Sales Management: Shaping Future Sales Leaders

Ethics, the Law, and Sales Leadership

Chapter 4

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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Learning Objectives
Identify the more common ethical dilemmas

Distinguish between organizational policies and practices that support ethical behavior and those that enable unethical behavior
Explain how principled leadership can foster ethical principles and corporate culture Develop an appropriate course of action when youre personally faced with an ethical dilemma

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Definition of Ethics

p 64

Ethics are the moral principles of right and wrong that guide peoples behavior
1. What is or isnt ethical varies from culture to culture 2. In terms of buseness it can vary from industry to industry 3. What is believed to be ethical can also vary over time

Problems arise, however, when peoples values conflict with what they see going on around them

Approaches to Ethics
Approach Golden Rule Summary
Treat others as you would like to be treated Acts are OK as long as its legal or if everyone is doing it

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Pros and Cons

Personalizes ethical decisions, making it easy to determine what to do Fails to account for situations in which others are in conflict Fails to account for gray areas, in which acts are not specified as either legal or illegal

Conventionalist

Protestant Ethic

Do what you can, defend to a committee of peers

The market will determine what is right Do what you want, as long as no one gets hurt Do what has the best outcome for all involved

Whats ethical is based on the intended, not actual, outcome

Can lead to more concern about doing what can be defended than what is right Provides clear responsibilities for individuals Can devolve into might is right scenario Outcomes are important, and a responsibility for others is assumed Can lead to problems when others are harmed indirectly or harm is not obvious Outcomes, and honorable intent, are important; requires taking responsibility for others

Market Imperative Approach Libertine Ethic

Utilitarian Ethic

Its unclear who gets to decide what outcomes are best

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The Golden Rule

p65

Do unto others as you would have them do unto you Challenge: there are multiple others, and their needs or wants conflict Weakness: assumes that the way you want to be treated is the way others want to be treated (Kants kategoriske imperativ)
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Kants kategoriske imperativer (den absolutte moral pligtmoral)

1. kategoriske imperativ:

"Handl kun efter den maksime ved hvilken du samtidig kan ville at den bliver en almengyldig lov."[1]
[1] Hartnack, Justus: Kant, Munksgaard, 1991, p. 211.

2. kategoriske imperativ: Handl sledes at menneskeheden i din person svel som i enhver anden person altid tillige behandles som ml og aldrig kun som middel[1]
[1] Hartnack, Justus: Kant, Munksgaard, 1991, p. 215

Self-Assessment Library
Go to http://www.prenhall.com/sal/
Access code came with your book

Click the following

Assessments I. What About Me D. Decision Making Insights 3. How Do My Ethics Rate?

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The Conventionalist Approach

Suggests that people should take any and all actions allowed by law or by convention
Everybodys doing it, so it must be okay Do it until they say you cant It is easier to ask forgiveness than permission

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Weakness: doesnt consider whats ethical and not ethical

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The Protestant Ethic

Could I satisfactorily explain this choice to a committee of my peers? Weakness: pick the right committee, and you can probably explain away anything

p67

Weakness: intent is more important than actions

Providing evidence of honorable intent can be difficult
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The Market Imperative

Based on Adam Smiths classical economics approach to capitalism

p67

The market requires a person to act in his or her own best interest The salesperson works for the organization, and the organizations needs come first Counter-argument: corporation is an entity granted the right to exist by society, so the corporation must be governed by what is best for society in addition to maximizing shareholder wealth
What is best for society must balance the interests of the different people within it, shareholders, employees, and customers alike Smith might say these groups should fight it out
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The Libertine Ethic

Individual freedom: one should be free to do whatever one wants, as long as no one else gets hurt
Customers should be free to make their own decisions

p67-68

Weakness: identifies only the two parties in the transaction as being important; conflicts among other groups are rarely considered or resolved
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The Utilitarian Ethic

Do the positive consequences outweigh the negative consequences? Weakness: who gets to decide the value of the positive and negative outcomes? (Nyttemoral ses som modstykke til Kants pligtmoral (absolutte moral))

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The Salesperson as a Boundary Spanner

Boundary spanner: operates both outside of and within an organizations boundaries Work within their company but also work with customers outside the company Because salespeople are boundary spanners, they encounter ethical dilemmas externally with customers and internally with other employees

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Who Does the Salesperson Represent?

The Company

The Salesperson

The Customer

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Ethics in Sales Management: Done Right

p69

Salesperson Dave made it clear that while Laura worked for Travelocity, he worked for both her and the company Collaboration and respect made them a successful team When sales is done right, friendships can develop and great things can be accomplished

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Common Ethical Issues between Customers and Their Salespeople p70

Salesperson exaggerates benefits or minimizes problems, leading a customer to draw erroneous Misrepresentation conclusions (exaggerate = overdrive)
Salesperson claiming theat his companys products are the best Allowed to a certain degree (puffery = reklame) Salesperson attempts to influence a buyer unfairly by offering a gift or money (bribery = bestikkelse))

Puffery

Bribery

Salesperson fails to protect the privacy of another customer by giving the customers confidential information to another customer Privacy Salesperson invades the customers privacy with spam 4-16 or unwanted calls Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Ethical Issues Associated with the Salespersons Company p72

Stealing Salesperson fails to work a full day, stealing time Salesperson pads expense accounts Salesperson steals other peoples leads Salespeople misrepresent location of customer to receive credit for an order belonging to someone else
Salesperson experiences unwanted sexual offers or inappropriate physical contact

Claiming Credit

Sexual Harassment

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Creating an Ethical Sales Climate p73

Code of Ethics
Provides Salespeople and other employees with guidelines and standards for conduct Salespeople inform others that they intend to conduct business in an ethical manner Salespeoples intentions to remain ethical, offering salespeople an out when under pressure High-quality salespeople

Helps

Supports

Attracts

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US Federal Sentencing Guidelines (FSG)

Enacted in 1987, updated in 2007
Response to an increase in white-collar crime, specifically crime committed by businesses

Set of suggested guidelines for sales organizations developing programs for preventing, detecting, and halting unethical or illegal misconduct by their employees
Company that follows the guidelines can avoid severe penalties

Sales leaders
Must clearly and regularly remind salespeople of what is considered ethical and what is not Monitor behavior Cant say one thing and do another
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US Federal Sentencing Guidelines (FSG)

FSG include
Developing clear and complete code of ethics capable of reducing misconduct Securing top managements support for high ethical standards and charging executive-level officer with responsibility for establishing and managing compliance program

Establishing and managing compliance program that includes mandatory training and regular communication
Creating internal auditing systems to monitor behavior and detect misconduct Enforcing standards and punishing violations consistently Reviewing and modifying the compliance program on regular basis to demonstrate a focus on continuous improvement
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Global Sales Management: The Caux Round Table (CRT)

Arctic Ocean
Banks Island Ellesmere Island Severnaya Zemlya

p74
Wrangel Island

Provides guidance for companies operating globally

Arctic Ocean
Greenland (Den.)
Franz Josef Land

Arctic Ocean
New Siberian Islands

Svalbard (Nor.)

Jan Mayen (Nor.)

Novaya Zemlya

Victoria Island

Baffin Island

Russia Founded in 1986 Primary purpose: reduce trade tensions between countries
U.S.A.
Faroe Is. (Den.) Norway

Iceland

Finland

Canada

Ireland

Island of Newfoundland

United States of America North Pacific Ocean

North Atlantic Ocean

Portugal

Estonia Latvia Lithuania Belarus Neth. Poland Germany Bel. Ukraine Czech. Slovak. Aus. Hung. Moldova Kazakhstan France Switz. Slov. Romania Cro. Yugo. Bos. Uzbekistan Georgia Bulgaria Italy Mac. Kyrgyzstan Armenia Azerbaijan Albania Spain Turkmenistan Greece Tajikistan Turkey United Kingdom Den.

Sweden

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Aleutian Islands (USA)

Kuril Islands

Mongolia

N. Korea S. Korea

Hawaiian Islands
U. S. A.

1994 CRT principles: codified most comprehensive set of responsible business practices
Tunisia

Morocco

Cyp. Leb. Syria Israel

Japan

Iraq

Iran

Afghanistan

China

North Pacific Ocean

Canary Islands (Sp.)

Jordan

Algeria

Kuwait

The Bahamas

Libya

Pakistan

Nepal

Western Sahara (Mor.)

Egypt

Bhu.

Qatar

Mexico

Cuba

Dominican Republic

Saudi

Guatemala El Salvador

Belize Honduras

Jam.

Mauritania

Mali

U. A. E. Arabia Oman

Bang.

India

Myanmar (Burma) Laos

Taiwan

Haiti Puerto Rico (US) Dominica

Niger

Nicaragua

Barbados

French Polynesia (Fr.)

The value of a business to society is the wealth it creates for shareholders and employees, as well as the marketable products and services it provides to consumers at a price commensurate with quality Businesses should respect international and domestic rules, and avoid behavior that, even if legal, has adverse consequences to society
Costa Rica Panama

Venezuela

Trinidad and Tobago Guyana Suriname French Guiana (Fr.)

Senegal The Gambia Guinea-Bissau Guinea Sierra Leone

Burkina Faso

Chad

Sudan

Eritrea

Yemen

Thailand

Vietnam

Philippines

Benin

Djibouti

Cambodia Andaman Islands (India)

Cte DIvoire

Nigeria

C. A. R.

Ethiopia

Sri Lanka

Federated States of Micronesia

Marshall Islands

Liberia

Colombia

Ghana Togo Eq. Guinea

Cameroon

Maldives

Brunei

Guam (USA)

Uganda

Somalia

Malaysia

Galapagos Islands (Ecuador)

Ecuador

Gabon

Sao Tome & Principe

Rwanda Zaire

Kenya

Singapore

Kiribati

Congo

Burundi Tanzania

Indonesia

Papua New Guinea

Seychelles

Solomon

Islands

Peru

Brazil

Malawi

Angola

Zambia

Mozambique

Bolivia

Zimbabwe Namibia Botswana

Madagascar

Fiji

Paraguay

Mauritius

Indian Ocean

New Caledonia

Swaziland

Australia

South Africa Lesotho

South Pacific Ocean

Uruguay

Chile

Argentina

South Atlantic Ocean

New Zealand

Tasmania

Falkland Islands (Islas Malvinas) (adm. by UK, claimed by Argentina)

les Crozet (France)

South Georgia (adm. by UK, claimed by Argentina)

Source: www.cauxroundtable.org
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Antarctica

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Identifying and Responding to Ethical Breaches p74-75

Encourage Whistle-Blowing

Use Technology to Identify Questionable Activities

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Due Process Systems for Responding to Ethical Breaches p75-76

Investigation & Punishment Upper manager investigates potential violations, determines guilt, and assesses punishment to the guilty

Grievance & Arbitration Mediator/ Counselor EmployeeBoard

Guilt and punishment investigated and discussed by progressively higher levels of management and labor (grievance = klage) (arbitration = voldgift)
Manager investigates, leads discussions, builds consensus about potential guilt of accused person and need for changes in organizations practices or policies Mediator/Counselor role taken on by board of accused employees peers

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Are Managers equally lenient or strict? (lenient = mild)

When a sales rep acts unethically
High performers tend to be treated leniently Even when they have acted unethically before Even when policy does not allow for different treatment Even when the breach is serious But the act is the key to the punishment, not the excuse or reason for the act

Sources: Joe Bellizi 2008, Honoring Accounts of Top Sales Performers and Poor Sales Performers Who Have Engaged in Unethical Selling Behavior, Journal of Global Issues and his work from 1997 to 2003

How can a sales leader avoid variety in punishment?

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Dealing Personally with Ethical Breaches

p76

Quit

Take a Stand

Negotiate an Alternative

Appear to Agree

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Sales-Related Laws
Law Uniform Commercial Code Business Defamation Gramm-Leach-Bliley Act Can-SPAM act Foreign Corrupt Practices Act Civil Rights Act Robinson-Patman Act
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Comments Defines key elements of a sale, such as what is a sale and a warranty State laws that govern what businesses can say about competitors Federal law regarding privacy policies Federal law prohibiting spam and governing how companies can contact customers; related is the DoNot-Call registry US law that makes bribery and other activities illegal in other countries for US companies Governs hiring practices for sales managers Federal law regarding fair pricing

The Uniform Commercial Code (UCC)

One of the most important set of laws salespeople must follow Legal guide to commercial practices Determines who is an agent

Defines sale
Defines warranty

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Other Important Laws

Business defamation involves false public statements about a firms products, salespeople, or other employees, service levels, and any other actions Gramm-Leach-Bliley Act requires companies to notify customers regarding privacy policies CAN-SPAM Act requires companies to clean up e-mail lists and only contact those with whom they have an ongoing relationship
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Do Not Call (DNC) list maintained by FTC allows individuals to make phone numbers off-limits to telemarketers Foreign Corrupt Practices (FCP) Act requires salespeople to obey US law Antitrust laws (Sherman Act of 1890) prevent tying agreements

Cooling-off periods when buyer may cancel purchase without penalty

Laws for Sales Managers

Market Laws
to Promote Fair Competition

Labor Laws
Fair pay issues, appropriate employee selection and retention issues

Foreign Corrupt Practices Act Robinson-Patman Act and antitrust acts that forbid price discrimination and noncompeting agreements Whistle-blower laws

Reporting processes and legal requirements for sexual harassment claims

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