ethical issues for a sales person
TRANSCRIPT
-
7/28/2019 Ethical Issues for a Sales Person
1/17
CHAPTER 3
ETHICAL AND LEGAL
CONSIDERATIONSIN SELLING
Glengarry Glen Ross
What were the principal ethical predicaments which Sheldon
Levine (Jack Lemmon) and his cohorts faced?
How could Shelley's extenuating circumstances justify his
actions?
What types of external pressures influenced the salespeople's unethical selling practices?
How did the sales manager (Kevin Spacey) and top management (Mitch & Murray) foster the
unethical practices?
How the nameless motivational speaker (Alec Baldwin) address the issues of ethics?
How does Dave Moss (Ed Harris), rationalize breaking the law?
-
7/28/2019 Ethical Issues for a Sales Person
2/17
How does George Aaronow(Alan Arkin) violate rules of ethics?
What was unethical about Ricky Roma's (Al Pacino) methods
in prospecting and closing James Link (Jonathan Pryce)?
Why was Ricky Roma's handling of Mr.Link 's cancellation
unethical?
How would you change the sales environment to promote
ethical selling practices without compromising overall sales
performance?
The Power of Ethical Management
by Dr. Ken Blanchard & Dr. Norman Vincent Peale
The basic message of their book is simple:
1. You dont have to cheat to win!
2. Nice guys may appear to finish last, but usually they are running in a different race.
3. Cheating, lying, and short-changing the customer on service
1. may bring a satisfactory profit today,
2. but it is a sure way to court failure for the future.
THE ETHICAL DILEMMA:
Do honest salespeople finish last?
Ethical Questions
-
7/28/2019 Ethical Issues for a Sales Person
3/17
What method do we use to determine moral standards?
Why be moral at all?
Are there moral standards which are common to all humanity?
Is free will a necessary condition for moral praise or blame?
The Origin of Ethics
1. Legal Standards are enforced
2. Ethical standards come from society
Bases for Ethical Systems
Deontological
Standards-based ethics
uses specific rules
Teleological
Results-Based Ethics
defines right and wrong in terms of end results
Utilitarianism
Started by Jeremy Bentham (1748-1832)
Tried to reform some of the unfair laws in England
Developed a theory that the morally correct rule was the one that provided
o "the greatest good to the greatest number of people. The greatest good fo
Ethical
Ambivalence
results from learning that everything is relative.
Are there any moral absolutes?
Is the language of ethics different from other uses of language?
-
7/28/2019 Ethical Issues for a Sales Person
4/17
INFLUENCES ON THE SALESPERSONS ETHICS
Company Code of EthicsGovernment action and fear of retribution have induced more companies to adopt a code
Typical
issues
covered
Expense accounts
Gift giving
Unethical demands by a buyer
Promises about performance or delivery
Selling unnecessary products
Role Modeling by Executives and Sales Managers
Examples Set by Colleagues and Competitor
The Bottom Line
Profit?
Survival?
Groupthink
peer pressure
group develops a set of shared perspectives that may be
unrealistic but are strongly supported by the members ofthe group.
-
7/28/2019 Ethical Issues for a Sales Person
5/17
Gamesmanship
winning
for the sake of winning
DEVELOPING A PERSONAL CODE OF ETHICS
Responsibility
to
Self
your conscience
Responsibility
to
your
Company
Inaccuracies in Expense Accounts
Honesty in Using Time and Resources
Accuracy in Filling Out Order Forms
Representing the Company
Responsibility
to
Competitors
Responsibility
to
Customers
Overselling and Misrepresenting Products or Services
Keeping Confidences
Gifts
Entertainment
http://en.wikipedia.org/wiki/Stephen_Potter -
7/28/2019 Ethical Issues for a Sales Person
6/17
OPERATING IN A GLOBAL ENVIRONMENT
Some cultures have different expectations
U.S. citizens are expected to follow U.S. laws
ETHICS AND JOB TENURE
Whistle-Blowing
1. You may be held legally accountable for inaction
2. Recent rulings encourage whistle blowing
3. Sometimes the best policy may be to keep quiet until solid evidence can be accumulated against a
wrongdoer.
4. A word of caution inaction can even be grounds for legal action.
How Does the Company Treats the Salesperson
1. Some incentives encourage fudging
2. Management may not be accessible to help with dilemmas
3. Do control mechanisms exist for
a. Customer complaints
b. Salesperson dissatisfaction
c. Expense accounts
4. Are sales goals impossible
5. Be sure managers fairly manage the distribution of sales territoriesSEXUAL HARASSMENT
-
7/28/2019 Ethical Issues for a Sales Person
7/17
A. Nearly 16000 complaints per year
B. Look for a harassment policy including
A. Company Leadership
B. Immediate complaint investigation
C. Privacy rights protected
D. Thorough follow up
E. Sensitivity training
F. Review training for comprehension
G. Periodic refresher courses
ETHICS AS GOOD BUSINESS
A. Unethical activity costs business
B. Check Points in Ethical Decision-Making
1. Is it legal?
2. Is it fair to all concerned?
3. Would I want someone else to act this way to me?
4. How would I explain my actions to someone else?
5. How will it make me feel about myself?
RememberThere is no
pillow as soft as a clear
conscience.
LEGAL ISSUES FACING THE SALESPERSONIt is easy to violate many of the laws
Some
Legal
Traps
Quality below standard specified
Violation of delivery date
Pricing concessions
Incomplete or incorrect instructions
Price fixing
Delivering a different brand than that sold
-
7/28/2019 Ethical Issues for a Sales Person
8/17
Misrepresentation of product usage
Slandering competitor
Kickbacks to buyer
Charges after the sale
Misuse of proprietary data
Signing agreements without the proper authorization
C
at
eg
or
ie
s
of
L
a
w
s
Antimo
nopoly
Decept
ive
actions
Preserv
e
compet
ition
SPECIFIC ANTITRUST LAWS AND THEIR SALES IMPLICATIONS
The Sherman Antitrust Act of 1890
Federal Trade
Commission
Act of 1914
Unfair methods of competition and commerce
Unfair or deceptive acts or practices
The Robinson Patman
Act of 1936
Defines price discrimination
Gives FTC the right to limit quantity discounts
Prohibits unfair promotional allowances
Brokerage allowances only go to brokers
-
7/28/2019 Ethical Issues for a Sales Person
9/17
THE UNIFORM COMMERCIAL CODE (UCC)
guidelines for selling
1. Written or verbal offers to sell may be binding
2. Financing must be explained clearly and completely
3. Salesperson must know legal responsibilities of both parties
Warranties and guarantees
a. Express warranties are made by salesperson or in writing
b. Implied warranties
1. State law
2. Unless a disclaimer is made
COOLING-OFF LAW
How to keep out of
Legal Trouble
1. "Puffery" vs.
statements of
fact.
2. Educate the
customer
thoroughly
before making
the sale
3. Know technical
specs, etc. for
the product you
sell.
4. Know your
company's
literature.
Challenge it if is
false
5. Know the terms
of sale policies.
You can bind
the company
6. Know federal
and state laws
regarding your
product and its
warranties
7. Don't guess at
-
7/28/2019 Ethical Issues for a Sales Person
10/17
your product's capabilities
Common Ethical Issues for Salespeople
What are the most common ethical issues facing salespeople? Many of the most common
situations you could face as a salesperson involve issues such as the following:
A customer asking for information about one of their competitors, who happens to be
one of your customers
Deciding how much to spend on holiday season gifts for your customers
A buyer asking for something special, which you could easily provide, but arentsupposed to give away
Deciding to play golf on a nice day, since no one knows if you are actually at work or
not
Lets examine each of the issues. In the first issue, a customer owns the information about
their business. The salesperson may hold that information, such as how many cases of the
product they purchase or who their customers are, but that salesperson does not have the right
to share that information with the customers competitor. In many instances, a buyer may ask
the seller to sign a nondisclosure agreement because, in order to serve the buyer, the seller
will gain access to important private information about that buyer. But even if there is nonondisclosure agreement, courts are likely to agree with the buyer that the seller has an
obligation to protect the buyers information.
In the second issue, the concern is whether the gift is so extravagant that it is considered a
bribe. In some companies, such as IBM and Walmart, buyers are not allowed to accept so
much as a free cup of coffee from a seller. These companies do not allow their buyers to
receive promotional items such as a pen or coffee cup with the sellers logo on it because
they want every vendor to have free access to sales opportunities and earn the business on
their merits, not their freebies. Many buyers would question the motives of a salesperson
giving too large a gift. Most salespeople agree that lavish entertainment and gifts are
becoming less important in business because decision makers know these add to the costs of
doing business and theyd rather get a better price than be entertained.
Figure 13.12.
-
7/28/2019 Ethical Issues for a Sales Person
11/17
Lavish gifts like this watch may be nice, but many buyers will consider it too lavish and
wonder about the salespersons motives.
The third issue is tough for salespeople because there are two factors involved: a possibleviolation of company policy and providing an unfair advantage to one customer. Customers
may not know that their special request could get the salesperson in trouble and the request
may be reasonable, just against company policy. In that instance, the salesperson should not
follow through on the request, though it might make sense to see if the policy can be
changed. The second factor, though, is a bit more difficult because the request can be unfair
to other customers, and may cause legal problems. As long as the special request can be
provided to anyone who asks for it, no law is broken. What if the special request is for a
discount? Pricing discrimination laws could come into play if such a discount is not made
available to all who ask. What if the request isnt illegal, but other customers find out and get
upset that they werent offered the same benefit? Then the salesperson may get a reputationfor being untrustworthy.
http://www.web-books.com/eLibrary/Books/B0/B64/IMG/fwk-tanner-fig13_013.jpg -
7/28/2019 Ethical Issues for a Sales Person
12/17
In the final issue, the question is whether the salesperson is cheating the company out of time
and effort. Some argue that a salesperson who is paid straight commission (paid by the sale)
is not stealing anything from the company, but others argue that even in that instance, the
company is being deprived of possible sales that would be gained if the salesperson was
working.
Figure 13.13.
Even though it is a beautiful day for golf, a salesperson who takes time away from the job is
stealing time from the company, and losing sales opportunities as well. Taking a customer to
play may be a different story; such a game may be a time to strengthen a relationship, as long
as the customer does not feel manipulated or obligated.
These are not the only issues that salespeople face. In the United States, two basic principles
of business are that everyone should have an equal opportunity to earn business, and thecustomer remains free to make a choice. Manipulation, a form of unethical sales behavior,
unfairly reduces or eliminates a buyers ability or opportunity to make a choice. Persuasion,
on the other hand, may influence a buyers decision, but the decision remains the buyers.
Manipulation can include misrepresentation, or claiming a product does something it doesnt,
but it can also include withholding important information, using hard-sell tactics, and other
unfair sales tactics.
However, as mentioned earlier, salespeople tend to be ethical people. The use of manipulative
sales tactics is actually pretty rare.
Company Safeguards
http://www.web-books.com/eLibrary/Books/B0/B64/IMG/fwk-tanner-fig13_014.jpg -
7/28/2019 Ethical Issues for a Sales Person
13/17
Salespeople often work in the field and are therefore not under constant supervision. Even
inside salespeople may be able to get away with less than ethical behavior as no supervisor
can watch or hear everything. So how do companies manage ethical practices?
The first step is to develop policies based on the companys mission and values (recall these
from Chapter 2, Strategic Planning) that describe what is acceptable and what is not. Goodethical policies not only list or describe appropriate and inappropriate behaviors, they also
describe the underlying principles. Not all ethical dilemmas can be listed in a policy, so by
detailing the principles and values that make up the reasoning behind the policies, salespeople
and sales managers will be more prepared to respond appropriately.
Codes of ethics, or ethics policies, can be pretty detailed. Shells ethics policy, for example, is
a book over 20 pages long! Not only do these cover how salespeople (and other company
representatives) should interact with customers, they also detail how employees should treat
each other and how the companys vendors should be treated. (To see an example of a brief
code of ethics for salespeople, visit Sales and Marketing Executives Internationals Web site,
http://www.smei.org/displaycommon.cfm?an=1&subarticlenbr=16.)
A good second step is to train all salespeople and sales managers on the policy. One reason
for such training is to secure greater support and application of the policy, but another reason
is that, should a salesperson engage in an unethical or illegal activity, the company is
protected. The Federal Sentencing Guidelines (FSG) were first developed in 1987 and then
updated in 2007, and specify what happens to companies when employees commit breaches
of ethics. Companies that have solid policies and train all employees on those policies can,
rightfully under the FSG, claim that any unethical employee was acting against company
policies and on his or her own, should anyone file charges against the company. Solid
policies and employee training can then be used as a defense against such charges, and the
company would not be held liable.
Yet training alone is insufficient. The company must also enforce the policy and have
procedures in place that make enforcement possible. For example, a company should have a
mechanism for reporting unethical activity in a way that protects the person making the
report. Many companies have anonymous message boxes that enable an employee to report
unethical activity. One similar and common practice is to have an ethics office, charged with
investigating any complaints. The FSG requires that companies also have internal auditing
procedures to ensure that misconduct can be detected.
Note that these codes of ethics, the FSG, and the policies and procedures affect allemployees. These were not created just because of salespeople. Marketers have faced ethics
challenges in how claims are made in advertising, while supply chain managers have
encountered dilemmas in dealing ethically with vendors. Managers, in any area of the firm,
encounter challenges regarding equal opportunity and creating an appropriately professional
work environment.
Challenges Facing Sales Managers
Sales managers face the same challenges in managing salespeople that all managers face.
These include ensuring that hiring, compensation, and other management practices are not
discriminatory, that sexual harassment finds no home in the workplace, and that employeesare treated with dignity and respect.
http://www.smei.org/displaycommon.cfm?an=1&subarticlenbr=16http://www.smei.org/displaycommon.cfm?an=1&subarticlenbr=16 -
7/28/2019 Ethical Issues for a Sales Person
14/17
Other challenges may arise, though. For example, salespeople have to be in front of
customers when customers are available. Earlier, we discussed how the number of calls made
can impact a salespersons success. So should a sales manager schedule all training sessions
on weekends, when buyers are at home and not available for sales calls? Does the answer to
that question change if the salesperson is paid a salary or a commission?
Recently, one sales manager reported a customer who said he wanted no Muslims calling on
him. Another sales manager said when she and her salesperson (another woman) sat down
with a buyer (a male), the buyer had pornography on his computer monitor. Do those sales
managers assign new salespeople to the accounts? Or do they fire the customer? If the
customer was to be fired, the salesperson would lose commission. Yet in both instances, the
managers said they fired the customer, an action that both salespeople were happy with, and
they were reassured that the loss of the sale wouldnt be held against them. The loss of the
commission was worth it.
In sales, several laws apply that also apply in other areas of marketing but are more
prominent in sales. For example, the Uniform Commercial Code (UCC) determines when asale is a sale. Typically, a sale is a sale when the product is delivered and accepted by the
buyer. In most instances, the customer can cancel the order with no penalty unless accepted.
Sales managers have to be aware of such laws in order to avoid creating policies that can be
illegal.
Laws that affect sales operations include pricing discrimination, which we discuss in
Chapter 15,Price, the Only Revenue Generator, and privacy laws, discussed earlier. In
addition, laws regarding hiring practices, workplace safety, and others can affect sales
managers. If global sales situations arise, the Federal Corrupt Practices Actwhich prohibits
bribery and other practices that might be culturally acceptable elsewhere but that are illegal in
the United Statescomes into play.
For these reasons, sales managers should develop close working relationships with the human
resources department. These professionals, along with the legal department, are charged with
staying abreast of legal changes that influence management practice.
Key Takeaway
Salespeople are, for the most part, caring, ethical professionals. They do face unique ethical
challenges because of their job, including how to handle unethical requests from customers
and making sure that they know and follow all company policies for interacting withcustomers. American salespeople have the added constraint that whats illegal in the United
States is illegal for them in other countries because of the Foreign Corrupt Practices Act, even
if the behavior in question is acceptable to those countries laws and practices.
Sales managers have all the usual management concerns, such as fair hiring practices.
According to the Federal Sentencing Guidelines, managers also have to develop policies and
practices that codify ethical behaviors, train salespeople on the ethics policies, and ensure that
the policies are followed. In addition, sales managers have to be aware of laws such as the
Universal Commercial Code and others that govern sales transactions.
Review Questions
-
7/28/2019 Ethical Issues for a Sales Person
15/17
1. Do salespeople deserve the image or negative stereotype? Why or why not?
2. Do ethics get in the way of success in sales? Why or why not?
3. What safeguards do companies enact to ensure ethical behavior among salespeople
and sales managers?
Ethical Selling and Sales Management
A code of sales ethics is fundamental to sales success. It is the foundation on which sales techniques and
strategies are built, and provides solid footing on which long-term, profitable businesses are built.
Written Feb 15, 2008, read 6991 times since then.
More Sharing Services
| Share
Sales people perform amid the convergence of three demanding masters: employer, customer
and self. Each party has their own agenda and the sales person, who clearly has a personal
agenda, is the arbitrator.
The employer/seller is seeking sales, profit margin and correctly consummated
closings.
The customer/buyer is seeking solution, value and correctly consummated closings.
The salesperson has the above objectives in mind and also their own income potential.
The common desire is that the sale be closed correctly. All three parties want to leave the
closing feeling pleased with the final result and process that lead to it. Critical to this three-
way satisfaction is the sales person saying and doing the right things and not over-promising.
True and correct disclosure is the basic tenet: disclosing to the customer what the product
truly is, how it can solve problems and disclosing to their employer who the customer is and
what they want.
It is a challenging work of communication, that can easily be confused accidentally and
deliberately.
The deliberate error most often is caused by money. People, including sales people, sellers
and buyers all have and will act oddly for money. Money can lead us astray. Sales people
have the added pressure of variable income streams and the challenge of having great months
and poor months. The question is, Will our sales people hold their ethical posture when
times are bad?
Micro-management is one tool to deal with this disclosure problem and many companies now
use scripts and legal approval of any and all flyers or letters that a sales person might use.
Misrepresentation is embarrassing and expensive. It can result in loss of business, loss of
customers and worst-case scenario, class action suits. Ethical selling is an adjunct to micro-management and an enhancement to any sales effort. Sales people need to know about the
http://biznik.com/articles/ethical-selling-and-sales-managementhttp://www.addthis.com/bookmark.php?v=250&pub=biznikhttp://www.addthis.com/bookmark.php?v=250&pub=biznikhttp://biznik.com/articles/ethical-selling-and-sales-managementhttp://www.addthis.com/bookmark.php?v=250&pub=biznik -
7/28/2019 Ethical Issues for a Sales Person
16/17
conflicted position that they are in and use their own ethical posture to bolster their customer
relations and service.
Ethical selling is developing trust: teaching individual sales people to act rightly, to say and
print the right things; to not over-promise and make sure that buyers and sellers are fully
informed.
The customer is not always right. Not all customers should be sold to, and sometimes,
customers should be fired. In every walk of life there are liars and thieves. Just as sales
people can over-promise and not deliver, so too can customers. The promise of purchases is
not the same thing as actually making the purchase. And paying for the purchase and the
product performing as advertised complete the transaction.
Sales people certainly know that all customers are not created equal. Some are large buyers
and some are small. Some have prompt payment habits and some dont pay at all. Though we
would prefer the large buyers who pay promptly, what we must truly avoid are those
customers that never pay. These are the unethical customers that should be avoided. Do oursales people know to avoid them?
Quality begets quantity. If and when sale people are ethical (courteous, responsible and
honest) they can and will attract similar type customers. They will also be able to identify
customers that may not be so. Unethical customers are to be avoided. The customer is not
always right. Ethical selling involves both sales people and their customers. Can our sales
people be ethical and also find like-minded customers?
Be ethical thyself and do business with same. Liars and thieves can and will play money
games and lead a sales person astray. Are our sales people ethically secure?
Competitors are not the enemy. Sometimes they will win the day and sometimes we will. No
one wins every game they play, but how do we handle defeat? Do we disparage our
competitors or our operations / fulfillment teams? Do we sulk and complain to anyone and
everyone? Or do we examine the events and learn from them?
Mistakes will happen and perfection is a very hard performance level to achieve and
impossible to maintain for very long. Mis-communication does happen. Shipping delays
occur and people do get sick and take vacations; all of which can cause a sale to not close
correctly. Ethical sales people know this and can deal with these errors, and they can also
communicate clearly what did occur and what might be done, without recrimination orassassination.
Ethical selling provides a framework to accept both success and loss. Surely, success is the
preferred outcome, but experience and character are most often acquired when we lose.
Losing is not bad, if we learn and grow from it. Developing a personal code of ethics is
critical in the development of successful sales people.
I am coming from the mortgage industry, which is suffering now for many reasons and one is
a market wide lack of ethical behavior. Too many players, sales people, sellers (lenders) and
buyers (borrowers) are misbehaving. Too many loans have been closed that were not true and
correct. Misrepresentation is not the only problem in the current mortgage crisis, but it is acontributory factor and there is truly no need for such and no excuse for such.
-
7/28/2019 Ethical Issues for a Sales Person
17/17