"On my honor, as a salesperson..."

Why sales ethics matter, by Andrew Rudin, MS

Which business risk represents the greatest threat to shareholder value: Natural disasters? Terrorism? Product defects? Piracy? Patent infringement? Lack of ethical boundaries?

If you answered lack of ethical boundaries, you are right. The massive collapse of market capitalization at Tyco, Worldcom, and Enron underscores the grave dangers posed to shareholder value when employees lack an ethical compass. The cumulative decline in market capitalization resulting from fraud at these three companies was $136 billion, according to Public Citizen’s Congress Watch.

What ethical risks do entrepreneurs face? How might your company’s reputation or your personal reputation be affected? What other ethical problems occur every day, too innocuous to make the news, and beneath the radar of regulators? What about unethical sales practices that spiral from what are euphemistically called “aggressive sales practices?” Do businesses have ethical responsibilities, and if so, what are they? Who, then, is responsible for the actions made on behalf of a corporation? This paper explores these dilemmas through an actual case, describes how to identify risk factors for ethics problems, and how to mitigate the risk.

What exactly is unethical?
Any discussion of ethics involves drawing boundaries. But drawing boundaries for sales ethics is much easier said than done. “I’ll sell an early version of my software that isn’t fully tested, but I won’t sell anything that I know doesn’t work. I won’t bring up the fact that I’m missing a key feature, but I won’t lie about its absence. At the end of the quarter, I will commit resources I don’t control in order to win the sale, but I won’t promise my prospective customer anything I know cannot be delivered. I won’t overcharge anyone, but I won’t sell at the lowest possible price, either. I’ll look out for my client’s best interests, but only if doing so doesn’t jeopardize my business.” As author David Quammen writes in Wild Thoughts from Wild Places, “Not every crisp line represents a triumph of ethical clarity.” What causes this obfuscation? Individual ethical interpretations are a function of a person’s current emotions, situation, values, experience, logic, and personality. What do blurry interpretive boundaries mean for sales? They mean that ethical practices and behaviors are difficult to define. If ethics are hard to define, how can a company prescribe and enforce ethical practices? That question will be addressed later in the paper.

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Andrew Rudin is the Managing Principal of Outside Technologies, Inc. and specializes in sales strategy for technology companies.  He holds a BS in Commerce (Marketing) and a MS in Management Information Technology (MS/MIT) both from the McIntire School of Commerce, University of Virginia, where he serves on the Advisory Board for the MS/MIT program.  He is Certified in Production and Inventory Management (CPIM) through APICS.  As a Faculty Adjunct at National Louis University, he teaches Strategic Uses of Information Technology.  He can be reached at 703.255.3732, or arudin@outsidetechnologies.com

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