No gifts allowed!

In the 1990s, I was a procurement executive working for a large company. Back then, it was common for suppliers to provide gifts to buyers as a way of building relationships. I remember receiving lavish gifts like expensive porcelain, bottles of wine, and even binoculars. These gifts were seen as perks of the job and were considered part of the business culture but there has been a shift towards new, and I must say more relevant, ethical standards.

As time passed and the world changed, so did the attitudes towards these gifts. Companies began to realize that accepting gifts from suppliers created conflicts of interest and could compromise their integrity. It became clear that these gifts could influence the decision-making process and ultimately lead to poor business decisions. As a result, strict ethical standards were put in place, and there was zero tolerance for the acceptance of gifts, hence no gifts allowed. 

Reflecting on this change in core values, it is clear that it was a necessary step towards ensuring that business was conducted with honesty and transparency. In the past, it was easy for buyers to be swayed by gifts and other incentives, which ultimately might led to poor decisions that were not in the best interest of the company. By eliminating the influence of gifts, companies were able to focus on what really mattered: finding the best suppliers and negotiating the best deals.

In some cultures, such as Japan, gift-giving is an important part of building relationships and showing respect. Gifts are often exchanged at the beginning and end of business meetings, and the value of the gift is considered a reflection of the giver’s level of respect and appreciation for the recipient. However, it is important to note that in Japan, there are strict rules around gift-giving, and gifts that are perceived as too expensive or extravagant can be seen as inappropriate or even offensive.

In other cultures, such as the United States and Europe, gift-giving is generally less common in business settings. While gifts may be exchanged between colleagues or business partners during the holidays, it is generally not expected or considered necessary. In fact, as we discussed earlier, there is often a zero-tolerance policy towards gifts in order to maintain ethical standards and avoid conflicts of interest.

It is important to remember that the role of gifts in different cultures is deeply rooted in history and tradition, and it is not appropriate to judge other cultures based on our own standards. When doing business globally, it is important to be aware of these cultural differences and to approach gift-giving with sensitivity and respect. By doing so, we can build stronger relationships and avoid any potential misunderstandings or conflicts.

Here are some examples of polite wording that a buyer can use to decline gifts from suppliers, either via email or in a meeting:

Email Example

Subject: Appreciation for Your Kind Gesture – No gifts allowed.

Dear [Supplier’s Name],

I hope this email finds you well.

I wanted to express my sincere appreciation for the kind gesture of the gift you recently offered. It is always a pleasure to work with you and your team.

However, our company policy does not permit us to accept any gifts from suppliers. This policy helps us ensure transparency and maintain the highest ethical standards in our business relationships.

I hope you understand, and I look forward to continuing our successful partnership.

Thank you for your understanding and cooperation.

Best regards,

[Your Name]
Buyer
[Company Name]

In-Person or Meeting Example

“Thank you so much for the thoughtful gift. I truly appreciate the gesture and your kindness. However, I must inform you that our company policy does not allow us to accept any gifts from suppliers. This policy helps us uphold our commitment to transparency and ethical business practices. I hope you understand, and I look forward to continuing our successful collaboration.“

By using this wording, the buyer can politely decline the gift while emphasizing the importance of maintaining ethical standards and expressing gratitude for the supplier’s gesture.

Today, as retired, I look back on these changes with a sense of pride. It shows that as a society, we are capable of recognizing and correcting our mistakes. It also demonstrates that we are constantly evolving and adapting to new challenges and opportunities. I hope that this shift towards ethical standards continues to shape the way we do business in the future, ensuring that honesty and integrity are always at the forefront of our decision-making processes.

Learn more about managing core values in the relationship with suppliers in the course Supplier Code of conduct. A code of conduct is a set of guidelines and principles that define an organization’s values and expectations for behavior. A supplier code of conduct is a set of standards and expectations that suppliers must adhere to when doing business.

Visting Transparency International can further enhance your learning in this area. The report CODE OF ETHICS FOR COMPANIES: GOOD PRACTICES AND RESOURCES is interesting reading. Please find a summary here.

To me, the “No Gifts Allowed” policy is a stringent statement that have supported me in my career and I can strongly recommend using this core value in your future endeavors. 

Hope you have enjoyed. /// Per-Erik

P.S I found a draft to a text regarding guidelines on my disc. Might be interesting…?:

“Gifts and Entertainment from Suppliers

Purpose: This policy establishes the guidelines for accepting gifts and participating in meals or entertainment with suppliers to ensure ethical practices, maintain impartiality, and avoid conflicts of interest in all procurement activities.

Scope: This policy applies to all employees, contractors, and representatives involved in procurement activities on behalf of [Company Name].

1. No Gifts allowed from Suppliers

Policy Statement: No employee, contractor, or representative of [Company Name] shall accept any gifts from current or potential suppliers, regardless of the value.

Guidelines:

• Prohibited Items: This includes, but is not limited to, physical gifts, promotional items, discounts, vouchers, or any other items of value.
• Exceptions: No exceptions are permitted under this policy. Any attempt by a supplier to offer a gift should be politely declined and reported to the procurement department immediately.
• Reporting: Employees must report any attempts by suppliers to offer gifts to their direct supervisor and the procurement compliance officer.

2. Meals and Entertainment with Suppliers

Policy Statement: When participating in meals or entertainment with current or potential suppliers, the host organization (the party extending the invitation) shall bear the cost. This policy ensures transparency and prevents any potential conflicts of interest.

Guidelines:

• Hosting Responsibility:
  • If a [Company Name] employee invites a supplier for lunch or dinner, [Company Name] will cover the cost.
  • If a supplier invites a [Company Name] employee for lunch or dinner, the supplier will cover the cost.
• Expense Reporting:
  • All meal and entertainment expenses must be accurately reported and documented according to [Company Name]’s expense reporting procedures.
  • Receipts and a brief description of the business purpose must be submitted along with the expense report.
• Approval:
  • Any meal or entertainment expenses exceeding $[Amount] require prior approval from a senior procurement executive.
  • Routine meals within the approved budget do not require additional approvals but must still adhere to reporting guidelines.

….” 

D.S

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Note: Illustration to blogpost “No gifts allowed. Shift towards ethical standards” was created by CHAT-GPT on Jan 23, 2024.