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4.1 Business Ethics: Guiding Principles in Selling and in Life

Learning Objectives

  1. Understand ethics and what composes ethical behavior.
  2. Discuss the role of values in ethics.
  3. Understand how you define your personal code of ethics.

It seemed like a straightforward decision at the time—you could either pay ninety-nine cents per song on iTunes, or you could download for free from a peer-to-peer network or torrent service. After all, artists want people to enjoy their music, right? And besides, it’s not like Kanye West needs any more money. So you pointed your browser to ThePirateBay.org.

Of course, that isn’t the whole story. The MP3s you downloaded have value—that’s why you wanted them, right? And when you take something of value without paying the price, well, that’s theft. The fact that you’re unlikely to get caught (and it isn’t impossible; people are arrested, prosecuted, and ordered to pay massive judgments for providing or downloading music illegally) may make you feel safer, but if you are caught, you could pay from $750 to $150,000 per song.Elianne Friend, “Woman Fined to Tune of $1.9 Million for Illegal Downloads,” CNN.com, June 18, 2009, http://www.cnn.com/2009/CRIME/06/18/minnesota.music.download.fine/index.html (accessed February 13, 2010). Other variables can further complicate the situation. If you downloaded the MP3s at work, for example, you could lose your job. Acting unethically is wrong and can have enormous practical consequences for your life and your career.

What Is Ethics?

EthicsMoral principles that define what is right and wrong. is moral principles—it is a system that defines right and wrong and provides a guiding philosophy for every decision you make. The Josephson Institute of Ethics describes ethical behavior well: “Ethics is about how we meet the challenge of doing the right thing when that will cost more than we want to pay. There are two aspects to ethics: The first involves the ability to discern right from wrong, good from evil, and propriety from impropriety. The second involves the commitment to do what is right, good, and proper. Ethics entails action; it is not just a topic to mull or debate.”John C. Maxwell, There’s No Such Thing As “BusinessEthics (New York: Center Street, 2003), 23–24. Is it right? Is it fair? Is it equitable? Is it honest? Is it good for people? These are all questions of ethics.Manual Velasquez, Claire Andre, Thomas Shanks, and Michael J. Meyer, “What Is Ethics?” Santa Clara University, http://www.scu.edu/ethics/practicing/decision/whatisethics.html (accessed August 31, 2009). Ethics is doing the right thing, even if it is difficult or is not to your advantage.[citation redacted per publisher request]. Carly Fiorina, former CEO of Hewlett-Packard, discusses the importance and impact of ethics on business.

Video Clip

Excerpt from Carly Fiorina’s Speech on Ethics

(click to see video)

Your success starts with personal ethics.

Personal Ethics: Your Behavior Defines You

Ethics comes into play in the decisions you make every day. Have you ever received too much money back when you paid for something in a store, didn’t get charged for something you ordered at a restaurant, or called in sick to work when you just wanted a day off?College Confidential, http://talk.collegeconfidential.com/california-institute-technology/427749-ethical-dilemma-question.html (accessed August 31, 2009). Each of these is an ethical dilemmaA situation in which options are presented which may be right or wrong.. You make your decision about which path to take based on your personal ethics; your actions reflect your own moral beliefs and moral conduct.Manual Velasquez, Claire Andre, Thomas Shanks, and Michael J. Meyer, “What Is Ethics?” Santa Clara University, http://www.scu.edu/ethics/practicing/decision/whatisethics.html (accessed August 31, 2009). Your ethics are developed as a result of your family, church, school, community, and other influences that help shape your personal beliefs—that which you believe to be right versus wrong.Manual Velasquez, Claire Andre, Thomas Shanks, and Michael J. Meyer, “Ethics and Virtue,” Santa Clara University, http://www.scu.edu/ethics/practicing/decision/ethicsandvirtue.html (accessed August 29, 2009). A good starting point for your personal ethics is the golden rule: “Do unto others as you would have them do unto you.” That is, treat people the way that you would like to be treated. You would like people to be honest with you, so be honest with others.

Your strong sense of personal ethics can help guide you in your decisions. You might be surprised to find yourself with an ethical dilemma about something that is second nature to you. For example, imagine that you’re taking a class (required for your major) that has an assignment of a twenty-page paper and you’ve been so busy with your classes, internship, and volunteer work that you really haven’t had the time to get started. You know you shouldn’t have waited so long and you’re really worried because the paper is due in only two days and you’ve never written a paper this long before. Now you have to decide what to do. You could knuckle down, go to the library, and visit the campus Writing Center, but you really don’t have the time to do all that and still write the entire twenty pages. You’ve heard about some people who have successfully bought papers from this one Web site. You’ve never done it before, but you are really desperate and out of time. “If I only do it this one time,” you think, “I’ll never do it again.”

But compromising your ethics even just once is a slippery slope. The idea is that one thing leads naturally to allowing another until you find yourself sliding rapidly downhill. Ethics is all about the art of navigating the slippery slope: you have to draw a line for yourself, decide what you will and won’t do—and then stick to it. If you don’t have a strong set of ethics, you have nothing to use as a guidepost when you are in a situation that challenges you morally. A highly developed set of personal ethics should guide your actions. The only way to develop a strong sense of ethics is to do what you believe in, to take actions consistent with your principles time and time again.

So if you buy the paper and get caught, you will not only fail the class, but you may also find yourself expelled from school. If you’re tempted to consider buying a paper, take a minute to read your school’s academic dishonesty policy, as it is most likely very clear about what is right and wrong in situations like this.

Link

Academic Dishonesty Policy at the University of Nevada, Reno

http://www.unr.edu/stsv/acdispol.html

Even if you get away with using a paper that is not your own for now, it’s always possible that you’ll be found out and humiliated even decades after the fact. Southern Illinois University (SIU) had three high-ranking officials—a university president and two chancellors—revealed as plagiarists in a two-year period.Margaret Soltan, “Southern Illinois University an Official Laughingstock,” Inside Higher Ed, August 30, 2007, http://www.insidehighered.com/blogs/university_diaries/southern_illinois_university_an_official_laughingstock (accessed February 18, 2010). Even more embarrassing, the committee formed to investigate the charges of plagiarism against Chancellor Walter Wendler developed a new plagiarism policy whose parts were plagiarized—specifically, it copied its academic dishonesty policy from Indiana University without citing that source.Wendy Weinhold, “SIU Accused of Copying Plagiarism Policy,” Daily Egyptian, January 29, 2009, http://web2.collegepublisher.com/se/daily-egyptian/siu-accused-of-copying-plagiarism-policy-1.1318397 (accessed February 18, 2010). SIU was made a laughingstock, and its reputation has suffered considerably. Academic dishonesty is not a gamble worth taking; though many students are tempted at some point, those who give in usually regret it.

Do the Right Thing

If you rationalize your decisions by saying, “Everyone does it,” you should reconsider. Unethical behaviorActing in a way that is not responsible or deemed to be the standard of what is right, good, and fair. is not only what you believe to be right and fair, it is a reflection of your personal brand and what people can expect from you personally and professionally. Even celebrities such as Wesley Snipes, Willie Nelson, and Darryl Strawberry have fallen from grace in the eyes of the public and learned the hard way that unethical—and in their cases, illegal—behavior such as tax evasion can result in a prison term.Stefanie Fontenez, “Tax-Troubled Celebrities, Politicians, Outlaws,” CNN.com, April 15, 2008, http://www.cnn.com/2008/LIVING/wayoflife/04/15/famous.tax/index.html (accessed August 29, 2009). The consequences of unethical behavior can range from embarrassment to suspension, loss of job, or even jail time, depending on the act.

Eliot Spitzer, the governor of New York, admitted that he violated his personal ethics and those of his office when he resigned in March 2008 because of alleged involvement in a sex ring. Ironically, he built his reputation as the “sheriff of Wall Street” due to his efforts to crack down on corporate misdeeds.Danny Hakim, “Eliot Spitzer,” New York Times, Times Topics, August 31, 2009, http://topics.nytimes.com/topics/reference/timestopics/people/s/eliot_l_spitzer/index.html (accessed August 31, 2009). His disgrace was the topic of many conversations about ethics.

Video Clip

What Is Ethics?

(click to see video)

This video includes interviews about ethics and perceptions of Eliot Spitzer and his actions.

You have no doubt heard the expression “Do the right thing.” It is the essence of ethics: choosing to do the right thing when you have a choice of actions. Being ethical means you will do the right thing regardless of whether there are possible consequences—you treat other people well and behave morally for its own sake, not because you are afraid of the possible consequences. Simply put, people do the right thing because it is the right thing to do. Thomas Jefferson summed up ethics in a letter he wrote to Peter Carr in 1785: “Whenever you are to do a thing, though it can never be known but to yourself, ask yourself how you would act were all the world looking at you, and act accordingly.”Gerhard Gschwandtner, “Lies and Deception in Selling: How to Tell When Customers or Prospects Are Lying to You,” Selling Power 15, no. 9, http://www.sellingpower.com/content/article.php?a=4256 (accessed March 16, 2010).

Ethical decisions are not always easy to make, depending on the situation. There are some gray areas depending on how you approach a certain situation. According to Sharon Keane, associate director of marketing at the University of Notre Dame, people have different approaches, so there may be multiple solutions to each ethical dilemma,“An Education in Ethics,” Selling Power Sales Management eNewsletter, April 17, 2002, http://www.sellingpower.com/content/newsletter/issue.php?pc=197 (accessed March 16, 2010). and every situation may have multiple options. For example, if one of your best friends told you in confidence that he stole the questions to the final exam would you say nothing, use them, or report him? Certainly, using the questions would not be ethical, but your ethical dilemma doesn’t end there. Reporting him would be the right thing to do. But if you didn’t report him, would it be unethical? You might not consider that unethical, but what if you just didn’t say anything—is that still ethical? This is the gray area where your personal ethics come into play. Looking the other way doesn’t help him or you. While you might be concerned about jeopardizing your friendship, it would be a small price to pay compared with jeopardizing your personal ethics.

Business Ethics: What Makes a Company Ethical?

Ethics apply to businesses as well personal behavior. Business ethicsThe application of ethical behavior by a business or in a business environment. is the application of ethical behavior by a business or in a business environment. An ethical business not only abides by laws and appropriate regulations, it operates honestly, competes fairly, provides a reasonable environment for its employees, and creates partnerships with customers, vendors, and investors. In other words, it keeps the best interest of all stakeholdersAll parties that have a stake in an organization including employees, customers, investors, the community, and others. at the forefront of all decisions.[citation redacted per publisher request].

An ethical organization operates honestly and with fairness. Some characteristics of an ethical company include the following:

  • Respect and fair treatment of employees, customers, investors, vendors, community, and all who have a stake in and come in contact with the organization
  • Honest communication to all stakeholders internally and externally
  • Integrity in all dealings with all stakeholders
  • High standards for personal accountability and ethical behavior
  • Clear communication of internal and external policies to appropriate stakeholders[citation redacted per publisher request].

High-Profile Unethical Behavior in Business

While ethical behavior may seem as if it is the normal course of business, it’s unfortunate that some business people and some businesses do not operate ethically. Enron, WorldCom, Tyco, HealthSouth, and Lehman Brothers among other companies, have been highlighted in the news during the past several years due to unethical behavior that resulted in corporate scandals and, in some cases, the conviction of senior executives and collapse of some companies. While business has never been immune from unethical behavior, it was the fall of Enron in 2001 that brought unethical business behavior on the part of senior executives to the forefront. Enron began as a traditional energy company in 1985. But when energy markets were deregulated (prices were determined based on the competition rather than being set by the government) in 1996, Enron grew rapidly. The company began to expand to areas such as Internet services and borrowed money to fund the new businesses. The debt made the company look less profitable, so the senior management created partnerships in order to keep the debt off the books. In other words, they created “paper companies” that held the debt, and they showed a completely different set of financial statements to shareholders (owners of the company) and the government (U.S. Securities Exchange Commission [SEC]). This accounting made Enron look extremely profitable—it appeared to have tripled its profit in two years. As a result, more people bought stock in the company. This lack of disclosure is against the law, as publicly traded companies are required to disclose accurate financial statements to shareholders and the SEC. There began to be speculation about the accuracy of Enron’s accounting, and on October 16, 2001, the company announced a loss of $638 million. On October 22 of that year, the SEC announced that Enron was under investigation. The stock price continued to fall, and the company was unable to repay its commitments to its shareholders. As a result of this unethical and illegal behavior on the part of senior management, the company filed for chapter 11 bankruptcy protection.NewsHour Extra, “What Happened to Enron?” Paul Solman, PBS, January 22, 2002, http://www.pbs.org/newshour/extra/features/jan-june02/enron_past.html (accessed December 6, 2009). The unethical (and illegal) behavior of the senior management team caused a ripple effect that resulted in many innocent people losing their money and their jobs. As a result of the Enron scandal, a new law named the Sarbanes-Oxley ActRegulation of corporate financial practices and protection for people who report violations. (for Senator Paul Sarbanes from Maryland and Representative Michael Oxley from Ohio) was enacted in 2002 that requires tighter financial reporting controls for publicly traded companies.SearchCIO, “Sarbanes-Oxley Act,” http://searchcio.techtarget.com/sDefinition/0,,sid182_gci920030,00.html (accessed December 6, 2009).

The epitome of unethical (and illegal) behavior was Bernard Madoff, who was convicted of running a $65 billion fraud scheme on his investors. For years, he reported extremely high returns on his clients’ investments, encouraging them to reinvest with even more money. All the time he was stealing from his clients and spending the money. He cheated many clients, including high-profile celebrities like actor Kevin Bacon and his wife Kyra Sedgewick and a charity of Steven Spielberg’s.“Bernie Madoff Ponzi Scheme: Victim List Grows,” Huffington Post, December 15, 2008, http://www.huffingtonpost.com/2008/12/15/bernie-madoff-ponzi-schem_n_151018.html (accessed December 6, 2009). He was arrested, tried, and sentenced to 150 years in jail, and his key employees were also sentenced to similar terms.Julie Creswell and Landon Thomas Jr., “The Talented Mr. Madoff,” New York Times, January 24, 2009, http://www.nytimes.com/2009/01/25/business/25bernie.html (accessed August 31, 2009).,Jack Healy and Diana B. Henriques, “It Was All Fake: Madoff Aide Details Scheme,” New York Times, August 12, 2009, http://dealbook.blogs.nytimes.com/2009/08/12/madoff-aide-reveals-details-of-ponzi-scheme/?scp=2&sq=madoff%20sentencing&st=cse (accessed August 31, 2009).

Ethical Dilemmas in Business

Not all behavior that is unethical is illegal. Companies frequently are faced with ethical dilemmas that are not necessarily illegal but are just as important to navigate. For example, if a travel company wants to attract a lot of new customers, it can honestly state the price of a trip to Disney World in its advertising and let customers decide if they want to purchase the trip. This would be ethical behavior. However, if the company advertises a free vacation in order to get customers to call, but the free vacation package includes a $500 booking fee, it is unethical. Or if an appliance store wants to get new customers by advertising a low-priced refrigerator, it is an ethical way to let customers know that the company has competitively priced appliances as well. However, if the store only has a higher-priced refrigerator in stock and tries to sell that one instead, it is unethical behavior.

Figure 4.1

Business cannot operate without ethical behavior on the part of all parties.

Sometimes ethical behavior can be a matter of disclosure, as in the case of Enron, Bernie Madoff, or the examples above. Business ethics can also be challenged based on business practices. For example, in the 1990s Nike was accused of exploiting workers in third-world countries to manufacture their products. The low wages they were paying the workers made Nike’s profits higher.Aaron Bernstein, “Nike’s New Game Plan for Sweatshops,” BusinessWeek, September 20, 2004, http://www.businessweek.com/magazine/content/04_38/b3900011_mz001.htm (accessed December 6, 2009). While this is not illegal behavior—they were paying the workers—it was considered unethical because they were paying the workers less than what is reasonable. Another example of unethical behavior is not disclosing information. For example, if a car salesperson knows that a used car he is selling has been in an accident but says that it has not been involved in an accident, that is unethical. Bribing an executive, saying or promising things that are knowingly untrue, or treating employees unfairly are all examples of unethical behavior in business.

Corporate Social Responsibility

You may choose to shop at companies because of their business practices. For example, you might like The Body Shop because of its commitment to selling products that do not use animals for testing. This is a case of ethical behavior that is socially responsible. In fact, corporate social responsibility (CSR)Company actions that balance the interests of all stakeholders. is when companies operate in a way that balances the interests of all stakeholders including employees, customers, investors, vendors, the community, society, and any other parties that have a stake in the company. While corporate social responsibility may seem easy, it’s not always as easy as it looks. Keep in mind that in order to be socially responsible a company has to balance the social, economic, and environmental dimensions, which means generating a profit for investors while serving the best interest of all parties that have a stake in the operations of the company. When companies measure the impact of their performance along the three dimensions of social, economic, and environmental impact, it is called the triple bottom lineMeasurement of company performance along three dimensions—social, economic, and environmental.. To learn more about McDonald’s social responsibility, watch the following video.

Video Clip

McDonald’s Commitment to Social Responsibility

(click to see video)

See how the triple bottom line is part of the company culture.

There are many companies that make a commitment to social responsibility and the triple bottom line.

Link

Most “Accountable” Companies for Socially Responsible Practices

http://money.cnn.com/popups/2006/fortune/g500_accountability/index.html

Good Ethics = Good Business

The impact of ethical behavior by companies cannot be underestimated. It’s no surprise that companies that consistently demonstrate ethical behavior and social responsibility generate better results. In successful companies ethics is so integrated into the organization that it defines how every employee from CEO to the lowest-level employee behaves. Ethics is not a separate topic but is incorporated into company strategy. The company makes ethics part of every activity from strategic planning to operational execution.Jeremy Dann, “Business Ethics Integral to Corporate Strategy, Says Stanford’s Malhotra,” BNET, July 1, 2009, http://blogs.bnet.com/mba/?p=927&tag=content;col1 (accessed August 29, 2009). For example, Target has been committed to the triple bottom line even before it was in vogue when the company’s founder, George Draper Dayton, established a foundation to give back to the community. The company’s commitment has grown, and since 1946 it has donated 5 percent of its income every year. Target’s Corporate Responsibility Report is information that the company makes available to everyone on its Web site.Target, “Corporate Responsibility Report,” http://investors.target.com/phoenix.zhtml?c=65828&p=irol-govResponsibility (accessed September 1, 2009).

Link

Target’s Corporate Responsibility Report

Target’s commitment to social responsibility is made public on the company’s Web site.

http://investors.target.com/phoenix.zhtml?c=65828&p=irol-govResponsibility

Target’s commitment to ethics and social responsibility are especially impressive given the current economic challenges. It is times like these that can challenge many companies that do not have this kind of ethical commitment. With pressure on short-term results, many companies set unrealistic goals and employees feel extreme pressure to meet them or face the possibility of losing their jobs. Professor Neil Malhotra of the Stanford Graduate School of Business calls this an “overemphasis on instant gratification.” In fact, he feels that is the root cause of the current economic crisis.Jeremy Dann, “Business Ethics integral to Corporate Strategy, Says Stanford’s Malhotra,” BNET, July 1, 2009, http://blogs.bnet.com/mba/?p=927&tag=content;col1 (accessed August 29, 2009). But business ethics, just like personal ethics, mean doing the right thing even when it is a difficult choice or doesn’t appear to be advantageous.

But ethical behavior and integrity are clearly linked to profitability. In a study of seventy-six Holiday Inn franchises around the country conducted by Tony Simons, associate professor in organization management at Cornell University and author of the book The Integrity Divided, Simons found that the behavior of the hotel manager was the “single most powerful driver of profit.”Heather Baldwin, “There’s a Price on Your Integrity,” Selling Power Sales Management eNewsletter, September 16, 2008, http://www.sellingpower.com/content/newsletter/issue.php?pc=867 (accessed March 16, 2010).

Ethical Behavior in Sales

One of the most visible positions in any organization in terms of ethics is sales. That’s because it is the salesperson that comes in contact directly with the customer. What the salesperson says and does is a direct reflection of the organization and its ethics.

Consider this ethical dilemma if you were a real estate agent. You have just landed a fantastic listing: a home that in the hot neighborhood that will surely sell quickly and yield a nice commission for you. The seller tells you that the home inspector suspects there is insect damage to the siding of the house, but the seller says she has never had any problems. Also, the seller feels so strongly about not disclosing this information to prospective buyers that she said she would rather go with a different agent if you insist on disclosing the possible insect damage. What would you do?

In a situation like this, it’s best to remember that doing the right thing can be a hard choice and might not be advantageous to you. Although you really don’t want to lose this listing, the right thing to do is to disclose anything that affects the value or desirability of the home. Even if you think it might not be a major issue, it’s always best to err on the side of honesty and disclose the information.Buck Wargo, “5 Everyday Ethical Dilemmas,” Realtor, March 2007, http://www.realtor.org/archives/feat2200703?presentationtemplate=rmo-design/pt_articlepage_v1_print&presentationtemplateid=1b18c0004a12c9a4b7e1ffbdd1ec736f (accessed August 29, 2009). Either withholding or falsifying information is lying and therefore unethical.Gerhard Gschwandtner, “Lies and Deception in Selling: How to Tell When Customers or Prospects Are Lying to You,” Selling Power 15, no. 9, http://www.sellingpower.com/content/article.php?a=4256 (accessed March 16, 2010).

Imagine that you are a financial planner responsible for managing your clients assets. You make your income on commission, a percentage of the value of your clients’ portfolios; the more you increase his portfolio, the more money you make. One of your clients is a very conservative investor; right now you are not making much money from his account. You have an opportunity to sell him a high-return investment, but the risk is far greater than you think he would normally take. You think you can sell him on it if you leave out just a few details during your conversation. The investment will actually be good for him because he will get a significant return on his investment, and besides, you’re tired of spending your time on the phone with him and not making any money. This could be a win-win situation. Should you give him your pitch with a few factual omissions or just make the investment and tell him after the money starts rolling in? After all, he doesn’t look at his account every day.Mark P. Cussen, “Ethical Issues for Financial Advisors,” Investopedia, http://investopedia.com/printable.asp?a=/articles/financialcareers/08/ethics-for-advisors.asp (accessed August 29, 2009). What should you do?

Even though the result of the investment could be a good one, it is your obligation to provide full disclosure of the risk and let the customer make the investment decision. You should never make assumptions and decisions on behalf of your customers without their consent. If you are frustrated about your lack of income on the account, you might not be the best financial planner for him. You should have an honest conversation with him and perhaps suggest a colleague or other planner that might be a better fit for his investment strategy. Sometimes it’s better to part ways than to be tempted to behave unethically.

Just Say No

What if your employer asked you to do something that you are not comfortable doing? For example, if your employer asked you to complete the paperwork for a sale even if the sale hasn’t been made, what should you do? It’s best to say that you are not comfortable doing it; never compromise your personal ethics even for your employer. It’s also a good idea to see someone in the human resources department if you have any questions about the best way to handle a specific situation.

What if you were a salesperson for a textbook company and you are only $1,000 away from your $1 million sales goal. If you make your goal, you’ll earn a $10,000 bonus, money you’ve been counting on to put a down payment on your first house. But the deadline is only two days away, and none of your customers is ready to make a purchase. You really want the bonus, and you don’t want to wait until next year to earn it. Then you remember talking to one of the administrators, and she mentioned the need for donations. What if you made a $1,000 donation to the school. It would help the school during this challenging financial crisis and it would be more inclined to make a purchase quickly. After the donation, you would still have $9,000. This could be a good move for everyone. Would you make the donation to “buy” your bonus?

When you are in sales, you are not only representing yourself, but you are also representing your company. Although it appears that all parties will benefit from the donation, it is not ethical for the school, you, or your company to make an exchange like that. Products such as textbooks should be purchased based on the organization’s buying process. Donations should be made with no strings attached. You might miss the opportunity to earn your bonus this year, but you will learn valuable lessons to make next year an even better sales year.Shel Horowitz, “Should Mary Buy Her Own Bonus?” Business Ethics, November 11, 2009, http://business-ethics.com/2009/11/11/should-mary-buy-her-bonus (accessed February 18, 2010).

Imagine that you are a sales rep for a software company and you’ve just taken a customer to lunch. It was an expensive restaurant, and the two of you thoroughly enjoyed yourselves; you had steak, wine, and a chocolate dessert. Now you’re filling out an expense report, and you need to fill in the amount of tip you left. In fact, you left a twenty-dollar bill—but forty dollars wouldn’t have been an unreasonable amount to leave for outstanding service. You could fill in the higher amount and use the difference to take your girlfriend to the movies; you’ve been meaning to spend more time with her. After all, you make a lot of money for the company and have been working a lot of nights and weekends lately. You also didn’t submit your expense account for the mileage you traveled last week, so this should make up for it. Is it OK to submit the additional tip money on this expense report?

It’s no surprise that it’s never acceptable to falsify information on an expense report (or any report for that matter). If you have legitimate expenses, they should be submitted according to the company policy. While it’s hard to keep up with the paperwork, it’s the right way to report and be reimbursed for company expenses. This can be another one of those slippery slope arguments; if you do it once, you might be tempted to do it again. Many people in many companies have been fired for providing false information on their expense reports.

Personal ethics and business ethics are a part of everyday selling. It’s a good idea to remember the words of Peter Drucker, famous management consultant and author, “Start with what is right, rather than what is acceptable.”Dr. Frank Crane, “The Truth in Business,” Selling Power, http://www.sellingpower.com/html_newsletter/motivation/article.asp?id=2691&nDate=November+20%2C+2006&lid=SP69444 (accessed August 29, 2009).

Power Point: Lessons in Selling from the Customer’s Point of View

Is the Customer Always Right?

The customer is always right, except when he asks you to do something unethical. What should you do to uphold your ethics and maintain your relationship? SellingPower.com suggests the following four steps:

  1. Evaluate the situation with a clear head. Most unethical behavior is driven by emotions such as fear, greed, stress, and status. Identify what is causing the behavior but wait until you have some time to reflect.
  2. Don’t jump to conclusions; identify the circumstances. You might not know the entire story so determine what you know and what you don’t know.
  3. Identify the criteria you are using to make this judgment. Is the behavior against company policy? Is it against the law? Is it against your personal code of ethics?
  4. Seek counsel. Always ask a trusted colleague, supervisor, or human resources representative for advice. Chances are, she has experienced the same situation and can provide insight from the company’s perspective and policies.

Understanding Values

Ethics are defined by moral principles; they are actions that are viewed by society as “right,” “just,” or “responsible.”BNET Editorial, “Understanding Your Values,” BNET, http://www.bnet.com/2410-13070_23-55147.html?tag=content;col1 (accessed August 29, 2009 ValuesGuiding principles and beliefs that are important to you and define how you live your life. define what is important to you: they are your guiding principles and beliefs, they define how you live your life, and they inform your ethics. While certain values might be important to you, they may not be important to your best friends or even every member of your family. While family, friends, and your environment have a significant influence, you develop your own set of values. Consider the list below, which includes some examples of values:BNET Editorial, “Understanding Your Values,” BNET, http://www.bnet.com/2410-13070_23-55147.html?tag=content;col1 (accessed August 29, 2009).

  • Honesty
  • Open communication
  • Teamwork
  • Integrity
  • Prestige
  • Security
  • Helping others
  • Loyalty
  • Social responsibility
  • Impact on society
  • Creativity
  • Achievement
  • Global focus
  • Religion

Values provide your personal compass and your direction in life. When something is not in line with your values, you feel unhappy and dissatisfied.BNET Editorial, “Understanding Your Values,” BNET, http://www.bnet.com/2410-13070_23-55147.html?tag=content;col1 (accessed August 29, 2009). Many people feel passionately about their values and want to have their environment align with their values. Examples of this are evident during political elections when people take sides on issues such as education, health care, and other social issues that reflect personal values.

Figure 4.2

Your personal values may change over time based on your experiences, but your integrity should always remain constant.

You might be surprised to learn that your values are not set in stone. Your personal values will evolve and may even change drastically based on your experiences.BNET Editorial, “Understanding Your Values,” BNET, http://www.bnet.com/2410-13070_23-55147.html?tag=content;col1 (accessed August 29, 2009). For example, Nikki Tsongas, wife of the late Senator Paul Tsongas from Massachusetts, got involved in public service after the death of her husband. She is now a congresswoman from the fifth district of Massachusetts.“Niki Tsongas: Long Bio,” http://tsongas.house.gov/index.cfm?sectionid=54&sectiontree=2,54 (accessed September 1, 2009). She may have never considered serving in public office, but the death of her husband had a dramatic impact on her values.

You have a set of values that inform your ethics, which in turn inform your decision making. No one can tell you what your values are; that’s something you’ll have to decide for yourself. John C. Maxwell, in his book There’s No Such Thing as “Business” Ethics, lists the values that he lives by, such as “put your family ahead of your work (having a strong and stable family creates a launching pad for many other successes during a career and provides a contented landing place at the end of it)”John C. Maxwell, There’s No Such Thing as “BusinessEthics (New York: Center Street, 2003), 102–3. and “take responsibility for your actions (if you desire to be trusted by others and you want to achieve much, you must take responsibility for your actions).”John C. Maxwell, There’s No Such Thing as “BusinessEthics (New York: Center Street, 2003), 93–94. If you are looking for a comprehensive list of values, check out HumanityQuest.com, which lists more than five hundred different values.

Link

Learn about What Values Are Important to You

http://humanityquest.com

Values of Organizations

Just like people, organizations have values, too. Values are “proven, enduring guidelines for human conduct” according to Stephen Covey in his book Principles.Thomas E. Ambler, “The Strategic Value of Values,” Center for Simplified Strategic Planning, http://www.cssp.com/CD0402/ValuesAndStrategy/default.php (accessed August 29, 2009). Many companies choose their values and communicate them to employees, customers, and vendors on the company Web site and other company communications. For example, Whole Foods includes the following values, among others: “selling the highest quality natural and organic products available” and “caring about communities and their environment.” You can see their entire values statement on their Web site.

Link

Whole Foods Market Values Statement

http://www.wholefoodsmarket.com/company/corevalues.php

Levi Strauss & Co. identifies four key values for their company: empathy, originality, integrity, and courage. Their values statement is also included on their Web site.

Link

Levi Strauss & Co. Values Statement

http://www.levistrauss.com/about/values-vision

Microsoft includes integrity, honesty, personal excellence, passion for technology, and commitment to customers as part of their values statement on their Web site.

Link

Microsoft Values Statement

http://www.microsoft.com/about/default.mspx

Company values and personal values are important because your values motivate you to work.BNET Editorial “Understanding Your Values,” BNET, http://www.bnet.com/2410-13070_23-55147.html?tag=content;col1 (accessed August 29, 2009). You will enjoy and excel at your job if you choose a company whose values you share. For example, if the environment is one of your values, it’s best to choose a company that includes a commitment to the environment as part of their values statement. Chances are you won’t be happy working at a company that doesn’t put a priority on the environment.

Mission Statements: Personal and Corporate Guidelines

Ethics and values are major concepts. If you have developed personal ethics and values, you might be wondering how they come together to help provide a roadmap for your life and your career. That’s the purpose of your mission statement; it becomes your roadmap for your decisions, choices, and behavior. You learned about creating your personal mission statement in the Selling U section of Chapter 1 "The Power to Get What You Want in Life". Mission statements such as “To gain experience in the public accounting field toward earning my CPA designation” and “To master the leading Web development tools and become a best-in-class Web developer” may sound simple, but each takes time, thought, and insight to create.“Develop Your Personal Career Mission Statement,” CollegeGrad.com, http://www.collegegrad.com/book/Job-Search-Prep/Develop-a-Personal-Career-Mission-Statement (accessed September 1, 2009). You may want to review the Selling U section in Chapter 1 "The Power to Get What You Want in Life" if you haven’t already created your personal mission statement.

Just as your personal mission statement is a blueprint for how you make decisions in life, companies also use a mission statement to define their direction, make operating decisions, and communicate to employees, vendors, shareholders, and other stakeholders. In fact, most companies have a formal, written mission that they include on their Web site. A mission statement is different than an advertising slogan or motto. It is based on the company’s ethics and values and provides a broad direction as to what the company stands for. For example, Harley-Davidson’s mission statement is below and can be found on their Web site.

Link

Harley-Davidson Mission Statement

http://www.harley-davidson.com/wcm/Content/Pages/Student_Center/student_center.jsp?locale=en_US#missionstatement

We inspire and fulfill dreams around the world through Harley-Davidson experiences.Harley-Davidson, “Harley-Davidson Mission Statement,” http://www.harley-davidson.com/wcm/Content/Pages/Student_Center/student_center.jsp?locale=en_US#missionstatement (accessed August 29, 2009).

FedEx expresses their mission statement a little differently as shown below and includes their mission statement along with their values on their Web site.

Link

FedEx Mission Statement and Values

http://about.fedex.designcdt.com/our_company/company_information/mission_statement

FedEx will produce superior financial returns for shareowners by providing high value-added supply chain, transportation, business and related information services through focused operating companies. Customer requirements will be met in the highest quality manner appropriate to each market segment served. FedEx will strive to develop mutually rewarding relationships with its employees, partners and suppliers. Safety will be the first consideration in all operations. Corporate activities will be conducted to the highest ethical and professional standards.FedEx, “Company Information: Mission, Strategy, Values,” http://about.fedex.designcdt.com/our_company/company_information/mission_statement (accessed August 29, 2009).

The mission statement of the insurance company Aflac is short and to the point as shown below. It can also be found on their Web site.

Link

Aflac Mission Statement

http://www.aflac.com/us/en/aboutaflac/missionandvalues.aspx

To combine innovative strategic marketing with quality products and services at competitive prices to provide the best insurance value for consumers.Aflac, “Mission and Values,” http://www.aflac.com/us/en/aboutaflac/missionandvalues.aspx (accessed September 1, 2009).

Many companies, like Google, put their mission statement or philosophy online—others use a printed manual. The mission statement is made available for the following reasons: employees can use it to aid them in ethical business decision making, investors can evaluate the company’s ethics before making a decision about becoming involved with it, and customers can choose whom they will do business with based on their ethics and purpose. In addition to their mission statement (which you may remember from Chapter 1 "The Power to Get What You Want in Life": “Google’s mission is to organize the world’s information and make it universally accessible and useful”Google, “Corporate Information: Company Overview,” http://www.google.com/corporate (accessed September 1, 2009).), Google’s Web site gives their philosophy—ten guiding principles, ten “things Google has found to be true,” which are values that reflect how the company conducts business:

  1. Focus on the user and all else will follow.
  2. It’s best to do one thing really, really well.
  3. Fast is better than slow.
  4. Democracy on the Web works.
  5. You don’t need to be at your desk to need an answer.
  6. You can make money without doing evil.
  7. There’s always more information out there.
  8. The need for information crosses all borders.
  9. You can be serious without a suit.
  10. Great just isn’t good enough.Google, “Corporate Information: Our Philosophy,” http://www.google.com/intl/en/corporate/tenthings.html (accessed September 1, 2009).

These ten things are the principles that Google uses to make decisions as a company; this list, with accompanying explanations, details why they do things the way that they do. It is both practical and concerned with ethics—the idea that “great just isn’t good enough” is part of their values, a declaration that Google wants to do the best that it can in every endeavor—it means that they will not take shortcuts, but will constantly strive to be more ethical, efficient, and user-friendly.

Character and Its Influence on Selling

As you have probably figured out, ethics, values, and missions are all very personal. Together they guide you in the way you behave at home, school, work, or out with your friends. Your characterFeatures and beliefs that define a person. is what sets you apart; it includes the features and beliefs that define you. It’s no surprise that the word has it origin in the Latin word character, which means mark or distinctive quality and from the Greek charaktr, which means to scratch.“Character,” Merriam-Webster Online Dictionary, http://mw1.merriam-webster.com/dictionary/character (accessed September 1, 2009). The Josephson Institute defines character as being composed of six core ethical values:

  1. Trustworthiness
  2. Respect
  3. Responsibility
  4. Fairness
  5. Caring
  6. CitizenshipJosephson Institute, “The Six Pillars of Character,” Josephson Institute, http://charactercounts.org/sixpillars.html (accessed September 1, 2009).

This is a comprehensive description of character. Consider how you perceive other people; it’s their character that defines who they are. Can you depend on him? Is she fair? Does he respect you? Just as these ethical pillars define other peoples’ character, they also define your character to other people. Customers ask the same questions about you: Can I trust her? Will he give me fair pricing? Is she honest? Does he care about the best interest of my business?

The Power of Your Reputation

In November of 2008, Tomb Raider: Underworld was released for multiple gaming systems. Knowing how important a game’s reputation can be for sales, public relations firm Barrington Harvey—in an attempt to massage the Metacritic score, a less-than-ethical move—asked reviewers to hold their scores until after the first weekend of the game’s release. “That’s right. We’re trying to manage the review scores at the request of Eidos.” When asked why, a spokesperson for Barrington Harvey explained, “Just that we’re trying to get the Metacritic rating to be high, and the brand manager in the United States that’s handling all of Tomb Raider has asked that we just manage the scores before the game is out, really, just to ensure that we don’t put people off buying the game, basically.”Mike Fahey, “Eidos Trying to Fix Tomb Raider: Underworld Metacritic Scores,” Kotaku, November 21, 2008, http://kotaku.com/5095674/eidos-trying-to-fix-tomb-raider-underworld-metacritic-scores (accessed September 1, 2009). Eidos, the company that published the game, tried to take an ethical shortcut—they wanted to be sure that the game’s reputation could not precede it—but paid for that decision with a great deal of negative publicity that adversely impacted their reputation.

Your overall character as judged by other people is your reputationOverall character as judged by other people..“Reputation,” Merriam-Webster Online Dictionary, http://www.merriam-webster.com/dictionary/reputation (accessed September 1, 2009). Consider some celebrities who have had unethical acts negatively impact their reputation: Tiger Woods, known as one of golf’s greats has been reduced to tabloid fodder since the news of his extramarital affairs; Michael Phelps, the only person to ever win eight gold medals in a single Olympic Games, has become the poster boy for marijuana use. Both had stellar reputations and were considered role models. Now both are working to gain back the trust of the public. Reputation isn’t limited to the wealthy or powerful. In high school, you knew that Sharon was a brain and Timothy was the sensitive, poetic type. You may never have had a conversation with either one of them, but you knew their reputations. Meanwhile, you avoided classes with Mrs. Avar because she had a reputation as a hard grader. Your reactions to many of the people in your day-to-day life are affected by their reputations.

Build Your Reputation: Be an Industry Expert

A great way to build your reputation in a specific industry is to become an industry expert: write a blog, tweet regularly about industry issues, be a guest speaker or panelist at industry conferences or events online or in person. Decision makers hear and see you take on a leadership role and seek you out to gain your expertise. You can build your reputation, which, in turn, will help you build your client list.Renee Houston Zemanski, “The Power of Your Reputation,” Selling Power, http://www.sellingpower.com/article/display.asp?aid=SP1900197 (accessed August 29, 2009).

When you work in sales, you are selling yourself; you will have greater success with customers if you are someone they want to “buy.” When customers buy from you, they are investing in your reputation. George Ludwig, author of Power Selling, explains that “you’ve got to live out your identity consistently in every facet of your life and make sure prospective clients bump into that identity everywhere they turn.”Renee Houston Zemanski, “The Power of Your Reputation,” Selling Power, http://www.sellingpower.com/article/display.asp?aid=SP1900197 (accessed August 29, 2009). In other words, every action you take affects your reputation. If you fail to follow up, forget details, or even if you are consistently late for meetings, you may become known as unreliable. On the other hand, if you consistently deliver what you promise, you will be known as reliable; if you always meet your deadlines, you will have a reputation for punctuality.

Power Player: Lessons in Selling from Successful Salespeople

Do the Right Thing

Robert L. Bailey, retired CEO, president, and chairman of the State Auto Insurance Companies, knows how important a salesperson’s reputation can be and the value of consistent ethical behavior. “Back in my corporate days I regularly met with new employees. I would tell them, ‘Regardless of the circumstances, regardless of what the contract says, we always want you to do the right thing. Do you know what it means to do the right thing?’ I would ask.” Bailey knows that any action taken by a salesperson can affect his or her reputation: “If your actions are described on the front page of our local newspaper or USA Today, will most people read the account and say, ‘I think they did the right thing?” That’s the kind of action we encourage and expect.”Robert L. Bailey, “A Story of Two Salespeople,” BNET, April 2008, http://findarticles.com/p/articles/mi_qa3615/is_200804/ai_n25420875/pg_2/?tag=content;col (accessed February 18, 2010). Your reputation speaks for you; make sure it’s saying what you want customers to hear.

You’re Only as Good as Your Word

Unfortunately, not everyone in sales is ethical or honest. David Chittock, president of Incentra, Inc., discusses one encounter in which a customer shared her view of salespeople: “The prospect’s body language told me she wasn’t just uncomfortable—she was downright hostile to me. Finally, she shared this sentiment out loud: ‘I have to be honest with you. I think that all salespeople are liars, and I don’t trust any of them, and I don’t trust you.’” He goes on to explain that “many (if not all) of our prospects, view salespeople with suspicion, assuming that in attempting to make a sale, we will be self-serving, manipulative, and possibly even untruthful.”David Chittock, “Outside the Box: A Question of Integrity,” Manage Smarter, May 28, 2009, http://www.presentations.com/msg/search/article_display.jsp?vnu_content_id=1003977677 (accessed February 18, 2010). Chittock and his employees overcome that suspicion by making promises to their customers and then keeping them—sure, it sounds simple, but too many salespeople are willing to promise their customers the moon in order to close the deal.

Dr. Pat Lynch conducted a study that was published in the Journal of Business Ethics in which he asked more than seven hundred businesspeople and graduate business students to rank their values in the workplace; these included competency, work ethic, overcoming adversity, seniority, and promise keeping. Lynch found that keeping promises was that the bottom of people’s lists, whatever their gender, supervisory experience, or religious background.John C. Maxwell, There’s No Such Thing as “BusinessEthics (New York: Center Street, 2003), 121 Honesty is a way to stand out and to build your reputation.

Video Clip

Lying in the Workplace

(click to see video)

This video highlights the problem of lying in the workplace.

If you are committed to finding win-win-win solutions for your customers, you need to be honest with them and with yourself. Figure out what you can realistically guarantee, make the promise, and then keep it. Jack Welch, in his book Winning, declares that “too many people—too often—instinctively don’t express themselves with frankness. They don’t communicate straightforwardly or put forth ideas looking to stimulate real debate. But when you’ve got candor, everything just operates faster and better.”John C. Maxwell, There’s No Such Thing as “BusinessEthics (New York: Center Street, 2003). If circumstances change and you realize that you will be unable to keep your promise, immediately communicate with the customer; explain what has happened, offer a new solution, and apologize. While that can make for an awkward conversation, in the long run, that kind of honesty and openness will help you to build strong business relationships.

Where the Rubber Meets the Road: Facing Challenges

Imagine that you are the buyer for Chez Food, a popular pan-European restaurant on the West Coast. You have good relationships with your suppliers, especially your produce guy, a genial fellow who owns his own business. As the holidays approach, Ray, your produce guy, approaches you with a gift. He tells you that he really appreciates both your business and your friendship, and he hands you two tickets to a Caribbean cruise. The company policy is clear: you aren’t supposed to accept gifts from suppliers, but, you argue to yourself, what could be the harm? After all, you were planning to keep buying from Ray before he offered you the tickets; it’s not as though he’s asking you for anything, anyway. What will you do? Your ethical obligation, of course, is to refuse the tickets—politely. Your relationship with Ray is important, but doing the right thing—and keeping your job—is important too.

At some point in your selling career—in fact, probably at many points—you will be faced with a situation that challenges your ethics. At these times, it is best to follow your code of ethics and the company’s code of ethics; when in doubt, don’t make an exception. If you’re having trouble finding the motivation to refuse a gift or accurately detail your résumé, remember that you will very like be found out—and when you’re found out, you will be very lucky not to lose your job. Is the case of wine from a supplier worth losing your job over? But more important, when you fail an ethical challenge, you trade in your integrity. If you are tempted to inflate your expense report by fifty dollars, ask yourself, “Is my integrity worth more than fifty dollars?” The answer, of course, is that your integrity is worth more than any amount of money—and once gone, it cannot be bought back. Ken Lay, former CEO of Enron, was a man with a great reputation and an oil portrait displayed at his alma mater; once his crimes were discovered, however, his name was forever associated with a willingness to break the law and exploit his own employees.“Ken Lay’s Final Act,” New York Times, July 6, 2006, http://www.nytimes.com/2006/07/06/opinion/06thurs4.html (accessed September 1, 2009).

Sir Michael Rake, chairman of KPMG International, says in Leading by Example, “Enron had an enormously laudable charter of values in corporate social responsibility, but actually it was almost a smokescreen for abuse…In investigations we’ve done into companies and individuals where things have gone wrong…have crossed from white, to gray, to black. Most of them have to operate in the gray a lot of the time…because of the aggressiveness with which the targets are set of the way in which their achievement of those targets is rewarded, intelligent, honest people suddenly think that this act is OK: because within that environment it seems to be OK. It isn’t OK; they’ve actually done something which is illegal or amoral.”Sir Michael Rake, “Setting the Right Tone at the Top,” Leading by Example (Cambridge, MA: Harvard Business School Press, 2007), 9–11.

Finding yourself in a corrupt corporate culture is not reason enough to violate your own code of ethics or break the law. If you find yourself in a situation where you feel pressured to do something unethical (or even illegal), talk to your supervisor about it. If you don’t feel that you can talk to your supervisor—or your supervisor is part of the problem—talk to someone in the human resources department. Give the company a chance to resolve the situation; if they are not aware of it, they can’t make it right.

If you’re wondering about how the role of human resources works in a situation like this, it might be helpful to think about an analogy: When you were in high school and you went out with your friends, your mother, at some point or another (or perhaps every Friday night!), must have given you a talk that went something like this: “I want you to have a good time with your friends—but if anything happens, just call us and we’ll come pick you up and we won’t be mad. If there’s drinking at the party, or if someone has drugs, just call us if you need to, OK?” While you probably won’t be calling your mom when an ethical problem arises at work (much as you might secretly like to), you can call the human resources department. Human resources departments oversee hiring, promotions, and performance reviews, but they also deal with employee relations and can provide confidential counseling to workers. It is important for a company’s success that employee goals align with corporate goals; when this is the case, the corporate culture is considered “successful.”David Towers, “An Investigation into Whether Organisational Culture Is Directly Linked to Motivation and Performance through Looking at Google Inc.,” extended essay, The University of Birmingham, The Birmingham Business School, 2005–6, http://www.towers.fr/essays/culture%20performance%20and%20motivation %20review%20and%20the%20google%20case%20study%20success.pdf (accessed September 1, 2009). If your supervisor is involved in the wrongdoing, the human resources department can be an excellent resource for you.

Key Takeaways

  • Ethics is moral principles, a system that defines right and wrong.
  • Business ethics is ethical behavior applied to a business situation.
  • An ethical dilemma is a situation that is presented with options that may be right or wrong.
  • Values define what is important to you: they are your guiding principles and beliefs, they define how you live your life, and they inform your ethics.
  • A mission statement is a roadmap of where a person or company wants to go.
  • Your reputation will affect how people see you throughout your life, which can have either a positive or a negative impact on your career.
  • Every action you take defines you; bear that in mind when making decisions.
  • If you find yourself in a situation that challenges your ethics, talk to your supervisor. If you don’t feel that you can talk to your supervisor, talk to someone in the human resources department.
  • A good rule of thumb is that if you would be ashamed to tell your boss about it, don’t do it.

Exercises

  1. Watch the following video about ethics and stop it after each scenario is shown. Discuss what you would do in each situation, then play the rest of the video and watch the suggested action.

    (click to see video)
  2. Evaluate your values. Choose three values that are important to you and discuss how they may impact your decision making.
  3. Think of someone you know only by reputation; what do you know about that person, and what assumptions do you make about him or her?
  4. Discuss the reputation of the following people. What actions has each taken that reflect their reputation?

    • Britney Spears
    • Chris Brown
    • Simon Cowell
    • Angelina Jolie
  5. Discuss what you would do in each of the following situations. Is it ethical behavior?

    • You are not really sick, but you want to take the day off. What do you say when you call your supervisor?
    • You are on a job interview for a job you really want, and the interviewer mentions that the candidate she hires will need to be fluent in Excel. Although you are familiar with Excel, you are not especially good at it and don’t really know all the features. What would you say when she asks you about your skill level with Excel?
    • You went on a business trip for the company you work for and are preparing your expense report. You are able to include tips, mileage, and other categories without a receipt. Since you’ve been working a lot of overtime without pay, you consider adding in an additional $25 to cover your extra hours; no one will notice. What do you do as you are completing the expense report?
    • Your boss takes the afternoon off but asks you to tell everyone at the staff meeting that he is in a meeting with a client. When you are in a staff meeting, a manager asks you why your boss isn’t there. What would you say?