Managing Ethics in a

Sales Environment

Group 1 presents…

What is Business Ethics?

Ethics describes the moral content of behavior.

Business Ethics is the study of how businesspeople behave when facing a situation with moral consequences.*

Sales Management Ethics is the specific component of business ethics that deals with ethically managing the sales function.

Salespeople are Boundary Spanners Boundary spanner is someone who

performs his or her job in the “boundary” between a company and a customer

Salespeople represent the company to the customer and the customer to the company.*

Sales managers have a special role in maintaining an ethical work and sales environment.

Customer Vulnerability

Vulnerable meaning they are at a disadvantage relative to the company.

Most often, the disadvantage comes in these forms: Ignorance, Naiveté, and Powerlessness

Sources of Potentially Unfair Advantages and Disadvantages in the Sales ArenaSource of Customer

VulnerabilitySalesperson Advantage

Customer Disadvantage

Ignorance Salesperson has superior technological

knowledge

Customer is technologically challenged and

cannot understand salesperson

Naiveté Salesperson allows room for negotiation

in setting prices

Customer doesn’t understand the

negotiation process.Powerlessness Salesperson works for

an exclusive supplier to the customer who is under contractual

obligation to purchase from the supplier

Customer represents a small retail

company with few assets and little access to other

markets

Applying Professional Sales Codes of Ethics

Codes of Ethics

It express the values of a firm by specifying, in writing, specific behaviors that are consistent or inconsistent with those values.

Codes must not only be adopted, they must embody values truly epitomized by top management.

Types of Codes of Ethics

1. Company codes that define ethical boundaries for employees.

2. Professional codes that define ethical boundaries for occupational groups.*

3. Business association codes that define ethical boundaries for people engaged in the same line of business.*

4. Advisory group codes suggested by government agencies or other special interest groups.

Generally PROHIBITED Behaviors in Sales-Related Codes of Ethics

Bribes, gifts, kickbacks

Conflicts of interest Illegal political

payments Violation of laws in

general Use of insider

information Violations of secrecy

agreement

Falsification of sales accounts

Moonlighting Violation of antitrust

laws Fraud and deception Illegal payments

abroad Justifying the means

by the intended end

Ethical Philosophies and Moral Judgments

Moral Philosophy

It deals with the systematic ways that individuals recognize and resolve decisions having moral content

Idealism Ideals are set of principles by which

individual determine morality. Golden Rule is considered a widely held

moral principle or moral absolute Moral Absolute represents a rule that should

always be applied with no exceptions or excuses.*

Idealism as a moral philosophy deals more with how people use these principles than with whether individual principle itself is universally valid.

Relativism

As a moral philosophy, is a process by which each individuals reach moral decisions based more on the actions they perceive to be acceptable given a particular situation

Those who are highly committed to relativism usually reject moral absolutes or imperatives

Relativism is sometimes called situational ethics*

Teleology

It is a philosophy that defines morality based on the consequences of the behavior.

It allows some indiscretion based on the argument that the “good” that results is more important than the harm caused.

The end justifies the means.

Moral Judgment

Is a person’s evaluation of the situation from an ethical perspective

Ethical Dilemma is a situation with alternative courses of action, each having different moral implications

Moral Judgment Criteria

1. Moral Equity*2. Acceptability*3. Contractualism*

Are Salesperson More Unethical

than Anyone Else?

Creating an Ethical Work Climate

Ethical work climate

It is a specific aspect of the organizational climate

Organizational climate is the way employees perceive the organizational culture

Four unique aspects of Ethical Climate

1. Policies and rules2. Trust and responsibility3. Peer behavior4. Bottom-line sales emphasis

Policies and Rules

It helps sales managers and sales people to internalize and govern selling and marketing conduct within the fir

Sometimes it is summarized in a code of ethics

Trust and Responsibility

Its dimensions defines how far people are trusted to behave in a responsible way and are held personally responsible for their actions.

Peer Behavior

As a dimension of ethical climate, is the extent to which employees view coworkers as having high standards.

Bottom-Line Sales Emphasis Sales emphasis is the extent to

which employees feel pressured to prioritize increased sales, profits, margins, or other financial returns over all other concerns.

A strong sales emphasis or bottom-line orientation, coupled with a control system based on sales quotas, leads to a more negative ethical work climate

Legal Considerations in the Sales Environment

Federal Regulation

1. Laws protecting companies from each other

2. Laws and policies protecting consumer and society from unfair business practices

Price Discrimination

The Clayton Act prohibits a seller from discriminating on price or terms of sale among different customers when the discrimination has a harmful effect on competition.

This practice is called price discrimination

Price Differences or Different Terms of Sales are allowed under two conditions:1. The price differential is given in

good faith to meet a price offered by a competitor

2. The price differential is based upon cost savings reflecting a difference in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which products are sold or delivered

Different Behaviors Associated with Discrimination in the Marketplace

Collusion Price Fixing Exclusive Dealing Restraint of Trade Reciprocity Tie-in Sales Unordered Goods Orders and Terms

of Sale

Business Descriptions

Product Descriptions

Customer Coercion

Business Defamation

Practicing Good Ethics Among the Sales Force

Understanding Ethics

Ethical Maturity- it is reached when salespeople place the moral treatment of others ahead of short-term personal gain

Measuring the Ethical CliimateExample Item Strongl

y Disagre

e

Disagree

Neutral

Agree Strongly Agree

Trust/Responsibility

Peer Behavior

Policies and Rules

Sales Emphasis

Sales Manager Ethics Checklist

Thank you!