fact now that more than a necessity, is our
responsibility towards our society to integrated honest leadership into our day to day activities. The key
to succeed in this endeavor and to stop this negative cycle in the Colombian institutions in general must
include the development of ways to protect and value human capital.
Thank you for sharing and please comment.