On the sixth day of Christmas…the ethics of hospitality and corporate gift reporting

It’s the festive season and we all know what that means…it’s time to party before Santa Claus leaves us presents and we, in return, leave a carrot out for Rudolph and a wee dram and mince pie for Santa himself. But hang on a second; let’s think about ethics and integrity for a moment; after all, none of us wants to end up on the ‘naughty list’ for New Year!

The tradition of exchanging gifts and enjoying hospitality extends into business dealings in many locations around the world and that can get individuals and organisations into hot water if they don’t have controls that ensure hospitality and gifts are monitored as appropriate.

Keeping a log of corporate gifts

Whilst private enterprises may have lower constraints than government organisations, knowing exactly who has received what from whom, in what capacity, and how they have reciprocated is key. Another consideration is ensuring that you don’t offer something unsuitable causing embarrassment to the recipient, and putting them in a position of conflict whereby to accept is inappropriate whilst to refuse may offend.

Educating your staff on the gift reporting process

Ahead of the season of goodwill, is a great time to remind staff of the code of conduct in relation to whether they may receive business gifts from clients, suppliers, or business partners, and if so what requirements apply in terms of recording the receipt. 

Does the receipt of gifts differ across departments?

Acceptance of gifts may be dependent on the individual’s role within an organisation.  It’s not uncommon for those involved in contracting and procurement, Audit or HR to be forbidden to receive gifts on the basis that acceptance may result in the perception that the gift could have influenced a business decision thus potentially compromising integrity.  On the other hand, those working in reception, logistics or operations may be free to receive small tokens of appreciation.  This can result in resentment between staff if not carefully managed. 

Sharing gifts across the company

Some organisations have rules that either all gifts must be pooled and shared amongst staff (e.g. a tin of biscuits or sweets), donated to the organisations nominated charity, or raffled in-house with proceeds going to a staff fund or charity.  However, this is not always practical and some staff may feel aggrieved if their good work, recognised and rewarded by an outsider, must be shared with colleagues.

Knowing how and when to declare a gift can be tricky

Some organisations have a financial threshold under which no records must be kept, but repeated gifts may take an individual over that threshold… so how and when, must these be declared?  Another difficulty is that often the recipient may have no idea what the gift cost is and clearly would not wish to ask.  A bottle of wine or whisky may vary significantly depending on whether it’s a supermarket own brand or rare malt; and not everyone is a connoisseur of these things.  Equally a night out as part of a ‘bring a party to a party’ may not be horrendously expensive, but by the time the ‘free bar and entertainment’ has ended the value may be well beyond the anticipated budget at acceptance.  Should staff retrospectively flag up when this occurs?

The issue with reciprocation…which clients do you reward?

Then there’s the issue of reciprocation or even just the ‘corporate gift giving’ decision for a firm.  Who decides which clients/suppliers to reward?  Who determines which gifts to purchase and distribute?  Should everyone get the same, or should each gift be somehow personalised?  Has consideration been given to any religious or personal mores and constraints that may affect the recipient (for example, giving Brazil nuts to an allergy sufferer or alcohol to someone who’s signed the pledge)? 

So how do you ensure your staff are behaving ethically? 

  • First, set the rules on giving and receiving and ensure they are compliant with any applicable legislation (particularly if your business has a cross border aspect or significant dealings with public servants)
  • Consider whether ALL offers (regardless whether they were accepted) need to be recorded, or if only those that were accepted should be documented (remember that where vendors are involved you may have audit rights and may want to compare registers for consistency in the future)
  • Ensure that your staff have been made aware of, and understand, the rules in the context of their role (a reminder in December never hurts)
  • Provide tools for the easy recording of gifts and hospitality and ensure that line managers review the records of their subordinates for completeness and validity (if all but one team member receives something then has that team member been incredibly unpopular or simply forgotten to record?)
  • Think about whether leaving the carrot out for Rudolph is an inducement for him to stop at your house when he would otherwise have flown past, and how that mince pie fits into Santa’s gluten free, low fat diet!
  • And finally, follow up in the new year with another reminder of the policy and ask staff to record anything they may have erroneously omitted, or under-recorded in the frenzy of the season!