ETHICAL LEADERSHIP SALES MANAGEMENT TOPIC 10 1

ETHICAL LEADERSHIP SALES MANAGEMENT TOPIC 10 1

AIM: ethical behavior & its importance in sales mgt. OBJECTIVES: 10. 1 Explain the moral bases for business ethics. 10. 2 Understand how to make decisions that involve ethical problems. 10. 3 Recognize the issues of common sales ethics. 10. 4 Discuss how to build a sales ethics program. 2

Modeling Ethical Behavior l l l Refer to hand out. The model describes the factors that may affect the decision making process. The process begins with the characteristics of individuals who are confronted with ethical choices. Next is sequence of activities a person goes through in making ethical decisions. Next focus is on outcomes of ethical decisions. 3

Whose Ethics are Relevant? Typically there are no laws or court decisions to guide people in specific situations, so actions must be taken in the ‘twilight zone’ between the clearly right & the clearly wrong. l Many ethical decision problems are due to the poor decisions made by individual managers & SP. l 4

Role Morality l When sales mgrs maintain ethical sales force they select SP, provide ethical training, enforce moral codes of firm l Their actions send moral signals. l Two patterns of moral reasoning: relativism & idealism. - a relativistic mgr tends to reject universal moral rules & makes decisions on the basis of personal values & consequences of each situation. - idealists accept moral codes & believe that positive outcomes for all can be achieved by morally correct actions. 5

Machiavellianism Focus on what is rather than what ought to be – a realist. l Niccolò Machiavelli in the 16 th century denied the relevancy of morality in public life & regarded expediency as the guiding principle. l He was prepared to manipulate people & bend laws of business to achieve his own goals. l “any person who decides in every situation to act as a good man is bound to be destroyed in the company of so many men who are not good”. l 6

Conventional Morality l Also known as situation ethics. l ‘when in Rome do as the Romans do’ l The emphasis shifts from the individual to the what the society thinks about ethical issues. l Argument given usually ‘everybody does it’. l Problem with CM is that it is difficult for mgrs to adapt to changing contexts or cultures. 7

$10 given to a head waiter is considered a tip while $10 given to a customs official to get a perishable product moving is a bribe. l At times what is moral, ethical or common in one country may be unacceptable or even illegal in another. l Hiring of relatives is called nepotism in USA, in South America it is viewed as an honorable family duty. l 8

Making Decisions on Ethical Problems The following chart portrays the order in which values evolve: General values & norms of society Definition of goals & ethical standards of business corporations Relationship between corporation values & values of mgrs. Managerial decisions 9

Ethics is concerned with the effect of actions on the individual, the firm, business community & society as a whole. l Business values & standards are derived from general values & norms of society. l Difficult choice for mgrs in solving problems is whether they should adhere to their own moral standards, rely on company policy or do what is expedient to maximize short run profits. l Faced with ethical problems executives too frequently choose what is expedient. l 10

A good starting point is to develop a Job Description that includes moral & ethical guidelines. l JD is a set of rules that define the role of an employee. It resembles a legal contract as it states hours of work, starting & finishing times, & goals to be achieved. Ethical Checklist l Mrgs often need practical guidelines when making difficult moral decisions. l Some firms use a checklist: l 11

1. 2. 3. l l l 4. Recognise the dilemma Get the facts List your options are they legal Are they right Are they beneficial Make your decisions. 12

Common Sales Ethical Issues Hiring & Firing l Federal & state laws prohibit discrimination in hiring practices. l Suppose a sales mgr must choose between a man & a woman for a sales rep post. l Both candidates are well trained, man has more experience. Woman is the daughter of a VP of the company. 13

l l l Based on qualification than man qualifies. Firm is under pressure from govt. to hire women then she qualifies. Even though nothing is said, Sales mgr knows there could be personal advantages in hiring the VP’s daughter. Mgr must make ethical decision on what is best for org & what might enhance his position in the firm. Another ethical question relates to hiring SP from competitors. Adv. Trained people, likely to bring along some customers. May lead to lawsuits if trade secrets are involved. 14

House Accounts l Big accounts often require special attention that exceeds the time & skills available from the SP assigned. l Should this account be left with district or moved to HQ as house accounts. l Moving an account to HA can lead to misunderstanding & resentment by the SP. 15

Expense Accounts l SP are expected to spend money contacting customers & are then reimbursed for their expenses. l At times it is abused. l Need to monitor the actual expense for reliable SP and use as indicator for others. Gifts for Buyers l Include samples, gift wrapped liquor at Christmas. l Need to set limits as to when it can become a bribe. 16

Bribes l if a customer says that an order will be placed if a $. . . Commission is paid to a 3 rd party the SP can be sure that someone is being paid off. l Foreign payoffs are very common that U. S congress passed Foreign Corrupt Practices Act in 1977. l Bribes have been disguised as gifts. 17

l l l Entertainment Providing entertainment for potential customers is standard practice in US business but can lead to ethical problems. Sexual Harassment Equal Employment Opportunity Commission defines SH as unwelcome sexual advances, requests for certain favours. Workplace SH is prohibited. SP are vulnerable to 3 rd party harassment (by someone outside the boundaries of the firm). SP own firm can be liable for 3 rd party SH. 18

Whistle Blowing l l A whistle blower is an employee who informs the public about an employer’s or supervisor's immoral or illegal behavior. Whistle blowing is a last resort action that is justified when the employee has the appropriate moral motive. All the internal channels for dissent should have been exhausted before WB is considered. WB is not taken lightly because employees know they may suffer if they go public with a moral problem. 19

Government Regulation l l l Basic roles of govt. is to set min standards of business morality & to enforce rules. Consumer protection – common practice of dealers inflating prices, deceptive packaging, misleading on interest rates all have led to the enactment of the consumer laws. Why are regulation needed – govt often get involved in business ethics when problem is too big for individuals firms to handle. E. g. pollution legislation. 20

Building a Sales Ethics Program Moral climate of a business reflects the words & actions of its top executives. l Code of ethics l Ethics training l 21