Social, Ethical, Legal Influences Management’s Social Responsibilities

1. Main Topics Social, Ethical, Legal Influences Management’s Social Responsibilities What Influences Ethical Behavior Are There any Ethical Guidelines Management’s Ethical Responsibilities Ethics in Dealing with Salespeople

2. Main Topics Salespeople’s Ethics when Dealing with Their Employers Ethics in Dealing with Customers The International Side of Ethics Managing Sales Ethics Ethics in Business and Sales

3. Ethical Situation #1 The Cadillac Lease A car salesman has presented a sales price and payment to a customer, who has agreed to the terms A bank salesman suggests he offer the customer a lease in order to lower the payment. The car salesman switches to a lease, but increases the profit instead.

4. Ethical Situation #2 The Home Mortgage A mortgage broker tells the customer he is getting the lowest rate available. Between the time the customer agrees to the terms and then signs papers rates go down. The mortgage salesman keeps the rate the same and is paid the difference by the bank.

5. Ethical Situation #3 Overdraft Protection The bank suggests that a customer sign up for overdraft protection. “It’s easy and convenient. It simply charges your credit card to cover overdrafts – no overdraft charges.” Each time the customer overdraws his account he is charged $5, and the interest ticker begins on the entire credit card balance.

6. Ethical Situation #3 Fees for Overdrafts A bank Marketing Manager calculates the actual costs of an overdraft at $1.50. His manager insists that the bank “fee” be increased from $12 to $20. The Marketing Manager decides to resign rather than support the increase.

7. Management’s Social Responsibilities • Social responsibility is management’s obligation to make choices and take actions that contribute to the welfare and interests of society as well as to those of the organization

8. A stakeholder is any group inside or outside the organization that has a stake in the organization’s performance Stakeholders may have similar or different interests in the organization: Customers Community Creditors Government CCC GOMES Owners Managers Employees Suppliers Organizational Stakeholders

9. Exhibit 3-2: Major Stakeholders in the Organization’s Performance

10. An Organization’s Main Responsibilities • Economic - be profitable • Legal - obey the law • Ethical - do what is right • Discretionary - contribute to community and quality of life

11. An Organization’s Main Responsibilities

12. What Is Your Level of Moral Development? • Principled - “What is the right thing to do?” Level 3 • Conventional - “What am I legally required to do?” Level 2 Level 1 • Preconventional - “What can I get away with?”

13. Are There Any Ethical Guidelines? • What Does The Research Say? • American adults said by a 3-to-1 margin that truth is always relative to a person’s situation • People are most likely to make their moral and ethical decisions based on: • whatever feels right or • comfortable in a situation

14. How Do You Make Your Moral-Right or Wrong Choices? (Choose One) • Whatever will bring you the most pleasing or satisfying results • Whatever will make other people happy or minimize interpersonal conflict • Values taught by your family • Primarily from religious principles and teaching or bible content • Other

15. What Do You Use For a Moral Compass?

16. Are There Ethical Guidelines? • What Does One Do? • What if you found a bank bag containing $125,000? Would you return it to the bank? • Is it fear of being caught? • Not the right thing to do?

17. Are There Ethical Guidelines? • Out of class, is it okay to copy someone else’s homework assignment? • What keeps you from cheating on an exam when the professor is out of the room? • Is it fear of being caught? • Not the right thing to do?

18. Is Your Conscience Reliable? • What Does One Do? • We all have an internal constant standard with which we measure right and wrong, a “moral compass” • Most of us know we should return the $125,000 and not copy someone’s homework • But what would we actually do?

19. Is Your Conscience Reliable? • If a person’s values are at “Level 2,” they may make decisions based on the situation and what others say and do • Usually people rationalize their decisions; “I’ll only copy the homework this one time” • Many people are so accustomed to doing things unethically that they think nothing about it

20. Are There Ethical Guidelines? • Sources of Significant Influence • Do factors influencing our decisions include your friends, family, or things you see on television or in the movies? • Barna has found that the leading influences on American ethics are movies, TV, the Internet, books, music, public policy, law, and family

21. To Have Ethical Guidelines You Need • A point of reference that: • Is fixed - so that no one can change it • Is separate from you • No one else may influence

22. The Fixed Point of Reference Must Be: • Right whether people: • Believe it or not • Like it or not • Know about it or not

23. How Do You Know If What Someone Is Saying is True Or Not? • Can it be a moral and ethical standard? • There is no way for you to know if what I am saying is true unless you know what is the truth • And there is no way to know what is the truth unless there is a truth you can know

24. What Is a Fixed Point of Reference? • Stars can be used for navigation because they are a fixed point of reference separate from you that no one can influence

25. Will The Golden Rule Help? • The “Golden Rule” concept is present in virtually all faith-based principles • The Golden Rule does not involve reciprocity • “Could the Golden Rule serve as a universal, practical, helpful standard for the businessperson’s conduct?” • Would you consider your faith a fixed point that is separate from you and never changes?

26. Examples of World Religions Which Embrace the Golden Rule • Hindu - “Do naught unto others what you would not have them do to you.” • Confucius - “Do not do to others what you would not like yourself.” • Buddhist - “Hurt not others in ways that you yourself would find hurtful.” • Rabbi Hillel - “That which is hateful to you do not do unto your neighbor.” • Jesus Christ - “Do to others as you would have them do to you.”

27. What Influences Ethical Behavior? • The Individual’s Role • Level one: Preconventional--acts in own best interest • A few operate here • Level two: Conventional--upholds legal laws • Most people operate here • Level three: Principled--lives by own code • Less than 20% reach level three • The Organization’s Role • At best, most employees in firm operate at level two • How will the situation be handled if no policies and procedures are in place?

28. Management’s Ethical Responsibilities • Ethics is the code of moral principles and values that govern the behaviors of a person or a group with respect to what is right or wrong • Ethical behavior refers to treatingothers fairly

29. What is an Ethical Dilemma? • A situation in which each alternative choice or behavior has some undesirable elements due to potentially negative ethical or personal consequences

30. Ethics in Dealing with Salespeople • Five ethical considerations faced by sales managers: • Level of sales pressure • Decisions affecting territory • To tell the truth? • The ill salesperson • Employee rights • termination-at-will • privacy • sexual harassment

31. Benefits of Respecting Employees Rights • More productive employees • Attracting good sales personnel • Reducing legal costs • Reducing wage increase demands

32. Salespeople’s Ethics in Dealing with Their Employers • Misusing company assets • Moonlighting • Cheating • Affecting other salespeople • Technology theft

33. Ethics in Dealing with Customers • Bribes • Misrepresentation • Price discrimination • Robinson-Patman Act • Selling the same quantity of the same product to different buyers at different prices • Tie-in sales • To buy a particular line of merchandise, a buyer may • Clayton Act

34. Ethics in Dealing with Customers • Exclusive dealership • Reciprocity • Buying a product from someone if the person or organization agrees to buy from you • Sales restrictions • Cooling-off laws • Green River ordinances

35. The International Side of Ethics • Guidelines for conducting international business may be different or even nonexistent • Despite laws in other countries, U.S. firms are subject to U.S. laws • It is important to keep up to date on the law and be aware of how authorized representatives are conducting business

36. Managing Sales Ethics • Follow the leader • Leader selection is important • Establish a code of ethics • Create ethical structures • Encourage whistle-blowing • Create an ethical sales climate • Establish control systems

37. Helpful Hints to Making Career Decisions • Your employer should provide worthwhile products • You should be able to do what is right • You do not have to compromise your beliefs • People go before anything else • Good people are desperately needed in all types of businesses/organizations • Look for a calling, not a job*