3-1 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 3 Ethics First…Then Customer Relationships Chapter 3

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3-4 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

3-5 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:  Customers  Community  Creditors  Government  CCC GOMES  Owners  Managers  Employees  Suppliers

3-6 Exhibit 3.2: Major Stakeholders in the Organization’s Performance

3-7 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

3-8 Exhibit 3.3: An Organization’s Main Responsibilities

3-9 What Influences Ethical Behavior?  The Individual’s Role  Level one: Preconventional – 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  Less 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?

3-10 Exhibit 3.4: 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?”

3-11 Exhibit 3.5: Moral Development Bell Curve

3-12 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 or  comfortable in a situation

3-13 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

3-14 Are There Ethical Guidelines?  What Does One Do?  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?

3-15 Are There Ethical Guidelines?  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?

3-16 Are There Ethical Guidelines?  Is Your Conscience Reliable?  We all have an internal constant standard with which we measure right and wrong, a “moral compass”  Most of us know we should return the $125,000 and not copy someone’s homework  But what would we actually do?

3-17 Are There Ethical Guidelines?  Is Your Conscience Reliable? (Cont’d)  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.

3-18 Are There Ethical Guidelines?  Sources of Significant Influence  Do factors influencing our decisions include your friends, family, or things you see on television or in the movies?  Barna has found that the leading influences on American ethics are movies, TV, the Internet, books, music, public policy, law, and family

3-19 To Have Ethical Guidelines You Need  A point of reference that:  Is fixed – so that no one can change it  Is separate from you  No one else may influence

3-20 The Fixed Point of Reference Must Be:  Right whether people:  Believe it or not  Like it or not  Know about it or not

3-21 How Do You Know If What Someone is Saying is True or Not?  Can it 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

3-22 Exhibit 3.6: What Is a Fixed Point of Reference?  Stars can be used for navigation because they are a fixed point of reference separate from you that no one can influence

3-23 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?

3-24 Exhibit 3.7: Examples of World Religions Which Embrace the Golden Rule  Hindu - “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 - “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.”

3-25 What Do You Use For a Moral Compass?

3-26 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

3-27 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

3-28 Ethics in Dealing with Salespeople  Five ethical considerations faced by sales managers:  Level of sales pressure  Decisions affecting territory  To tell the truth?  The ill salesperson  Employee rights  termination-at-will  privacy  sexual harassment

3-29 Benefits of Respecting Employees Rights  More productive employees  Attracting good sales personnel  Reducing legal costs  Reducing wage increase demands

3-30 Salespeople’s Ethics in Dealing with Their Employers  Misusing company assets  Moonlighting  Cheating  Affecting other salespeople  Technology theft

3-31 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 may be required to buy other, unwanted products.  Clayton Act

3-32 Ethics in Dealing with Customers  Exclusive dealership  Reciprocity  Buying a product from someone if the person or organization agrees to buy from you  Sales restrictions  Cooling-off laws  Green River ordinances

3-33 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

3-34 Managing Sales Ethics  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

3-35 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*

3-36 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?

3-37 Exhibit 3.10: What Do You Look for in an Employer?

3-38 Exhibit 3.11: The Tree of Business Life I T C T TT TTTT TTTT Ethical 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

3-39 Golden Rule + Tree of Life  Measure the growth of your Business Tree of Life with your Golden Rule of Personal Selling. I T C T TT TTTT TTTT Ethical Service Builds T r u e Relationships

3-40 Ethics Rule Business