Wrestling with Ethics

The head of a rep firm approaches the owner of a small manufacturing company for whom they sell. One of his salespeople has an opportunity for a huge order with a multinational company, but the purchasing manager has indicated that the sale will go to the supplier who “takes care of him.”

The owner has never paid bribes. Just as important, the customer is renowned in the industry for having a zero tolerance policy towards any gifts whatsoever. In cases where under the table payments have been discovered, the customer has pursued a “scorched earth” policy. Anyone associated with that transaction is permanently banned from doing business with the organization.

The owner tells the rep that he will not accede to the demand, even if it means losing the sale. The rep says, “I understand. I’ll take care of it.”

What does that mean? If the rep returns with an order, should the owner refuse it? If he asks the rep whether a bribe was paid, and the rep denies it, is the risk of permanent banishment worth declining it anyway? The sale could be the rep’s largest income source for the year, and rejecting it will permanently damage the relationship between the firm and its sales force. If it is a once-in-a-lifetime opportunity, should the owner just take it, and hope that there are no repercussions?

BribesIt’s easy to include words like “integrity” in your company core values, but how far does it go? Making sales calls with a fistful of hundred dollar bills or a trunkful of color TVs is a thing of the past in most industries, but laws and globalization are making the sales relationship more complex every day.

Another vendor is asked for “a piece of the action” from a new buyer on a big order for a customer he regularly does business with. He refuses, and the order goes to a competitor. Over the next several years, the buyer receives several promotions into the executive ranks. Then the vendor receives a new policy document regarding business ethics and kickbacks. It is required to be signed by all vendors. The final line says “I hereby attest that I have informed XYZ Company of any attempts. past or present, to extract consideration in return for doing business.”

The vendor stalls until the customer begins threatening cancellation of existing business. Finally, he calls the customer’s legal department and explains his dilemma without identifying the employee. After a few days the legal department calls back with a solution. They tell the vendor to discard the agreement, and they will pretend that it was fully executed.

How far does integrity go? Blowing the whistle on the legal department clearly seems a foolhardy strategy. Should he force their hand by signing and reporting, leaving the onus on them to bury it?

The days when a mid-level decision maker expected to remain with his employer for a whole career are gone. Today, a buyer in a large organization only has to get away with something for a year or two, and then he moves on. He might be laid off before then, so loyalty isn’t much of a motivator. Some of his suppliers may come from cultures where bribes or elaborate gift giving are part of the normal business relationship.

In the 1978 Yankee – Dodger World Series, Reggie Jackson threw an obvious hip chuck to break up a double-play. I remember being shocked when the announcers praised him for such a smart violation of the rules. Now you can’t watch an afternoon of football without hearing “Boy, he really got away with one that time.” A little cheating is just good competition.

Corrupt foreign dignitaries are plied with aid that no one pretends will be spent as stated. Elected officials in the US take junkets to exotic locales, trade stocks in industries they regulate, retire with millions in unused campaign contributions, and then jump into lucrative lobbying jobs. Can the law permit corruption? Does that make it ethical?

For a small business owner, a single relationship with a large company can lift your business to an entirely new level of success. It can mean jobs, college for the kids and a secure retirement. It can be very difficult to stand on ethics when there is pressure to put bread on the table. As the Facebook status says, “It’s complicated.”

Or do you disagree? Do you think it’s really very simple?

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2 Responses to Wrestling with Ethics

  1. Rod Giles says:

    I own my company so I am in a position to decide better than some other may be , however my standard in life has always been honesty, expected of myself , my kids and my employees. It has worked for me , yes it has been a difficult choice at times but I sleep well and have never had to be looking over my shoulder. Its choice I do not regret and the great kids I have and long term employees, some for over 20 years , I think is a tribute to that as I am now appraching retirement. Integrity is everything as trust is wjhat business is and should be built on.

    • Anthony Parkman says:

      I am a recently promoted SVP at a company that still does business with a handshake. Of course we do the requisite paperwork but if we say we have a deal and shake we won’t later accept a “better deal” because no paperwork was done upfront. I also served 26 years in the military and the one phrase that sticks in mind from day one until my retirement is ” Do the right thing even if no one is looking.” Being ethical in today’s business climate can be challenging but the cost of losing your integrity can be very high.

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