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99THTH EDITION EDITION

CHAPTER 4CHAPTER 4ETHICS: THE ETHICS: THE FOUNDATION FOR FOUNDATION FOR RELATIONSHIPS IN RELATIONSHIPS IN SELLINGSELLING

Manning and Reece

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LEARNING OBJECTIVES-1

Discuss influence of ethical decisions on relationships in selling

Describe factors influencing ethical conduct of sales personnel

Compare legal versus ethical standards

Discuss influence of company policies and practices on ethical conduct of salespeople

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LEARNING OBJECTIVES-2

Explain how role models influence ethical conduct of salespeople

Explain how values influence behaviors

Discuss guidelines for developing personal code of ethics

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BASIC ETHICAL ISSUE

”Why would any company violate the moral contract it has with customers and risk the loss of goodwill built up over many years?”

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ETHICS DEFINED

”Ethics are the rules that direct your conduct and moral judgments. They help translate your values into appropriate and effective behaviors.”

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MAKING ETHICAL DECISIONS

CHARACTER CHARACTER DEVELOPMENTDEVELOPMENT

EROSION OF CHARACTER EROSION OF CHARACTER AND AND CAVEAT EMPTORCAVEAT EMPTOR

NATIONAL ASSN. OF NATIONAL ASSN. OF SALES PROFESSIONALS SALES PROFESSIONALS STANDARDS (Fig. 4-1) STANDARDS (Fig. 4-1)

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ENRON Largest U.S. corporation to file Largest U.S. corporation to file bankruptcybankruptcy Enron culture emphasizedEnron culture emphasized--risk-taking--risk-taking--personal ambition over teamwork--personal ambition over teamwork--earnings growth at any cost--earnings growth at any cost Dishonest practices eroded company Dishonest practices eroded company

charactercharacter BUT was listed as #5 in Fortune 2002 BUT was listed as #5 in Fortune 2002 list! list! Why?Why?

Lists Copyright Fortune 2002-2003. 4-8

FORTUNE’S 2002COMPANY RANKINGS

TOP 500TOP 500

1.1. Wal-MartWal-Mart

2.2. Exxon-MobilExxon-Mobil

3.3. General MotorsGeneral Motors

4.4. FordFord

5.5. EnronEnron

6.6. General ElectricGeneral Electric

7.7. CitigroupCitigroup

8.8. Chevron-TexacoChevron-Texaco

9.9. IBMIBM

10.10. Phillip MorrisPhillip Morris

BEST TO WORK BEST TO WORK FOR FOR

1.1. Edward JonesEdward Jones

2.2. Container StoreContainer Store

3.3. Alson & BirdAlson & Bird

4.4. XilinxXilinx

5.5. Adobe SystemsAdobe Systems

6.6. American Cast Iron PipeAmerican Cast Iron Pipe

7.7. TD IndustriesTD Industries

8.8. J.M. SmuckerJ.M. Smucker

9.9. Synovus Financial Synovus Financial

10.10. Wegmans Food MarketsWegmans Food Markets

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EROSION OF CHARACTER AND HALF-TRUTHS

ONLY IN IT FOR OURSELVESONLY IN IT FOR OURSELVES

CORPORATIONS EXIST TO MAXIMIZE CORPORATIONS EXIST TO MAXIMIZE SHAREHOLDER VALUESHAREHOLDER VALUE

COMPANIES NEED TO BE LEAN & MEANCOMPANIES NEED TO BE LEAN & MEAN

Figure 4.2 4-10

FACTORS DETERMINING ETHICAL

BEHAVIOR OF SALESPEOPLE

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MANAGEMENT AS ROLE MODEL

Ethical standards tend to filter down Ethical standards tend to filter down from top from top

Organization’s moral tone, set by Organization’s moral tone, set by management, is most important management, is most important determinant of employee ethicsdeterminant of employee ethics

Managers must infuse ethical values Managers must infuse ethical values in in subordinatessubordinates

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COMPANY POLICIES AND PRACTICES

Company policies and practices can Company policies and practices can have major impact have major impact

Developing ethical policy statements Developing ethical policy statements forces company to take a standforces company to take a stand

Policies should include distributor Policies should include distributor relations, customer service, pricing, relations, customer service, pricing,

product developmentproduct development

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THE ST PAUL

See Table 4.1. 4-14

SEARS GUIDELINES FOR ETHICAL DESCISION MAKING IS IT LEGAL?IS IT LEGAL?

IS IT WITHIN SEARS’ SHARED IS IT WITHIN SEARS’ SHARED BELIEFS AND POLICIES?BELIEFS AND POLICIES?

IS IT RIGHT, FAIR, APPROPRIATE?IS IT RIGHT, FAIR, APPROPRIATE?

WOULD I WANT EVERYONE TO WOULD I WANT EVERYONE TO KNOW ABOUT THIS?KNOW ABOUT THIS?

HOW WILL I FEEL ABOUT MYSELF?HOW WILL I FEEL ABOUT MYSELF?

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ADDITIONAL POLICY AREAS

Sharing confidential informationSharing confidential information ReciprocityReciprocity BriberyBribery Gift givingGift giving EntertainmentEntertainment Business defamationBusiness defamation Use of InternetUse of Internet

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SALES MANAGER AS ROLE MODEL

Sales staff actions and attitudes Sales staff actions and attitudes often often mirror those of manager mirror those of manager

Sales managers are responsible for Sales managers are responsible for interpreting company policyinterpreting company policy

Values such as integrity and Values such as integrity and honesty honesty must receive constant must receive constant manager manager supportsupport

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PERSONAL VALUES Values are deep personal beliefs Values are deep personal beliefs

Values serve as foundation for our Values serve as foundation for our attitudesattitudes

Attitudes serve as foundation for Attitudes serve as foundation for our our behavior behavior

VALUES ATTITUDES BEHAVIOR

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LAWS CONTRACTS AGREEMENTS

All key elements are influences by All key elements are influences by laws, policies, and agreementslaws, policies, and agreements

Legal environment prevents Legal environment prevents engaging engaging in unethical behaviorin unethical behavior

Uniform Commercial Code is legal Uniform Commercial Code is legal accepted guide to buyer-seller accepted guide to buyer-seller transactionstransactions

See Table 4.2. 4-19

UNIFORM COMMERCIAL CODE

1.1. Definition of a saleDefinition of a sale

2.2. Warranties and Warranties and guaranteesguarantees

3.3. Salesperson and resellerSalesperson and reseller

4.4. Financing of salesFinancing of sales

5.5. Product consignmentProduct consignment

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PERSONAL CODE OF ETHICS

GUIDELINES Personal selling must be viewed Personal selling must be viewed as as an exchange of valuean exchange of value

Relationship comes first, tasks Relationship comes first, tasks secondsecond

Be honest with self and othersBe honest with self and others

Think long-term…making ethical Think long-term…making ethical error can damage reputationerror can damage reputation

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EXERCISE CARE WITH CRM TECHNOLOGY

CRM software allows you to store CRM software allows you to store transaction datatransaction data

Record facts, not opinions or Record facts, not opinions or conclusionsconclusions

CRM data is “mobile”…other people CRM data is “mobile”…other people may see or use it may see or use it

Don’t write anything you don’t want Don’t write anything you don’t want customer to see customer to see

Last slide Chapter 4. 4-22

MAKING RIGHT ETHICAL DECISION

MAY HAVE IMPLICATIONS”When you hold out for high standards,

people are impressed—but they don’t always like you for it. Not everybody will be on your side in your struggle to do the right thing.”

Price Pritchette, The Ethics of Excellence