Want a Customer-Focused Culture? Begin with Guidelines for Ethical Conduct


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Politicians love to judge ethics – that is, everyone else’s. If their hypocritical self-righteousness somehow produced water, Lake Mead would once again be full, and thousands of golf courses and car washes would open in California. I think I’ll look into this before the election in November, while I’m guaranteed a cornucopia of raw material.

My family routinely reminds me that I, too, am in no position to finger wag about someone else’s ethical standards. I don’t argue with them, not that I haven’t tried. Ethical ambiguity flourishes everywhere, affording infinite ways to distinguish pretty much right from kind of wrong. I guess I’m just lucky to have made so many correct ethical decisions over the years. Winking Emoticon, #humblebragging.

Isn’t it ironic that the same people who gripe about other people’s ethics often strenuously advocate rolling back regulation, and eliminating “bureaucratic red tape”? Do they really think it’s best to abdicate our society’s best interests to . . . well, there are so many checkered people whose names fit in this spot. So, no thanks – I’ll snuggle with the nannies at FINRA, OSHA, the FDA, the FCC, the CDC, and the FTC. They help me sleep better at night.

If you think Big Government has piled legal red tape too high, I urge you to peruse Article 2 of the Uniform Commercial Code (UCC), which governs sales of goods. Without the UCC, companies would be stuck navigating the laws of every state, along with the District of Columbia and Puerto Rico, just to sell a simple container of shower curtain rings, and ship it domestically.

A copy of the UCC stays in my car, submerged in a beefy volume that includes cases, titled Business Law, by Smith and Roberson. I figure the book will come in handy in case I have to change a tire, and need a sturdy wheel chock. Several cases follow a pattern: Party A deliberately and flagrantly screwed over Party B, causing grievous harm . . . Others are fuzzier on culpability, providing fodder for lively debate over whether laws were broken, despite unfortunate outcomes. “Satisfaction as an express condition.” A discussion topic that fascinates me, and underscores why Chief Customer Officers need law degrees to accompany their marketing creds. You’ve probably guessed that I don’t attract large crowds at parties.

Make no mistake: when it comes to business conduct, laws govern a miniscule sliver of possible situations. While I heartily agree that some regulations are misplaced (does it make sense for the government to shut down lemonade and cookie stands run by ambitious grade-school entrepreneurs?), I don’t think of American business as over-regulated. Not by a long shot. In fact, most day-to-day business activity occurs in spaces painted in appealing shades of Legal Gray. A joyous region where men and women of all races, religions, and ethnicities frolic unencumbered, making and selling things as they see fit. Go us! Freedom from regulation – and not a law man or law woman in sight! . . . said the Marketing Director for the dietary supplements company.

Think of commercial laws and regulations as a paper umbrella, about the size of the one a bartender uses to adorn your Singapore Sling. If you want to keep dry in the rain, you’d ask for something more substantial to preserve your coiffeur, and keep your Armani suit dry. In capitalist economies, we depend on ethics – the moral principles that govern a person’s or group’s behavior – to fill a comparable role.

Fortunately, anyone from a spunky summer intern in flip-flops to a wizened CEO in wingtips can trigger ethical circumspection by asking, “what is the right thing to do?” But providing answers can be anything but straightforward.

For example, how would a member of your biz-dev team respond if . . .

• when bidding on a large project, she had access to proprietary technical or pricing information about a major competitor?

• a prospective client proceeded to buy your product even though your rep knew it wouldn’t perform well?

• he had the ability to reduce prices for a long-time customer who consistently pays list price?

Depending on context, the answers could change.

In the first scenario, what would your rep do if she got the information passively through a mistakenly forwarded email? Or, what would she do if a prospective buyer offered to clandestinely share a competitor’s comprehensive proposal? If the rep found that unethical, would she refuse the offer if winning the deal meant earning a large commission or an important recognition, such as Achiever’s Club? And what would happen if she were below quota, and losing the deal meant losing her job?

In the second scenario, how would customer knowledge influence the rep’s action? For example, if the buyer were aware of the deficiency, would the rep accept the order? What if the buyer were aware, but underestimated the consequences?

And in the third scenario, what if a previous Account Executive no longer assigned to the account had made a vague comment to the customer to “pass along savings” whenever they became available? Would the rep feel obligated to honor his colleague’s statement?

In individual situations of ethical ambiguity, management must answer two questions:

1. How would your reps likely act or respond?
2. How does the company want them to respond?

This analysis assumes that management has made protection of customers’ best interests as much a cultural centerpiece as “driving revenue” or “optimizing profit” – two pursuits that trample best outcomes for customers. It also assumes that companies prefer that their employees act both legally and ethically.

For the first question, the sales commission and incentive plan provides important, though incomplete, insight. Usually, an unsettling gap exists between the two answers, and the greater the gap, the greater the risk for employees, employers and customers. Many executives can’t answer the first question, and can’t agree on the second – creating risks that make bungee jumping with a frayed cord seem safe by comparison.

Communication that documents and prescribes Guidelines for Ethical Conduct (GEC) not only affirms a company’s commitment to honesty, transparency, and fairness in dealing with customers, it forces management to think about what those values mean, and how they intend to demonstrate those values – not just say them. A company’s GEC won’t necessarily define the right sales decision, but it should spell out characteristics of ones that are wrong.

The International Code of Ethics for Sales and Marketing Executives International (SMEI) includes a pledge to “personally maintain the highest standards of ethical and professional conduct in all my business relationships with customers, suppliers, colleagues, competitors, governmental agencies, and the public,” to “protect, support, and promote the principles of consumer choice, competition, and innovation enterprise, consistent with relevant legislative public policy standards,” and to “not knowingly participate in actions, agreements, or marketing policies or practices which may be detrimental to customers, competitors, or established community social or economic policies or standards.”

The Direct Marketing Association’s Guidelines for Ethical Business Practice dives deeper, covering a lot in 51 pages, including,

Honesty and Clarity of Offer – “All offers should be clear, honest, and complete so that the consumer may know the exact nature of what is being offered, the price, the terms of payment (including all extra charges) and the commitment involved in the placing of an order.”

Decency – “Solicitations should not be sent to consumers who have indicated to the marketer that they consider those solicitations to be vulgar, immoral, profane, pornographic, or offensive in any way and who do not want to receive them.”

The Direct Selling Association stipulates boundaries in its Code of Ethics :

“Our Code of Ethics requires independent salespeople affiliated with DSA member companies to adhere to the Code’s guidelines and ensure a high level of professionalism, customer service and business ethics when interacting with consumers.

• Independent salespeople must respect a consumer’s wishes to discontinue a product demonstration or a sales interaction

• Independent salespeople must market income representations and product descriptions consistent with company directives and ethics training

• Independent salespeople must provide a receipt from the member company that permits the consumer to withdraw from a purchase order within a minimum of three days from the date of the purchase transaction and receive a full refund of the purchase price”

[Note: In November, 2015, Herbalife, a DSA Member, settled a $15 million class-action lawsuit brought by a former salesman which “alleged that Herbalife is a pyramid scheme in which the company’s independent distributors earn more money recruiting new sales people than they do selling its products, an allegation Herbalife has repeatedly and vigorously denied, according to MyNewsLA.com]

These excerpts are not just pragmatic – they outline essential conduct for a customer-focused culture. In addition to providing guidelines to the biz-dev team for how to resolve ambiguity and possible conflicts of interest, a GEC

1. provides the operational foundation for internal sales governance. If there are no defined boundaries, there can be no governance.

2. serves as vital counter-weight to pressures for achieving short-term sales goals.

3. establishes standards for employee disciplinary actions or termination.

4. communicates to customers and employees a commitment to practicing and enforcing high ethical standards.

5. Aligns corporate values and purpose with those of employees.

When I talk with senior sales executives about instituting GEC, I often encounter skepticism. Here are some examples:

1. “The best sales reps already have a strong sense of personal ethics.” But not every top rep made his or her quota honestly or ethically.

2. “Our mission statement covers ethical behavior.” Most don’t scratch the surface, and ethical standards are tangential to mission statements, anyway. Aflac’s, “To combine aggressive strategic marketing with quality products and services at competitive prices to provide the best insurance value for consumers,” won’t help a sales rep figure out how to evaluate a questionable approach.

3. “Those types of things could never happen here.” They can. And they do.

4. “We screen for honesty in the job interview.” Really? – How?

5. “Salespeople are ‘just wired’ to behave certain ways.” Guidelines won’t prevent anything. Possibly true. But in court, demonstrating that your company maintains GEC can be a more helpful defense than saying “we have never provided guidelines to our employees.”

6. “If senior executives model ethical behavior, reps will follow their behavior.” If you believe that, I have some land to sell you in Florida.

“An’ I’m never gonna care ‘bout my bad reputation. Oh no, not me, oh no, not me,” Joan Jett belted out in her song, Bad Reputation.

But I believe most people do care. It’s just that pressure to achieve short-term results makes the process of distinguishing right from wrong a bit . . . impure. Same for winning a presidential election, or a party nomination, for that matter. When the heat is on – or even when it’s not – a Guideline for Ethical Conduct will prepare your team to make better choices.


  1. Hi Andy

    Whilst I agree with you in principle that we should behave ‘ethically’, what exactly that means should largely be left up to the individual to decide and to a lesser extent, to the mores of contemporary society, rather than being defined in someone else’s code of conduct. The two codes of conduct you offer as examples suffer from three common problems.

    Firstly they seek to codify the obvious, such as when in Article 1 of the DMA Guidelines it states ‘Advertisements or specific claims that are untrue, misleading, deceptive, or fraudulent should not be used’. If a salesman were to make claims of this nature it would simply be unlawful in most countries. The guidelines are stating the legally obvious.

    Secondly, they are often full of ethical or other philosophical paradoxes, such as when in Principle 4 of the SMEI Guidelines its states, ‘I pledge to …promote the principles of consumer choice, competition, and…’. Surely business is all about reducing customer choice and competition by having products that are the standard all others are judged by. Just ask Apple, Ferrari or Emirates Airlines. The guidelines are logically paradoxical.

    And finally, who gave the DMA and the SMEI the deontological right to dictate what constitutes an acceptable ethical framework the rest of us must adhere to. Particularly when their guidelines are so full of ethical and other philosophical holes. Quis custodiet ipsos custodes!

    We all know what ethical behaviour looks like. Most of us try and lead relatively ethical lives. And we all know when someone behaves unethically. Most of us shun these people in the future. We should hire and judge colleagues against these societal standards of ethical behaviour. We don’t need well meaning but confusingly formulated guidelines from the DMA, the SMEI, or anyone else come to that.

    If anyone needs to know more about ethics, I suggest they read Peter Singer’s recent book ‘The Most Good You Can Do: How Effective Altruism is Changing Ideas About Living Ethically’, or watch Michael Sandel’s uplifting online lectures on ‘Justice’ at Harvard University (where else will you see 1,000 people crammed into a lecture hall to listen to a public philosopher speak?).

    Graham Hill

  2. Hi Graham: thanks for your comment. While doing the research for this article, I thought carefully about the semantics around the issue of ethics, which is why I have used the term Guidelines as opposed to Code. For the reasons you point out – and others – it’s counter-productive to be prescriptive about ethics.

    Your points about the paradoxes embedded in the examples I shared are well taken. For all the hype about the need for businesses to “educate” customers, the purpose of marketing and sales is to present a distorted point-of-view, and encourage customer closed-mindedness (toward buying from the other person or company). The antithesis of education! That goal doesn’t play well in a company’s Guidelines for Ethical Conduct. So I understand how reading some of them can create the reaction, “Yeah – Right. . .”

    Still, I think it’s essential for companies to establish boundaries for engaging with customers, prospects, competitors, and suppliers. Guidelines for Ethical Conduct are more than lists, they are points to be used in regular discussions about employee tactics and behaviors, and how they match the company’s objective. (My follow-on article describes this is more detail – it will be online next week.) They also enable senior management to understand that strategies create moral and ethical dissonance, and demands for employees to meet targets should always be balanced against the ethics that will likely ensue in their execution.

    Companies that are ignorant to the potential of imposed ethical conflicts will travel down the same road as VW and other companies (please see my article, Announcing the 2015 Sales Ethics Hall of Shame for a list of example companies that were hellbent on “making goals,” while having no ethical guidance or governance for achieving them.)

  3. Hi Andy

    The right way to do this is NOT with epistemologically confusing ethics guidelines, codes, frameworks or whatever, but with a Customer Charter. A charter focuses on desirable customer outcomes rather than mandating behaviours (which even if followed often lead to undesirable outcomes). That is why most modern regulators focus on outcomes rather than behaviours, for example the UK’s Financial Conduct Authority ‘s six ‘Fair Treatment of Customers’ outcomes.

    Look at the following charters to see how much more useful they are than ethics guidelines:

    National Express Coaches, uses its charter to set out its promises to its customers in easy to understand language

    Yorkshire Water, uses its charter to describe the outcomes customers can expect and the statutory compensation if it fails to meet them

    And the Royal Bank of Scotland, which uses its charter to report on how well it is meeting its promises and what it is doing to close any gaps

    If you want customers to receive better outcomes a Customer Charter beats ethics guidelines any day of the week.

    Graham Hill

    Further reading:

    Financial Conduct Authority, ‘Fair Treatment of Customers’

  4. Hi Graham: thank you for your comment. Your perspectives are valuable to me. Customer charters are valuable, and I recognize there’s sometimes overlap with guidelines for ethical conduct. They should be used. But I don’t see them as ‘competing’ with guidelines for ethical conduct as an expression of corporate policy.

    1. Like Customer charters, Guidelines for Ethical Conduct encompass positive outcomes for customers, but they go beyond, to include practices for ethical competitive engagement, ethical supply chain sourcing, and conduct with suppliers and other stakeholders.

    2. Customer charters concentrate on what customers can expect, but Guidelines for Ethical Conduct particularly addresses how the company’s representatives will behave with prospective customers, and how their prospecting resources will be deployed. (e.g. companies that pursue clients with structured settlements, discussed in my 2015 Sales Ethics Hall of Shame.)

    Regarding the epistemologically confusing ethics guidelines – that is a fair point. But it is not a ‘selling point’ for using Customer Charters, which are similarly not immune from semantic confusion and ambiguity.

  5. Hi Andy

    I suspect the irreconcilable difference between our perspectives is probably similar to the differences between regulation in the US and the UK. In the US regulators tend to define rules that cover all circumstances. Companies know exactly what is permissible, unless the regulator has missed something or circumstances change. Contemporary history is full of examples where regulators have been caught napping: from cross-state internet sales, through the internet of things to crypto currencies. In the UK regulators tend to define principles that cover the same circumstances. Companies are free to interpret the regulations within the guidance provided by the principles. Although regulators are also caught napping principles are generally much more amenable to changes than rules.

    It reminds of the joke about the difference between European law (based loosely on Napoleonic France) and UK law. In European law everything is forbidden unless it is allowed (rules). In the UK everything is allowed unless it is forbidden (principles).

    Although I prefer principles that I can interpret with much more insight into my own situation than any rulebook wielding regulator. I recognise that sometimes rules are also useful. All we need to find are a group of promethean regulators; omnipotent, omnipresent and omniscient in their wisdom, to write the rulebook. Good luck with that one.

    Graham Hill


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