Can ethics and sales ever be reconciled?

By Catherine Bernales and Antonia Di Lorenzo

There’s a great cartoon in which a sales manager tells one of his team: “A dynamic sales idea Lou. I’m just sorry I have to notify the police.”

At the recent Ethics and Governance conference by Ethisphere, in London, an attendee challenged the delegates with the suggestion “sales trump ethics every time”.

How close to reality is that assertion? In some dramatic cases like Enron, Worldcom or the Dhaka fire in Bangladesh, profits did indeed trump ethics and were part of normal business practice there.

Nick LeeNick Lee, Honorary Professor of Marketing at the Aston University, Birmingham, points out:

“if we see companies having problems it’s because they don’t have very good long-term prospects for relationships. One of the reasons for the financial crisis is there was far too much short-term focus on making profit. If you think about long-term continuing relationships and continuing business, then ethical behavior is the natural thing to do.”

Similarly, Fernando Chomalí and Nicolás Majluf, authors of Ethics and Social Responsibility within Business, 2007, [1] believe the nature of a company is both economic and social. Therefore, using profits as the only measure of performance and success of a company is insufficient. It ignores all the impacts that an organization makes in people’s lives and it community.

There should not be a problem in choosing between ethics and sales but the reality is the driving need to win the company’s bread and butter can create what seems like a choice.”

For a closer look at this issue, we invited some practitioners to share their views on what sometimes seems a choice. Most saw trust and long-term relationship as the key for a sustainable business. However, most also recognised it can sometimes be a tough decision.

Nicolás Majluf, PhD in Management, MIT, author of Strategies for Competitive Leadership, 1998, [2] and other publications.Majluf

“Business firms are not only “profit maximizing” entities. Certainly the economic dimension cannot be ignored, but if we reduce the role of a corporation to just maximising profit we risk losing the entire firm because it becomes insensible to the plight of society, it will no longer have “the social permit” to operate.

The firm must be seen as part of society and not as an economic entity concentrating solely on internal matters like productivity, the best technology or the appropriate compensation scheme. On the contrary, it must take responsibility for what is going on in the society at large.”

Nick Lee, Honorary Professor of Marketing and Organisational Research at Aston University.

“The choice between ethics and sales is a kind of false choice, but the problem is that it’s a long term prospect. On a short term basis perhaps there is a choice for individual salespersons. Sometimes for example the choice can concern choosing the easier and the more beneficial outcome for themselves.

What we need to do is show clearly the benefits of an ethical choice. People always choose the benefit over no benefit. We must present the ethical choice as a long-term benefit, rather than a short term one. In the past there were many companies focusing on short term performances and influenced by unethical behaviour rather than doing the right thing.

Ethical behaviour is al about long-term relationships. Think about your personal life, for example. If you are married with somebody you usually have a long term perspective. It’s to your benefit to use a wider criterion in your decision making rather than your short term gain.  Business is no different.  With a long term perspective the ethical choice is always the highest performance choice.

FontecillaRafael Fontecilla, CEO at PPI Security, MA in Defense and Security

“Numbers matter in running an organisation since without them few companies can expect to survive. However, ethics are indispensable too. For example, if the company does not act ethically, both clients and employees will stop trusting it and the organization will sooner or later fail.

With the advent of social media and new technologies, on-line social networks are strong and with enough power to easily reveal companies’ bad practices and corruption. So you could say being ethical is becoming unavoidable.”

Alfonso Bawarshi, European Business School, Managing Director at Avanza ConsultantsBawashi

I believe ethics will always prevail over sales in the long-term.

“If a company behaves unethically to any of its stakeholders, the lack of trust will damage relationships with this organisation; therefore compromising its future.

For instance, a sales manager will often have a short-term incentive to push sales far beyond a client’s need. Pressed to accomplish a monthly or a quarterly target being concerned about the negative impact in the long term may just not feature. But once stakeholders and customers feel trust is broken, there will be an unrecoverable rupture in the business relationship.”

CuccovilloMichele Cuccovillo | Co-founder and CEO, Netberg

“Every employee, not just sales people should be measured against Key Performance Indicators (KPI) and never against just a single one.

The world today is so complex that taking into account only one indicator is insufficient. Indeed, it can be seriously misleading for both the company and its stakeholders.

Sales people with only sales revenues as a target can easily be misled in their behaviour, ruining trust, reputation and ultimately the future growth of the company. It’s essential other KPIs such as transparency, customer satisfaction and Average Loan-To-Value Ratio, LTV, should also be taken into account when assessing a salesperson’s performance.”

Luis de Pablo, CEO and Software EngineerPablo

“I do strongly believe sales are very important and a must for every company. Honesty or being ethical can sometimes be complicated when there is an important sales decision to make.

Managers do not always keep ethics in mind nor its importance. So it’s difficult to mix both in every sales project or decision. However it’s true there must be a balance between both.

I was very inspired by The 7 habits of highly effective people of Stephen R. Covey, a bestseller in which many insightful principles for professionals are described. Life is not only about sales, but as human beings, we live in an ambitious world. I think that these days, unfortunately we make our choices taking into account sales more than ethics.”

Conclusion

The consensus seems to be that long-term, ethics must prevail. However all recognised there are often important and difficult choices to be made, especially in the short-term.

  1. Fernando Chomalí – Nicolás Majluf, Etica y Responsabilidad Social en la Empresa (Ethics and Social Responsibility within Business), 2007
  2. Nicolàs Majluf, Estrategias Para El Liderazgo Competitivo (Strategies for Competitive Leadership), 1998.

 

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