Ethics First…Then Customer Ethics First…Then Customer RelationshipsRelationships

Ethics First…Then Customer Ethics First…Then Customer RelationshipsRelationships

Chapter

Chapter

2

McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.

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Main TopicsMain TopicsMain TopicsMain Topics

Social, Ethical, Legal Influences Management’s Social Responsibilities What Influences Ethical Behavior? Are There any Ethical Guidelines? Management’s Ethical Responsibilities Ethics in Dealing with Salespeople

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Main TopicsMain TopicsMain TopicsMain Topics

Salespeople’s Ethics when Dealing with Their Employers

Ethics in Dealing with Customers The International Side of Ethics Managing Sales Ethics Ethics in Business and Sales The Tree of Business Life

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Social, Ethical, and Legal Influences

An organization’s environment is a major influence on how the firm sells its products.

Due to the environmental turmoil in the world of commerce, this chapter is arguably the most important in the entire book.

Begin by asking, “Does an organization have any responsibilities to society?”

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Social, Ethical, and Legal (SEL) influences

have a powerful effect

on anorganization’s

marketingprogram!

Exhibit 2-1

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Management’s Social Responsibilities

Social responsibility is management’s obligation to make choices and take actions that contribute to the welfare and interests of society as well as to those of the organization.

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Organizational Stakeholders A stakeholder is any group inside or outside

the organization that has a stake in the organization’s performance.

Stakeholders may have similar or different interests in the organization:CustomersCommunityCreditorsGovernment

CCC GOMES

OwnersManagersEmployeesSuppliers

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mployees

ustomers

ommunity

reditors

overnment

wners

anagers

uppliers

Exhibit 2-2: Major Stakeholders in the Organization’s Performance (CCC GOMES)

C

C

C

G

O

M

E

S

Organization

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An Organization’s Main Responsibilities

Economic - be profitable Legal - obey the law Ethical - do what is right Discretionary -

contribute to community and quality of life

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Exhibit 2-3: An Organization’s Main Responsibilities

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What Influences Ethical Behavior? The Individual’s Role

Level one: Pre-conventional – acts in own best interest A few operate here

Level two: Conventional – upholds legal laws Most people operate here

Level three: Principled – lives by own code Fewer than 20% reach level three

The Organization’s Role At best, most employees in firm operate at level two How will the situation be handled if no policies and

procedures are in place?

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Exhibit 2-4: What Is Your Level of Moral Development?

Preconventional - “What can I get away with?”

Conventional - “What am I legally required to do?”

Principled - “What is the right thing to do?”

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Exhibit 2-5: Moral Development Bell Curve

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Are There Any Ethical Guidelines?

What Does The Research Say?American adults said by a 3-to-1 margin that truth

is always relative to a person’s situation.People are most likely to make their moral and

ethical decisions based on:Whatever feels right Comfort in a situation

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How Do You Make Your Moral-Right or Wrong Choices? (Choose One)

Whatever will bring you the most pleasing or satisfying results

Whatever will make other people happy or minimize interpersonal conflict

Values taught by your family Primarily from religious principles and

teaching or Bible content Other

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What if you found a bank bag containing $125,000? Would you return it to the bank?

Is it fear of being caught? Not the right thing to do?

What Does One Do?

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Out of class, is it okay to copy someone else’s homework assignment?

What keeps you from cheating on an exam when the professor is out of the room? Is it fear of being caught?Not the right thing to do?

What Does One Do?, cont…

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We all have an internal ultimate moral standard we use to measure good and evil, right and wrong – some people call that their “conscience.”

Most of us know we should return the $125,000 and not copy someone’s homework.

But what would we actually do?

Is Your Conscience Reliable?

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Is Your Conscience Reliable?, cont…

If a person’s values are at “Level 2,” they may make decisions based on the situation and what others say and do.Usually people rationalize their decisions; “I’ll

only copy the homework this one time.”

Many people are so accustomed to doing things unethically that they think nothing about it.

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How Do You Know if What Someone Is Saying Is True or Not?

Can there be a moral and ethical standard? There is no way for you to know if what I am

saying is true unless you know what is the truth, and

There is no way to know what is the truth unless there is a truth you can know.

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Exhibit 2–6: How Do You Know Which Fork in the Road to Take? You Need a Moral Compass!

“When you come to a fork in the road, take it.”

YOGI BERRA

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Factors influencing decisions include friends, family, or things seen on television or in the movies.

Barna Research has found that the leading influences on American ethics are movies, TV, the Internet, books, music, public policy, law, and family.

Sources of Significant Influence

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Three Guidelines for Making Ethical Decisions

A standard that:1. Never changes

2. Offers a fixed point of reference

3. Is separate from you

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Stars can be used for navigation because they are a fixed point of reference separate from you that no one can influence

A Fixed Point of ReferenceYou need a You need a fixedfixed point of point of reference reference separateseparate from you from you that that no one can influence.no one can influence.

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The Fixed Point of Reference Must Be:

Right, whether people:Believe it or notLike it or notKnow about it or not

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What Is a Fixed Point of Reference?

A fixed point of reference refers to something that provides the correct action to take in any situation and never gets tailored to fit an occasion.

How do you know which fork in the road to take?

You need a moral compass!

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Will The Golden Rule Help?

The “Golden Rule” concept is present in virtually all faith-based principles.

The Golden Rule does not involve reciprocity. “Could the Golden Rule serve as a universal,

practical, helpful standard for the businessperson’s conduct?”

Would you consider your faith a fixed point that is separate from you and never changes?

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Exhibit 2-7: World Religions Embrace the Golden Rule

Hindu Mahabharata, “Do naught unto others what you would not have them do to you.”

Confucius, “Do not do to others what you would not like yourself.”

Buddhist UdanaVarga, - “Hurt not others in ways that you yourself would find hurtful.”

Rabbi Hillel, “That which is hateful to you do not do unto your neighbor.”

Jesus Christ, “Do to others as you would have them do to you.”

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Exhibit 2–8: What Is Your Moral Compass in Life?

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Management’s Ethical Responsibilities

Ethics is the code of moral principles and values that govern the behaviors of a person or a group with respect to what is right or wrong.

Ethical behavior refers to treating others fairly.

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Management’s Ethical Responsibilities

Ethical behavior refers to treating others fairly.Being honestMaintaining confidence and trustFollowing the rulesConducting yourself in the proper mannerDemonstrating loyalty and responsibilityCarrying your share of work

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What Is an Ethical Dilemma?

A situation in which each alternative choice or behavior has some undesirable elements due to potentially negative ethical or personal consequences

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Ethics in Dealing with Salespeople

Five ethical considerations faced by sales managers:Level of sales pressureDecisions affecting territoryTo tell the truth?The ill salespersonEmployee rights

Termination-at-willPrivacySexual harassment

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What Rights Do Employees Have?

Termination-at-willMust now have accurate records which lead

to employee’s termination Privacy

Non-job-related information is being taken out of personal files by employers

Cooperative acceptanceEmployees are protected by law from acts

of discrimination and sexual harassment

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Benefits of Respecting Employees Rights

More productive employees Attracting good sales personnel Reducing legal costs Reducing wage increase demands

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Salespeople’s Ethics in Dealing with Their Employers

Misusing company assets Moonlighting Cheating Affecting other salespeople Technology theft

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Ethics in Dealing with Customers Bribes Misrepresentation Price discrimination

Robinson-Patman Act Selling the same quantity of the same product to different

buyers at different prices

Tie-in sales To buy a particular line of merchandise, a buyer maybe

required to buy other, unwanted products Clayton Act

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Ethics in Dealing with Customers, cont…

Exclusive dealership Reciprocity

Buying a product from someone if the person or organization agrees to buy from you

Sales restrictionsCooling-off lawsGreen River ordinances

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The International Side of Ethics

Guidelines for conducting international business may be different or even nonexistent.

Despite laws in other countries, U.S. firms are subject to U.S. laws.

It is important to keep up-to-date on the law and be aware of how authorized representatives are conducting business.

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Managing Sales Ethics

All managers feel they face ethical problems Most managers feel their employees need to

be more ethical Managers are more ethical with their friends

than with people they know Even though they want to be more ethical,

some managers lower their ethical standards to meet their goals

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Managing Sales Ethics, cont.

Managers are aware of unethical practices in their industry and company ranging from pricing discrimination to hiring discrimination

Business ethics can be influenced by an employee’s superior and the company’s environment

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Managing Sales Ethics, Exhibit 2-12: Top-Level Management Sets the Climate for Ethical Behavior

Follow the leader Leader selection is

important Establish a code of ethics Create ethical structures Encourage whistle-blowing Create an ethical sales

climate Establish control systems

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Ethics in Business and Sales

Personal project for you this week:Using the three levels of moral development, score

each ethical or moral decision you make this week.Do you have a pattern of using different moral

development levels for different decisions?What is a moral or ethical issue for you?

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Helpful Hints to Making Career Decisions

Your employer should provide worthwhile products.

You should be able to do what is right. You do not have to compromise your beliefs. People go before anything else. Good people are desperately needed in all

types of businesses/organizations. Look for a calling, not a job.*

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Do Your Research to Find an Ethical/Moral Employer: Is the Employer’s...

Mission to serve? Vision based upon the Golden Rule? Values based upon integrity, trust, and

character? Foundation based upon service? Cornerstone love of people?

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FUTRELL CORPORATIONPreparing People for the 21st Century

Exhibit 2-13: What Do You Look for in an Employer?

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Exhibit 2-14: The Tree of Business Life

IT C

TT T

T T T TT T T T

Ethi

cal Service

Builds

T r

u e

Relationships

The Tree is rooted in: Integrity: being honest and

without compromise or corruption From integrity flows confidence

that one can trust the other Integrity and trust form the

attributes often referred to as character

Framed by: Ethical Service that Builds True

Relationships

Shown with T’s standing for: Truth: facts needed to make

ethical and moral decisions

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Tree of Life + Golden Rule

Measure the growth of your Business Tree of Life with your Golden Rule of Personal Selling

IT C

TT T

T T T TT T T T

Ethi

cal Service

Builds

T r

u e

Relationships

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Ethics Rule Business

Customer

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Summary of Major Selling Issues

Ethical behavior pertains to values of right and wrong.

Ethical decisions and behaviors are typically guided by a value system

An important individual characteristic is one’s level of moral development.

Corporate culture is an organizational characteristic that influences ethical behavior.

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Summary of Major Selling Issues, cont…

Social responsibility in business means profitably serving employees and customers in an ethical and lawful manner.

Ethical standards and guidelines for sales personnel must be developed, supported, and policed.

Research suggests that socially responsible organizations perform as well as – and often better than – organizations that are not socially responsible.

End of Chapter 2End of Chapter 2End of Chapter 2End of Chapter 2

Chapter

Chapter

2

McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.