Chapter 4

Sales Ethics
INTRODUCTION
 Ethical dilemmas are common in selling because
ales people often have to make decisions in field
with customer and competitive offers.
 Sales ethics provide a moral framework to guide
sales people in their daily contacts with
customer.
 Example of prudential insurance company of
America.
 Example of Sales people paid bribes for
promotional material. 1
Continued……..
 Other ethical problems happen with the issue of
harassment.
 Such as a sales manager ask his sales people to credit his
personal frequent- flier account when ever they take trips
on company business. If sales people refuse they may be
penalized on their next performance review.

 The above example shows personal selling is full of ethical

dilemmas.
 Sales manager must train sales people that how to respond
when situation occur.

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PROCEDURE FOR ETHICAL DECISION
 PART-A:
MAKING
The process starts with individual
characteristics who are confronted with ethical choice.
 If sales people start with high moral standard, the chances
of ethical decision are made are enhanced.
 Hiring honest, principled sales person is the first step.
 PART–B: sequence of activities a person goes through
in making ethical decision.
 First you have to recognize ethical issue, affected parties
and possible outcomes of your choice.
 Assign priorities to moral values and convert these intention
into action.
 This decision process is moderated by the ethical standards
of society, organization, peers, competitors, customer and3
kaw.
Continued……..
 PART-C: focuses on outcomes of ethical decision
process.
 It can be measured in terms of job performance,
customer satisfaction and achievement of
organizational goals.

 Figure 6-1 on next page.

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5
 Whose Ethics are relevant?
 Ethical problems mean poor decision by individual
sales people or company policy encouraging wrong
doings.
 Example of new York, a director charged bribes from
computer supplier.
 hiring a person with characteristics can save money in
long run.
 A best sales person can go wrong if forced to operate
under polices that promotes misdeeds.

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 Role Morality
 Moral philosophies held by moral manager are
important to maintain ethical sales force because
manager select field force, provide ethical training, and
enforce the moral code of the firm. Two philosophies
are common.
 Relativism: manger tends to reject universal moral rules
and make the decisions on personal values and
ramification of each situation. believe
 Idealism: leads to better ethical decision rather than
relying on it all depends approach used by relativistic.

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Continued……..
 With age increasing the relativism declines.
 Idealism increases with age.
 Research was conducted with 602 marketers, 20
questions. The result indicated no significant on high or
low difference on idealism and relativism between sales
manager and other marketer.
 Its popular that sales people lower ethical standards
than any other occupation.

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 JOB DESCRIPTION
 A good place to find guidelines on ethical behavior in
the work place is job description.
 A job description is a set of rules or practices that define
the role an employee is expected to play at work.
 It is like a legal contract because it specify the no or
working hrs, start and stop time, and goals are to be
accomplished that are grounds for dismissal.

 If complete job description is available, employees are

in position to resolve ethical problems.

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 Social Darwinism
 Social Darwinism is based on idea of Charles Darwin
and theory of evolution.
 Natural selection leads to stronger plants and animal.
 Natural laws”. Select the best and the more competent
firms to enhance the good of society.
 Free competition among business firms presumably
leads to the survival of fittest.
 With social Darwinism there is no ethical standards.
 And reflect the climate of everyday business.
 The law is the law of jungle.
 Government does not interfere, cut throughout
competition eliminates the weak and only the strong10
 Machiavellianism
 Niccolo Machiavelli, secretary of republic of Florentine.
 Famous for his observation on human behavior and the
working of power.
 A realist “ a person who focused on what is rather than
on what ought to be.
 Machiavellianism deny the doctrine of relevancy of
morality in public life and regarded convenience as
guiding principle.
 He was prepared to manipulate people and bend the
laws of business to achieve goals.
 Principle and method of craftiness, dishonesty and
cheating. Such practices are adopted by sales people11
to achieve personal of corporate goals.
Figure 6-2 MAKING DECISION ON ETHICAL PROBLEM

General Values and Norms of

Society

Definition of Goals and

Ethical Standards of Business
Corporation

Relationship between
Corporation Values and
Values of Manager

Managerial Decision

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 Making Decisions on Ethical Problems
 Ethics are concerned with effect of action on
individuals, the firm, the business, community and
society as a whole.
 The relationship among the values and moral codes of
conduct is also there. figure-6.1.
 Ethical values and standards of business firm are
derived from general values and norms of society.
 A business decisions represents a synthesis of the
moral and ethical principles embraced by various
entities.
 Conflict is common because the values of the firm
interpreted by its executives may not match the values13
of individuals.
Continue…….
 The manager find problem in deciding whether they
should adhere to their own values to solve problems or
do what is convenient to maximize the short run profit of
the firm.
 Ethical Checklist
 Recognize the dilemma
 Get the facts
 List your option
 Are they legal
 Are they right
 Are they beneficial

 Make your decision

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 The Case of Drug using Salesperson
Recognizing dilemma:
 sales manger smith is concerned about sales person Jones. His
sales volume is slipping.
 Initially smith ignored the problem, but customer start calling to
complain. So the sales manger decide how to deal the issue.
Assembling facts:
 smith could start by asking from other sales force member and
customer who can be trusted. these inquiries reveal that Jone’s
personal life is stable but that use of drug effect on sales calls.
 Good sales record, Firm having trouble in finding good replacement of
Jone. Jone’s apparent drug use is preventing him, good sales man also
up to standards. Using drug also hurting company sales, and profit the
situation must be correct.
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 Continue………
 Making ethical decision:
 Smith could have talk with Jone about sales of his territory. And
may set new goals and standards of sales.
 Smith could call Jone and mention that he is unhappy with poor
sales and rumors.
 The smith may asked Jone to submit drug test repot.

 Smith could tell Jone for dual problems, possible sales and drug
use.
 Smith may ask Jone to for necessary treatment and stay drug
rehabilitation centers for a month and terminate until he gets a
healthy person.
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 Common Sales Ethics Issues
 Manager makes variety of ethical decision in different situation
 They may include relationship with supervisor, employees, customers,
competitors.
 There is no well defined guides for moral conduct for each situation.
 What is right is based on particular situation.
 These are potential areas of ethical decision
 Hiring and firing
 House accounts
 Expense accounts
 Gifts for buyers
 Bribes
 Entertainment
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 Hiring and firing
 Laws of prohibit discrimination in hiring parties.
 Relatives of officers in the firm.
 Man (qualified and experienced) and women (daughter of VP).
 Sales manger can make moral choice.
 Ethical question hiring from competitors
 Can hire trained people
 Can bring some customers
 These sales may increase selling cost and may lead to lawsuit for
trade secretes.
 Firms always try to hire trained agents rather than un trained.
 There could be agreement between competitors. Not to hire their people.
 Females are higher in idealism and on moral standards than male.
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 House accounts
Problem sales manager is how to handle large and important customers.
Older accounts often needs more attention, that exceeds the time and
skills of sales person for that territory.
Should these accounts left for head office or district office as house
accounts.
Its not easy because accounts generates high commission.
These house accounts results in better service.
District sales person assumes this house account as proprietary interest
because of historical relationship.
The transfer of house account is unfair for sales person.

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 Expense accounts
 Most ethical abuse in sales occur with expense accounts.
 Sales people are expected to spend money contacting customers
and then reimburse for their expense.
 Those who abuse reimbursement policy they claim high
expenditures than amount spent.
 Sales manager should decide how to tight control on expense.
 If we fire these sales people then organization would loose its
team.
 Tight control can result in not travelling to contact out of the way
with customer.
 Solution is monitor the actual expenses of some reliable sales people.
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 Gifts for buyers
 Some organization has trend of giving small gifts to buyers to express
appreciation for past and future business..
 These gifts are given by sales people. Given on some occasions (eid,
charismas).
 In pharmaceutical 80 % have received for encouraging to write their
medicine to patients.
 Pen, dairy, calculators, cups, clothing etc.


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 Bribes
 Use of bribes is widespread.
 Bribes is fairly easy.
 Building hospital funds
 Scholarship for relatives
 Discounts on auto purchase
 Trip to professional meetings
 Expensive dinners
 Outings

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 Entertainment
 Providing entertainment for potential customers is standard practice
in US. Some times it can leads towards ethical problem.
 How much allowance of entertainment is too much??????
 Some agree that taking for lunch is fair.
 Along with spouse is ok????
 Use of company car on weekend????
 Its not usual to fly on company account for personal visit.
 Use of hunting lodge????

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Building a sales Ethics Program
Sales Ethics
 Moral climate of organization reflects the words and
actions of its top management.
 If management tolerates unethical behavior in sales
force, then little member of organization can do it.
 The best way is to build ethical program by board of
organization.
 Codes of ethics
 Ethics training.

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 Code of Ethics
 Written sales ethics policy statement (defines company deals fair with
customer and competitor).
 Code ethics is effective way.
 Get support from top management showing that they expect you to follow
the spirit and letter of the law.
 Develop and distribute a sales ethics policy.

 Establish proper moral climate. If bosses follow the rules then the followers
are likely to do the same.
 Assign realistic sales goals
 Set up control when needed. Watch people who live above their income.

 Suggest that sales people call for help when they face unethical demand.
 Get together with your competition if payoff are an industry problem
 Blow the whistle if necessary.

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 Ethics Training

 Many times sales people are involved in unethical

behavior to achieve personal or organizational goals.
 Research indicate only 44 % organization gives ethic
training to employees.
 Todays ethics training is essential for sales people.
 Code of ethics is not enough the origination should give
proper follow up.
 Younger sales people are less idealistic and more
relativistis. In ethical decision making.
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