Here are the answers I got when I posted our What Would YOU Do? scenario a few
weeks ago.
Thanks to Frank and Jackie for responding. You should be getting a copy of
the newsletter in a few days.
Here's the scenario:
"Kathy, I'm worried about ethics in our sales department," said Sales Manager
Tim Ross.
"Why, Tim," asked HR Director Kathy McGuire. "What's been happening."
"Well, for example," Tim said, "I'm always telling reps that integrity is the
key to success, so this morning Joe West comes in my office and tells me,
'Boss, you're going to be proud.' He says a customer assured him we'd get his
business if we 'took care of him' the way our competitors do.
"So, Joe tells me he told the customer 'No way.' I was glad he resisted the
temptation, but he also lost the account."
"Did you talk to him about ways he could have helped the customer that didn't
involve kickbacks?" Kathy asked.
"I was about to when I got called into a meeting. Joe and I are supposed to
meet later today. But that's not the end of the problem.
"An hour later, Christine Smith is in my office to get her expense account
approved. She explains that it's high because one of her accounts told her
our competitor would buy him a VCR. So Christine bought him one instead. She
spent $700 to get a $45,000 account.
"It makes good business sense, but it's not ethical," Tim said. "I'm
troubled, Kathy. Idealistic reps who show integrity sacrifice sales.
Meanwhile, reps who bend the rules are driving in the revenue. Isn't there a
way we can have both?"
If you were Kathy what would you tell Tim?
1.
I would tell Tim that he needs to take the long view. In the long
view, persons deal with others they can trust. Sticking to
principles might lose some sales in the short run, but will keep
customers in the long run.
(rhetorical) Question: What happens when the account that Christine
bought the VCR for leaves for another position and a new manager, one
who's not on the take, takes the job? Or the story breaks in a local
newspaper? Or the auditors get hold of it?
Early in my career, I lived in Washington, D. C., and knew a lot of
lobbyists. I found that the lobbyists who got results were not those
who ran up the biggest bar bills with politicians and (more often)
their staffs; they were the ones who told the story straight and kept
their words. The same is true here.
Frank Bell Internet:
Project Leader
frank.bell@nonamebbs.com Amtrak
National Training and
Conference Center FidoNet:
110 S. French St.--Ste 200 Frank Bell@1:150/160
Wilmington, Del. 19801
2.
Jackie DiGiovanni
Adjunct Faculty
Jackson Community College
2641 Pittsfield Blvd (home)
Ann Arbor, MI 48104
In response to your post of 06-06-97 requesting feedback on the situation of
Tim/Kathy.
In our society which acknowledges that a lack of ethics is prevalent, the
phrase "integrity is key" means keep your word to your customer. If you said
the product will arrive by the 15th, make sure it does. If you said the new
design will solve the customer's problem, make sure it does. Don't let the
customer down. Don't make false statements to the customer. Ethics is a
separate matter.
Kathy and Tim, as managers, understand the culture of their company and they
know what is and is not accepted practice. Ethical issues are best handled by
providing employees with some published "code of conduct" that spells out
situations considered unethical. The senior leadership within a company or
institution drives the culture to the accepted level of ethical behavior.
In Tim's case, the sales rep has expensed a "gift" to an account. Is the VCR
for business use by the customer/company or for the personal use of the
decision maker?
What the sales rep includes on an expense report is captured by the
accounting system as a business expense. There are IRS rulings on allowable
business expenses. Gifts to companies and organizations need to be tracked
separately by the accounting system and the record needs to include the tax
number of the recipient. If Tim's company has an internal audit function, the
expensed VCR should be identified and disallowed. If Tim's company is public,
the outside audit will find the questionable expense. If there is an IRS
audit, the expense could be disallowed and could result in additional taxes
owed and penalties owed. If the VCR is an actual "donation" to the
customer/company, it should be accounted for in a proper manner. If the VCR
is a personal gift to the decision maker, Tim and Kathy need to decide how
ethical their own behavior will be.
Tim has a decision to make that involves his ethics. He has to approve
Christine's expense report. If Christine's $700 expense item is not approved,
then she has paid for the VCR out of her own pocket. If the sales commission
on the $45,000 account is large enough, she may not mind.
If Christine has violated the company's code of conduct, direct and
appropriate action should be taken. If no code of conduct exists, Tim and
Kathy should take the initiative to begin writing one. And it would prove an
interesteing discussion at senior management levels to decide if the
management of the company receiving Christine's largesse should also be
notified.
Unethical behavior happens one incident at a time.