Below you will find three everyday selling situations. What makes them special is that they potentially involve a risk for unethical action. Please read each situation carefully – Before you answer the question at the end of each example ask yourself –

a) Is there an ethical conflict?

b) What would my manager do in this situation?

c) What action will I take that is in my best interest and in line with company policy?

TEST NUMBER ONE: CAN YOU SALVAGE THIS ORDER?

You have been working for two months on an industrial account to obtain a firm commitment for a $185,000 computer system. If you can land the order today, you will become eligible for a quarterly performance bonus of $2,500. To meet your competitor’s lower price, your manager decides to give you special authorization to offer your client a $9,000 package consisting of free software, specialized operator training and extended service contract terms. Similar incentives have been offered on special occasions in the past. You feel that this sweetened offer will bring you below your competitor’s rock-bottom price. You know that your customer is a price buyer.

As you drive to your customer, you get tied up in a huge traffic jam. You call your client from your car phone and ask his secretary if it would be OK to come about 30 minutes later than scheduled. She tells you not to worry. As you are ushered into the buyer’s office, you greet your customer with smile, ready to announce the good news. He informs you that he signed contract with your competitor just 10 minutes ago. Upon your insistence, he shows you the bottom line on the signed contract. You realize that by purchasing your system he could have saved as much as $12,000.

Would you try to reverse your prospect’s decision?

Write your answer in the space below before reading further.

WHAT GUIDES ETHICAL DECISIONS?

The above example illustrates a knotty problem created by conflict in loyalties. You may feel that the customer acted unfairly. You therefore feel justified in your desire to renegotiate the deal. You may feel that since you’ve invested so much time in this deal, it would be unwise to give up now. You may have already spent the bonus in your mind so why let a competitor take what was already destined to come your way? Why should your customer have to pay a premium if he could save money with your deal? Aren’t you supposed to create satisfied customers?

We all offer different justifications for our actions in different situations. Companies that issue written guidelines for ethical conduct covering this particular situation will help the salespeople in the decision-making process.

For instance, marketing representatives working for IBM will find the following directive on page 16 of the booklet entitled “Business Conduct Guidelines: “As a matter of practice, a competitor already has a firm order from a customer for an application, we don’t market IBM products or service for that application before the competitor has installed.” IBM’s guideline is clear. Stop selling.

But what if a company does not have such guidelines? What if your sales manager tells “war stories” when he himself has persuaded a customer to call your competitor and cancel the purchase order and return the deposit check? According to experts on ethics such action has direct consequences on the bottom line. Unethical behavior managers will negatively impact productivity. A two year study sponsored by the Exxon Education Foundation discovered that companies that practice ethics on a day-today basis will enjoy higher levels of productivity. Gary Edwards, executive director of the Ethics Resource Center in Washington, D.C., explained it this way: “People don’t want to be ashamed of where they work or what they do. And they won’t be productive if they are.”

TEST NUMBER TWO: CAN YOU CREATE A WIN-WIN SITUATION?

As the sales manager of a printing company, you are about to invest in a car leasing program that involves 18 company cars for your sales staff. Together with your comptroller you have examined several leasing programs. You have narrowed down your selection to two leasing companies that offer very similar terms. You are meeting with the president of Equilease, a company with which you have never done business before. You know from your own prospect files that one of your sales representatives has tried to call on the purchasing manager of Equilease before to get some of their printing business; however, he could not crack the account.

As you meet with the president for lunch, you gently steer the conversation in the direction of printing services. Since he is very knowledgeable about printing services and prices, you ask him about ballpark prices charged by his existing supplier. You feel that you could provide his company with high quality service at a better price.

Since the president of Equilease is in a good mood, you think about setting up a win-win situation. You are considering an offer in your mind like: “Let’s make this a double win. I’ll give you 100 percent of our leasing business, if you’ll consider giving us 50 percent of you printing business. Fair enough?”

Would it be ethical to propose such a deal?

Write your answer in the space below before reading further:

PRINCIPLES GUIDE THOUGHTS, NOT ACTIONS

We asked you not to read further unless you have answered the question above. If you have been tempted to first look at the comments below prior to shaping your “official” response, then you may have been misled by one of the many incentives for unethical conduct. Two major incentives for unethical conduct are a) the absence of specific rules of conduct and b) the absence of effective controls.

According to a study sponsored by the Ethics Resource Center, 75 percent of Fortune 500 companies have developed written codes of ethics. The study also revealed that most of these codes (61 percent) consist only of general principles rather than specific rules of conduct.

What’s most surprising, however, is that only a few firms have the necessary mechanisms to see that the principles of ethical conduct are upheld. Only 15 percent of the companies surveyed have ethics committees to monitor compliance.

Although published general principles of a company’s ethical beliefs are good for public relations, they are fairly useless as a guide for solving everyday ethical conflicts. Without a clear-cut, reality-based guideline and practical monitoring of compliance, the above ethical conflict could put the sales manager and his company at considerable risk.

In essence, the sales manager was seeking reciprocity. The contemplated deal is clearly unethical. In some cases such a deal may be even unlawful. (The Federal Trade Commission Act of 1914 gives the Commission broad powers to prevent unfair trade practices and unfair methods of competition.)

Companies aware of their legal and ethical responsibilities protect themselves and their employees from unnecessary exposure.

For example, IBM marketing representatives are urged to follow the specific steps set forth in their Business Conduct Guidelines: “You may not do business with a supplier of goods or services on condition that it agrees to use IBM products or services. Reasonable? Quite. Important? Absolutely.

Remember that your career and the future of your company depends on creating values that last. This depends on making decisions we can live with tomorrow, not on what we might get away with today.

TEST NUMBER THREE: CAN YOU CALL A SPADE A SPADE?

You are in the very competitive business of selling office machines. You have an appointment with the senior partner of a large medical center. She has already studied several competitive products. Her hot buttons are low operating costs and low maintenance. You know that four competitors have demonstrated their product to your prospect. After you have shown her the benefits of your products she asks you: “Tell me, what makes your machine better than brand X?” You restate some of your obvious product benefits and she comes back with: “The salesman with company X told me that they use a special kind of toner that is far superior to what you are using for your machine and that it will increase the lifetime of their machine by 20 percent.” You know that this is an obvious lie so you ask: “What evidence did this salesperson give you to prove his claim?” She shows you a customer testimonial letter that talks about how satisfied they were with their machine, but it says nothing about longer lifetime. You reply carefully: “That’s the first time I have ever seen a letter praising a brand X machine.”

Next, she shows you another piece of paper, it’s a chart that graphically illustrates the operating costs of five different brands. The chart says on the bottom “Marketing Research – Brand X, 1987.” It shows your machine with the highest operating costs over a five year period and it shows brand X in the leading position with 50 percent lower operating cost. You are stunned by this unfair competitive comparison. You try to control your temper and think about saying: “They always are much better than we are on paper, but when it comes to reality, we outperform them any time.” Would your comment be ethical?

Write your answer in the space below before reading further:

UNFAIRNESS BEGETS UNFAIRNESS

Dealing with unfair competition represents a double challenge. On one hand you want to get the order; on the other you want to stop the competitor’s unfair practices. In this case your prospect is using every bit of information to play one competitor against the other to obtain the best deal. What do you do when the fight for business is getting dirty?

First, take notes when you hear a customer’s reports about unfair comments made by your competitor. Turn the information over to your sales manager or legal department. Your role is not to pass judgement on the case, but to collect the evidence.

Second, do not “knock” the competition, but let the competition knock itself out. It’s virtually impossible to build a lasting and profitable business by risking customer trust and confidence on every single deal. Should your customer find out that the operating cost figures were nothing but lies, company X would not be able to sell a single office machine to the medical center in the future.

Reputable companies believe in the lasting power of honesty. Their policies and guidelines reinforce that message to every salesperson. For example, Xerox representatives are bound by ethical guidelines that state: “Make no disparaging statements, directly or by any kind of inference or innuendo, about competitors and their products and services – even if you believe them to be true.”

IBM tells its marketing reps: “It has long been the company’s policy to provide customers the best possible products and services. Sell them on their merits, not by disparaging competitors, their products or services.”

These guidelines are tough, but fair. They were drafted with the clear realization that salespeople are the stewards of their company’s reputation.

The absence of ethical guidelines will always create the illusion of safety, yet these illusions are short lived. Over 200 years ago, Thomas Paine wrote about the unethical actions of Great Britain: “A long habit of not thinking a thing wrong gives it the superficial appearance of being right.” History proves that appearances are deceiving. It also proves that without ethical conduct, freedom is unsafe.