Part V SALES FORCE LEADERSHIP Chapter 10: Sales Force Ethics

Figure 10-1: A Model of Ethical Decision Making Part A: Characteristics of decision maker facing ethical choices DemographicsBehavioralPositional Part C: Outcomes Job performance Rewards and punishments Feedback and learningRecognizealternatives, affected parties outcomes. Determine the morally best alternative: ethical theories moral judgment stages Convert intentions into action (decisions and/or behavior) Give Priority to moral values and intend to do what is morally right. Part B: Moral decision structure. To behave normally in a given situation, a person must: Situation Moderators SocietalPeersCustomers ethical standardsSuperiorsLegislation Organization culture

TO LOOK OR NOT TO LOOK Assume you are taking a make-up final exam in a separate room and you need an A to pass the course, otherwise you might have to go to summer school and delay graduation for three months. You are 99% certain that your professor will not check in on you while you are taking the test and you have your textbook and notes in your book bag, which is sitting next to you on the floor. You are stumped on a few questions (enough so that you probably won’t get your A). If you looked in your notes and text, you would answer them correctly. Do you look?

Assume the same situation, but that if you got your A on the test you would receive $5,000 (in addition to graduating). Now would you look in your notes? TO LOOK OR NOT TO LOOK

Examples of Pressures Facing Sales Managers  Incentives to provide favorable earnings reports  High rewards for short –term profits at expense of long-term growth  Greed  Reputation  Other?

Purchasing Agent’s Ratings of Sales Activities and Correlations With Career Impact and Supplier Choice Ethicality Ethicality Ethicality Ethicality Ethicality Ethicality Salesperson BehaviorMeanCareerSupplier Choice Salesperson BehaviorMeanCareerSupplier Choice Gifts to Current Customers: 1.Give purchaser who was one of best customers a gift worth $50 at Christmas Gave one of best customers a $25 Christmas gift Buys lunch for a purchasing agent Gives every customer a present worth $10 at Christmas Provides entertainment for purchasing agent such as tickets to sporting events Puts Own Interest First: 1.Quotes higher than normal price for product during temporary shortage situation Lets it be know he has information about a competitor if purchasing agent is interested Hints if order is placed, price might be lower on next order, when it is not so

4.Only stresses positive aspects of product, omitting possible problem purchasing agent’s firm might have with it Grants price concession to purchasing agent of company he owns stock in Attempts to sell product to purchasing agent that has little or no value to buyer’s company Uses “back-door”selling instead of going through purchasing department Gifts to Prospects: 1.Gave purchaser who had not done business before Christmas present worth $ Gave purchase who had not bought from the firm a Christmas gift worth $ A $50 Christmas gift sent to purchaser who has been called on but had not placed an order Purchasing Agent’s Ratings of Sales Activities and Correlations With Career Impact and Supplier Choice Ethicality Ethicality Ethicality Ethicality Ethicality Ethicality Salesperson BehaviorMeanCareerSupplier Choice Salesperson BehaviorMeanCareerSupplier Choice

Pressure or Coercion: 1.In reciprocal buying situation, salesperson hints unless order is forthcoming, prospect’s sales to firm might suffer Attempts to use economic power of firm to obtain concessions from the buyer Attempts to get purchasing agent to divulge competitor’s bid in low bid buying situation Exaggerated how quickly order will be delivered to get the sale Preferential Treatment: 1.In shortage situation allocates product shipments to purchasing agent he personally liked Grants concessions to purchasing manager depending on how much he likes manager Give preferential treatment to customers who are also good suppliers Note: 5 = very unethical; 1 = very ethical. Correlations over.25 are significant at 0.01 level. Purchasing Agent’s Ratings of Sales Activities and Correlations With Career Impact and Supplier Choice Ethicality Ethicality Ethicality Ethicality Ethicality Ethicality Salesperson BehaviorMeanCareerSupplier Choice Salesperson BehaviorMeanCareerSupplier Choice

Recognize the Dilemma Get the Facts List the Options Make Your Decision Ethical Checklist

Is it a Gift or a Bribe? * Have you or your colleagues ever offered potential clients personal gifts valued at more than $100 in exchange for their business?

Is it a Gift or a Bribe? In your opinion, would a personal gift valued at $100 - $500 given to a potential client by a salesperson constitutes a bribe?

Table 10-1 Eight Ways to Keep You Sales Force Honest 1.Get support from top management showing that they expect you to follow the spirit and letter of the law. 2.Develop and distribute a sales ethics policy. 3.Establish the proper moral climate. If the bosses follow the rules, then the troops are apt to do likewise. 4.Assign realistic sales goals. People who try to meet an unfair quota are more likely to rationalize their way to a kickback scheme. 5.Set up controls when needed. Watch people who live above their income. 6.Suggest that salespeople call for help when they face unethical demands. 7.Get together with your competition if payoffs are an industry problem. 8.Blow the whistle if necessary.

Honesty “The reputation of a thousand years is determined by the conduct of one hour.” Japanese Proverb “There is no pillow as soft as a clear conscience.” Blanchard and Peale “When in doubt, tell the truth. It will confound your enemies and astound your friends.” Mark Twain