Over the past couple of years, there has been a great deal of chatter about “fintech” or financial technology. One category that gets plenty of buzz is bitcoin and blockchain. What is blockchain? What is bitcoin (either with a capital “B” or small “b”) and what impact will it have on the world of recruitment? The purpose of this blog post is to answer those questions and delve a bit into this new technology and highlight the potential real-world implications for human resources.
What is blockchain anyways?
Bitcoin was created in 2008 by an anonymous programmer named Satoshi Nakamoto. No one knows his or her real name and whether it is one person or a group of people.
Bitcoin is a cryptocurrency or digital money with embedded encryption features. Think of it as money that has internal safeguards against counterfeiting or double spending. Bitcoin uses blockchain as a method of transferring value between market participants. Generally speaking Bitcoin with a capital B is a specific type of cryptocurrency (there are others such as Ethereum and Litecoin). When people refer to bitcoin, with a small “b” it can either mean one unit of Bitcoin or as a generic reference to all cryptocurrencies.
Imagine that bitcoin is the automobile and blockchain as the modern interstate system. There were roads before the modern car, but they didn’t have sophisticated tunnels, tollways or ERP systems to manage traffic flow. Similarly, there are vehicles that exist now, due in part to the new modern interstate system (e.g. safety features like guard rails, banked turns, and speed bumps were only introduced as cars moved faster). There will also be future vehicles (e.g., autonomous cars, buses, electric cars) which use the same road system.
Source: Financial Times
These future vehicles won’t necessarily rely on internal combustion engines driven by people. In the same way, the blockchain is a platform or system of protocols which will allow other applications besides bitcoin.
Another useful and more relevant analogy is to think of blockchain as TCP/IP protocol for the internet. Nowadays, people have built multimillion dollar companies on the internet without needed to understand the exact protocols. You can develop an idea for a marketplace or delivery service that would have been virtually impossible last century.
Uber, Amazon, AirBnB would not have existed 20 years ago without the confluence of high-speed internet connections and mobile devices. In the same way, businesses of the future may rely on blockchain features without necessarily getting into the technical aspects of it. Focusing on the consumer and resolving the pain and reducing the friction involved in transactions has built Alibaba and Square into billion dollar companies.
For further evidence of the importance of technology in the modern business era, simply look at the 5 largest companies by market capitalization in 2016 vs 2011. It’s clear visually by looking at the green colored tech boxes that they have come to dominate the modern economy.
Source: Visual Capitalist
It’s entirely plausible that in 10 years time, we will stop using “tech” as a way to distinguish companies. In the same way that “digital marketing” is being more commonly referred to as simply “marketing”, tech companies will begin to branch into all sorts of sectors. From this perspective, we will use industry concentration to distinguish Apple from Facebook.
However, for the time-being, it seems that traditional brick-and-mortar companies operated in discrete industry verticals. What distinguishes them most from tech companies is a narrow focus on industry and lack of a technology platform as a key competitive advantage.
The key functionality of blockchain is to allow multiple parties simultaneous access to a true view of the world or of ownership. Without going into too much detail, the basic underpinning is that everyone on the blockchain has a copy of ownership and can verify this in real-time.
A traditional ledger or balance-sheet ultimately has one owner. Even after it is published, only Company XYZ can say whether their assets are what they say they are. When Company XYZ says their assets for the prior year need to be restated from USD100 to USD90, they tell all interested parties (banks, vendors, regulators, etc…) and everyone else agrees. The other parties can run tests and re-create their own balance sheets, but ultimately the “truth” is relative.
What makes blockchain technology unique for now is that tampering with the records is virtually impossible due to how “blocks” are added to the “chain”. Each block is a transaction or a transfer of some type of value. Since everyone in the network has to implicitly validate the transaction (even if they are not a party to it), fraud is extremely unlikely to happen.
In this sense, there are as many copies of the ledger as there are participants. Unlike copies in the past where there was one parent ledger and multiple children ledgers, now everyone has the same ledger…it has been distributed to everyone.
Quantum Computing and limits of blockchain
So is blockchain a silver bullet to solve all the world’s problems? In short, no. While blockchain and distributed ledgers have the potential to solve myriad of our current, real-world problems, it’s also a function of current, real-world solutions.
At the heart of blockchain are complex mathematical problems that need to be solved in order to add legitimate blocks to the chain. Essentially, a transaction to the correct owner involves a “private key”. Current computers do not have the processing power to solve and crack these private keys in a reasonable amount of time, making the bitcoin infrastructure virtually hack-proof.
However, a quantum computer operates in a different way from modern computers. Essentially, all current computers operate by using binary code – 1s and 0s, ‘on’ or ‘off’. Instead of just on or off, a quantum computer can have an infinite number of values (i.e., 1, 0, 1&0, any number between 1 and 0 concurrently).The big difference between existing computers and quantum computers is the number of simultaneous calculations they can perform.
So, in theory, a quantum computer could hack bitcoin accounts and steal money. While a workable device is probably decades away, it is a potential threat to an economy based on a blockchain infrastructure.
How blockchain could change the company of the future
Companies are organized to provide consumers with value. If companies do this efficiently, they grow. If they do a bad job, they go the way of Kodak.
When customers buy goods from businesses, they do so on faith. Even large
well- known companies can make mistakes, but customers believe that they can trust products they’ve bought based on past experience or based on reviews from friends or colleagues.
When companies buy goods from other companies, they go through a similar calculus. Larger firms might have more rigorous protocols around their supply chains, but ultimately, someone is “trusting” the merchant on the other side of the deal. Or they “trust” that the regulators investigate all market participants to uncover wrong-doing.
In the modern era, the best way to produce goods and services for consumers or other businesses has been to form businesses. The modern corporation has facilitated risk-management, knowledge transfer and a whole host of other activities which reduce the need to trust others.
Ultimately, both business to consumer and business to business transactions boil down to contracts. How they are written, how they are interpreted and how they can be enforced. One way to reduce the number of required transactions need to produce a good or service is to internalize these transfers in the form of a company. The other way to operate businesses is to have better contracts between parties.
In a simple example, a company who needs to execute a marketing campaign can either hire an agency or produce the campaign in-house. The same for legal or other services. However, the US auto-industry might be a sign of future manufacturing especially in a blockchain enabled environment.
Ford and GM don’t manufacture cars. They manage sprawling supply chains of specialized firms which produce inputs they need to assemble the final product. The future could see the growth of decentralized autonomous organizations. In this possible future, people or small firms specialize in niche fields and sell their services in a marketplace in near real-time. There’s no need for companies in the traditional sense. Of course, this has many simplifying assumptions like adequate regulation to protect consumers and the like.
If the contracts themselves contain features that auto-execute, then we waste less time approving vendors. Blockchain allows a contract to have a payout feature only if the task is completed to specifications. Money would be held in escrow or within the contract itself and the proof of completion would trigger the payment.
Smart contracts still have the potential of fraud or collusion, but it becomes harder and harder to game the system. Contracts, including employment contracts, help us organize ourselves.
In the same way, a new system where each individual participant “trusts” who they are dealing with directly could result in far more freelancers and contractors than actual employees.
Is this all science fiction?
Source: Wikimedia: Creative Commons
Talking about the future is always fraught with challenges. In 1900, people predicted that fireman would have wings and put our fires from the air. Outside of a Hollywood blockbuster, this clearly has not happened.
So let’s turn to what companies are doing right now with blockchain to have a glimpse into what we should expect in the next 5 or 10 years.
- Monetary Authority of Singapore – MAS has formed a partnership with the R3 blockchain consortium to develop a system of inter-bank funds transfer.
- IBM-Bluemix Garage – At the 2016 Singapore Fintech Festival, IBM unveiled an initiative to help financial services companies with their compliance requirements using blockchain. Know-Your-Customer or (KYC) is a big pain point in banking and has obvious similarities with employee on-boarding.
- Nasdaq – Allows private companies to issue shares using blockchain to power the transaction.
- Philips – Has partnered with start-ups Gem and Tierion in a new project. Although details of the initiative have not been disclosed, it will likely involve medical records. Tierion provides a service to use blockchain as a way to verify any bit of data, file or business process.
- Toyota – The financial services arm of Toyota is looking at ways to track assets in the car production process or enable connected cars to more easily communicate with their owners.
The potential impact of blockchain on employment screening
With more trust between buyers and sellers, one implication in the future is that hiring becomes more transparent. Imagine a central repository that is opt-in and hack-proof. Anyone accessing the database can be assured that the data is robust and true. Anyone who chooses to operate outside of the database would be automatically subject a greater level of scrutiny.
In this fictional world, there is no need for a third-party company to screen a candidate’s work history and professional credentials. A company would pay a subscription to access the database directly and simply review a prospect against their profile in the database.
Banks are currently exploring a similar system to share data on an as-needed basis. The person who owns the data (the bank customer or the job applicant) can decide which data is visible to which participant. For example, I could specify that employers can view the university I attended, the year I graduated and degree earned. Alternatively, if an employer only wanted a candidate with a x years of experience, I could have the ability to phrase the question to be yes or no (I have a relevant experience without specifying the year I graduated).
The world of tomorrow will have to strike a balance between having safeguards and protecting consumer/job applicant data and operating more efficiently. Given the way Millennials are prone to share everything and allow Facebook open access to virtually all apps, it’s unlikely that disclosure and opt-in will be a major issue in the future.
Making verification easier
One organization that is already using blockchain to warehouse earned degrees is the Holberton School – a California computer programming institution. Degrees are transferred to graduates via blockchain where they are secure and authenticated.
If all academic institutions stored their degrees in a similar fashion, employers would need only access that database to verify an applicant’s credentials. The same could be done for professional qualifications or continuing education.
Earlier in 2016, Recruit Technologies announced a partnership with Ascribe where they will develop blockchain powered “Certificates of Authenticity”. Work is underway to create a database to verify resumes of prospective job applicants.
In the meantime, you still need screening companies
Quite often, when professionals talk about the intersection of human resources and technology or “hrtech”, they talk about chatbots or (“AI”) artificial intelligence.
In part, this is because it’s the most obvious, real-world application that impacts us today. There’s really no way to understate the rapid change that is currently underway.
Quite likely, you’ve interacted with artificial intelligence this week and hadn’t realized it. From chatbots that power some customer service portions of websites, to the intelligent algorithm that runs Siri, technology is running in the background more and more.
While a Brave New World may be quickly upon us, the reality is that some of the today’s thorniest problems still need human attention. You need a person to help understand the nuance of the specific question you are trying to answer.
You Get What You Screen For
Liz Ryan of The Human Workplace wrote an excellent piece about the need for proper employee screening. It was written in 2008 but is still relevant today. She describes an interaction with a manager who had a poor disposition and terrible demeanor. You can’t screen for everything, but you should know what an applicant will need in order to excel in a role.
“On the drive home, I remembered that the copy shop uses extensive testing in its pre-employment screening. I’ve seen about every big-company pre-employment test there is (thanks to Camera readers and others who know of my geeky interest in such things), and I’ve seen this copy shop’s tests — and they’re extensive.
They’re taken online at the start of the application process. They measure a job seeker’s math and analytical skills. They measure his or her logical skills.
What they don’t touch is interpersonal communication — no questions like, “Which one of these responses is the best choice when a customer is unhappy with our service?”
When you look at your recruitment process, does it sound like the scenario above? If you’re looking for that personal touch to help you in the recruitment process, then please reach out to us at firstname.lastname@example.org.
Disclaimer: Social media profiles may contain information about a candidate which might provide grounds for employer discrimination in certain jurisdictions (e.g., disclosure of race, sexual orientation or marital status). Before adding Social Media Screening to your prospective employee onboarding process, please seek the advice of the appropriate legal counsel.
Facebook has how many active users?!?!
Recently, Facebook announced they had 1.79 billion users worldwide. With a global population of 7.5 billion people, this means roughly ¼ people in the world are on Facebook. Since we know there are vast swaths of the planet without internet connection, this suggests the concentrations of prospective employees active on social media is probably much higher. If we add other platforms such as LinkedIn, Twitter and WeChat, the number starts to balloon exponentially. Using theories of affinity (e.g., birds of a feather…) could allow employers to screen out dubious employees with a propensity for dishonesty, theft or any other behaviors inconsistent with a productive workplace.
Birds of a feather
Various industries have begun mining social media data for different reasons. In these instances, terabytes of anonymized data are used to identify risks of default for loans or insurance. Last year, Facebook itself updated a patent to allow its data to be used to assess credit worthiness. The main thinking behind this approach is that people with similar behaviors tend to associate with one another. If 9 of your friends own their own homes, have excellent credit and steady jobs, then you are more likely to be a good credit risk for example. On the other hand, if 9 of your friends engage in minimal to no regular exercise, have poor diets and eating habits and rarely get health screening, then you are probably also a high risk prospect for health insurance.
In the US, concerns over privacy limit the extent to how prevalent these practices might become. However, in countries such as Singapore, there tends to be a greater emphasis on the public good or the benefit to business. Using social media as signaling mechanism would likely be seen as a useful tool. The Philippine start-up Lenddo began as a peer-to-peer lending platform using Facebook as part of its underwriting algorithm. It has now pivoted and works directly financial institutions to screen potential loan applicants. So if social media can be used to screen likelihood to repay, can it screen for likelihood of tardiness, promotion potential or other job performance measures?
Employees behaving badly
In July 2016, Singapore-based 99.co faced a serious issue with a recent hire who drew the ire of the public on Facebook. Sonny Truyen was upset over the lack of Pokemon Go in Singapore at the time and took his umbrage out online. His initial remarks got attention, but his defiant responses and lack of shame caused the episode to spin out of control. The Australian SEO consultant was swiftly sent packing and the CEO Darius Cheung issued a heart-felt apology on behalf of the company. Would a more thorough social media screening of Mr Truyen’s profile have identified this type of behavior in advance? Maybe, maybe not. However, given the number of people on social media, and the growth projections for platforms like Facebook and WeChat, employers will have access to more and more data about potential new hires.
Increased use of social media in background checks
Social media monitoring as already done by 40% of American private sector companies. According to Jobs Central, 75% of Singaporean companies do online research of potential employees. In fact, some reports suggest that social media screening has increased 5x in the past 10 years. Where will it end?
The US government does not have a reputation for cutting edge technology. Given that there are nearly 3 million civil servants, making sweeping changes is extremely hard. In May 2016, the federal government announced a new policy to examine social media profiles for people in sensitive positions. While this seems to be limited for people with access to classified security information, it doesn’t seem unreasonable to have this policy extend further. If the slow moving bureaucracy of the US federal government has started to adopt this practice, it’s an indication of its broader acceptance and likely to become the standard before we know it.
According to Biz Journals, the Office of Personnel Management (the US agency responsible for hiring) now conducts 1 million background checks every year. There are plans to automate social media profiles of potential employees via a third-party service. At this stage, only public information will be reviewed. However, as with Lenddo or other services, there is a possibility in the future where the third party contracting company already has access to user data via an app or other opt-in tool.
What can you do?
Depending on the size of your company, you can handle your own social media screening of prospects. However, best practices are to outsource this function to avoid any potential liability around what information you uncover during your review process. If you view someone’s Facebook profile and see that they have a legal lifestyle choice that differs from your own, can you reject the candidate? If you do, can you be sued for discrimination? Reviewing a LinkedIn profile to look for consistency around credentials or previous work experience would not likely cause any problems. However, reviewing a prospects Facebook profile to see how they spend their weekends, who their friends or spouse is or what religion they practice might violate certain labor laws. To minimize your exposure as a potential employer, you should look to hire a firm to handle social media screening for you the next time you look to add headcount. Email email@example.com for more information.
With nearly every modern fact now searchable and easily confirmed, it is amazing that job applicants today still falsify information on their résumés. Some industries are more sensitive than others. For example, untruthful employees in sectors subject to more rigorous compliance like banking, wealth management or insurance could pose more employer liability than others. The reasons behind misrepresentation range from arrogance that applicants won’t get caught to shame that their actual credentials aren’t competitive enough to get hired. In general, prospective employs lie in two different ways. The first type is falsely claiming a degree they never earned. The second is claiming a degree from an institution which lacks accreditation. While both are egregious, this article focuses solely on the former.
The Top Ten List
- Recently, the National University of Singapore (NUS) had a bit of a scandal when Anoop Shankar claimed bogus credentials on his applications. He was able to get a professorship at NUS but when he applied to an American university, a routine pre-employment background check uncovered the fraud.
Scott Thompson only held the post of Yahoo CEO for five months because he falsely claimed an additional degree in Computer Science. In this case, it was likely more the result of an activist board looking for any excuse to control Yahoo, but the end-result is the same. When people start digging into your background, what will they find?
Back in 2002, the Chief Financial Officer of Veritas Software Corp, claimed an MBA from Stanford University. Kenneth Lonchar later resigned after the fake accomplishments were discovered.
Ronald Zarrella claimed he earned an MBA from Stern-NYU. He was promoted to CEO of Bausch & Lomb, the maker of eye care products. While he did take classes at the Stern School of Business, he never matriculated. As a result of his falsehood, he had to forfeit a USD1.1 million bonus.
The director of research at Institutional Shareholder Services (ISS) was forced to part ways with his employer after his supposed law degree from the University of Southern California turned out to be a slight exaggeration. Ram Kumar left the school a few credits shy of receiving said degree, but the fib was enough to cost him his job.
- Claiming a PhD from Pepperdine, black belt in Tae Kwon Do and fighter pilot experience in the US Marine Corps, former Lotus CEO Jeffrey Papows takes the cake for telling tall tales. After his past caught up with him, he was forced to resign and end his 23-year career with the company.
- David Edmondson resigned his post as CEO Radio Shack, the American technology retailer, after falsely claiming two college degrees.
- In 2007, Marilee Jones was the Dean of Admissions at MIT. Arguably, she was in the ideal position to know the importance of being honest about academic achievement. Yet, despite her position, she lied multiple times on her CV about schools she attended and degrees she earned. She finally resigned from MIT when confronted about her background. However, this only bubbled to the surface after working there for almost 3 decades!
Singapore-based Patrick Imbardelli was recruited to InterContinental Hotels and promoted to CEO of Asia Pacific. Unfortunately, he had padded his resume a bit too much and his fabrications caught up with him. It was a promotion to the ICH governing board which prompted additional scrutiny and brought the lies to light.
Tang Jun 唐骏 served as President of Microsoft China and claimed a PhD in computer science from Caltech. Later, the publisher of his biography issued a correction without this degree. The blogger Fang Zhouzi exposed this on his website New Threads.
The reality today is that background checks are becoming more common in Asia. Lying on a CV is on the rise in Asia. Some reports state 19% of Singapore applicants and 16% of Hong Kong applicants give inaccurate information about their credentials. Based on these trends, employers should use more rigorous screening methods in their hiring. Email me to find out how Checkbox can conduct background screening for your next hire! firstname.lastname@example.org
In July 2016, Singapore-based 99.co faced a serious issue with a recent hire who drew the ire of the public on Facebook.
Sonny Truyen was upset over the lack of Pokemon Go in Singapore at the time and took his umbrage out online. His initial remarks got attention, but his defiant responses and lack of shame caused the episode to spin out of control. The Australian SEO consultant was swiftly sent packing and the CEO Darius Cheung issued a heart-felt apology on behalf of the company. You can read about the entire episode on the Straits Times.
Social media screening is one of the services we provide to clients in Singapore and Asia Pacific
Contact us: email@example.com
There are various reasons why candidates lie on their resume to get a job. Either the candidate doesn’t have the qualification or want to sensationalize their job experience to match the requirements.
As a recruiter, most of us don’t do a background check of shortlisted candidates.
the process takes too long; calling the 2 or 3 references would be enough to satisfy the client.
The main role of a recruiter is to close the deal as soon as possible and get paid. They believe doing a background check, the candidate may no longer be interested in the job while the checks are being conducted. The bottom line is placing the candidate’s and hopefully, he/she will stay on the job for the guarantee period of 3 months.
Most of the references are usually the candidate’s good friends/ colleagues who will give a good reference.
One of our services is contacting others within the current (if the candidate no longer works for the company) or a previous company where the candidate worked, this option gives the client more information on the candidate.
The cost of a background check is much cheaper than a Recruiter placement fee. Therefore, background checks are highly recommended for all positions.
Checkbox Pte Ltd provides pre-employment verification and background check services, for clients throughout Singapore and the Asia Pacific region.
Our services include verifying the following:-
Photo and name identity
Social media screening
I would welcome the opportunity to have a meeting or phone call to provide you with more comprehensive information and more than happy to answer any question which you may have for selecting your next team member.
Tel: +65 94507849
Uber is being sued by district attorneys in Los Angeles and its native San Francisco for not being transparent enough in how it performs background checks on its drivers. The ride-sharing company is also claimed to have allowed people convicted of murder and sex offences to drive for it.
District attorneys in Los Angeles and Uber’s native San Francisco said on 19 August that background checks used by the company failed to uncover the criminal records of 25 drivers in the two California cities; one driver was released from prison in 2008 after spending 26 years behind bars for murder. The claims fly in the face of Uber’s assurance that it uses an “industry-leading” screening process for all new drivers.
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George Gascon, district attorney in San Francisco, said: “We are learning increasingly that a lot of the information that Uber has been presenting the consumer has been false and misleading.” Uber does not use the same Live Scan fingerprint authentication as required by taxi drivers in California. These scans are the only ones which update after the driver has been hired, alerting their employer to any crimes committed after they become an employee.
The crimes committed by the 25 Uber drivers investigated by the district attorney include assault with a firearm, sexual exploitation of children, theft from the elderly and disabled and identity theft. Speaking at a local news conference, Gascon said around 30,000 registered sex offenders in California do not appear in the public registry used by Uber in its driver background checks.
‘Troubling and misleading’
“So, for example, if someone was convicted of kidnapping eight years ago, and they were just paroled last week – they just got out of prison – the Uber background back process will not identify the person as a convicted kidnapper,” Gascon claimed. He added that this was “troubling and misleading to Uber customers and to the public at large”.
Uber says its checks go back as far as the law allows. The suit led by Gascon here is not focused on which background checks Uber users, but if customers are being deceived. “The main concern that we have here, and that we continue to have, is the fact that the consumer is not given the information, you know, the truthful information, in order to make an informed decision,” Gascon said, adding that the suit “is only really scratching the surface”.
Uber says it has acted on the evidence provided to it by Gascon, removing the highlighted drivers’ access to Uber. The company said it needed more information on some of the drivers to pinpoint exactly who they are. Regarding its background check process, Uber said in a statement: “We disagree that the Live Scan process used by taxi companies is an inherently better system for screening drivers than our background checks. The reality is that neither is 100$ foolproof.”
The company Uber uses to conduct driver background checks, Hirease, recognises on its website how fingerprinting aids background checks. “Fingerprinting helps uncover criminal history not discovered through traditional methods, offers extra protection to aid in meeting industry guidelines, and helps prevent fraud,” it says.
THE Infocomm Development Authority (IDA) is investigating a claim that one of its employees possesses a fake master’s degree.
In a Facebook note yesterday, IDA said it is continuing to look into the case of Nisha Padmanabhan, who joined the agency last year with a master’s degree from Southern Pacific University, which is based online.
The university has been alleged to be a “degree mill” – an institution selling non-accredited educational credentials or diplomas for a fee – and was closed in the United States by a court order. It is now apparently operating in Malaysia.
IDA has been criticised online, after a netizen accused it earlier this month of hiring Ms Padmanabhan despite her alleged phoney qualification.
Last week, IDA responded on its Facebook page by saying that Ms Padmanabhan, a Singapore citizen, had received a bachelor’s degree from “a reputable university”.
According to her LinkedIn page, she has a bachelor’s in electronics and telecommunication from the University of Mumbai in India, and worked for nearly 14 years in various firms before joining IDA.
“She was recruited because of this bachelor’s degree, extensive past work experience and good track record,” IDA said.
“Nisha pursued an MBA (the master’s degree) out of personal interest, and it was not a relevant certificate for her position in IDA, though she was open about the fact that she had obtained it.”
In fact, 93 per cent of IDA staff hired at the level of applications consultant were hired because of their bachelor’s degree.
The criticism against IDA continued, however, with several people hijacking its Facebook posts on other subjects to comment on Ms Padmanabhan’s hiring and the agency’s handling of the case.
In its latest Facebook post on the matter yesterday, IDA said: “We understand your sentiments and concerns, and we are continuing to look into the matter.”
It also asked people who have comments to share them on the post, or e-mail them to firstname.lastname@example.org
It added that it would moderate comments more actively on the rest of its Facebook posts, so that the discussion would remain civil and constructive. It said it does not generally remove comments, but reserves the right to remove those that contain vulgarities, are personal attacks against individuals or are deemed inappropriate.
The importance of what you post on Social media can affect your current job and or job application.
One of the services Checkbox provides is looking at potential candidates’ social media account; to know if they are involved in activities that may jeopardize the company or country culture.