Overview
The following scenario is about a potentially ethical situation involving a sales manager and a salesperson. I want you to discuss if the salesperson's behavior is ethical or unethical and what the sales manager should and/or should not do about the behavior.
“I’m glad you came in, Jennifer. I’ve been wanting to speak with you.” Sarah Jackson, sales manager for the Southwest region of Sports Shirts, Inc. greeted one of her salespeople, Jennifer Phillips, as she entered the office. The company marketed a line of sports clothing consisting primarily of three styles of suits.
“What about?” Asked Jennifer.
“You know, since you’ve been with us, I’ve always considered you one of our top salespeople. You always meet quotas. You always find new accounts. But, I’ve got a problem we need to discuss. I got a letter from one of your customers. He claims he could not sell the goods you sold him even if he tried all year. He included sales data that shows he has large quantities of our merchandise left at the end of the season. I have received letters from other customers with the same problem. What do think the problem may be?”
“I don’t see where we have a problem. What I am supposed to do, refuse to sell them as much as they will take? It’s not my fault if they overbuy! I guess I’m just a top-notch salesperson.”
The facts certainly indicated that Jennifer was a top salesperson, exceeding quota each year. Some of her co-workers say that she could sell snow to Eskimos. In three years with the company, she has already worked her way to be the top salesperson in the company. Last year her sales were almost double her quota, with 30 new accounts being added. Sales for the region increased 30 percent last year, mainly due to Jennifer’s performance and her influence on other salespeople.
There were rumors that she was considering buying into a partnership and becoming a manufacturers’ agent specializing in high-fashion clothing. It would affect sales if Jennifer left the company. In fact, Sarah was concerned that Jennifer would hire away the firm’s better salespeople.
Sarah remembered when Jennifer was hired. She had always wanted to sell in the clothing industry, but no one would give her the opportunity. So, on graduation from college, Jennifer went to work for a large department store chain. In two years, she moved from manager of the women’s clothing department in one of the smaller stores to head buyer of women’s wear for the entire chain. Jennifer said she wanted more out of life than what a $45,000 a year job could give her. So, Sarah hired her on a straight commission of 10 percent on sales up to quota and 15 percent on all sales after quota. This year Jennifer would earn $130,000, with a sales increase of over 40 percent.
Sarah believed that Jennifer worked 12 hours a day since she began. She put some of her earnings back into customer goodwill, which appears to have helped sales. Gifts and entertainment were a large overhead expense item for her. The only expense the company paid was an amount up to 1 percent of a salesperson’s actual sales, and this amount had to go for entertaining. Jennifer said she spent over $15,000 of her own money on customers in addition to the $5,000 the firm paid.
During the recent year-end performance appraisal session, Sarah was surprised when Jennifer accepted her next year $1 million sales quota so calmly. Jennifer said it would be no problem. In fact, she estimated that her sales would increase to between $1.5 to $2 million. When asked why, Jennifer said a friend of hers was now buyer for the retail chain for which she once worked. The buyer had worked for Jennifer until Jennifer quit to begin working for Sports Shirts. Jennifer recalled discovering that her friend was receiving kickbacks of over $5,000 in cash, merchandise, and vacation trips. Jennifer said nothing to the chain’s management, mainly because she was doing the same thing, which her friend did not know. So, Jennifer was sure she could sell this buyer her entire line of running suits for fear that Jennifer would report her to the company. Further, last year Jennifer began requiring many of her customers to buy all the styles and sizes she sold to receive the best-selling models.
However, Jennifer did ask for an additional 1 percent in entertainment expenses. Last summer, she gave a party with a live band and professional female and male escorts for buyers. Jennifer believed it increased sales and wanted to continue the practice. However, it was expensive.
Corporate management had begun to ask about Jennifer’s management capabilities. They believed that if she could train salespeople as well as she sold, she would make a great sales manager.