Decision-making when profits and ethics collide…

Our role as leaders is to convey to every employee in the company our philosophy and expectations on ethics, integrity and core values. It seems pretty straight forward and easy to explain and most times easy to put on paper. The difficult part is putting this into practice and having flawless execution by all.

Often in this business conflicts over ethical practices and maximizing profits occur. Equally conflicting are the mixed messages business owners send to sales and operations staff. Most times it’s a matter of requiring better explanation and real world examples. Generally the confusion stems from a very short list of circumstances. Most conflicts I hear about occur with margins on product in the varying stages of competitive pressures.

Let’s pretend Jim is the most ethical business owner in our industry. Maybe we can simplify the message and teach ethics in the form of a question. What would Jim do? That is not to be confused with the more evasive “what would Jim want me to do” or “let’s not worry Jim about how we make money for him”. Using only the straight forward approach of “what would Jim do” leaves no room to rationalize the outcome. Let’s test ourselves with a sample of some recent ethics questions I’ve had…

Scenario A:

An integrator has an opportunity to do a system upgrade on a time and materials basis. The technician is unfamiliar with several programing functions and needs to research the proper integration methods. Is this billable time? What would Jim do?

Scenario B:

By the time the job is ready a few products have become obsolete. One option is to keep quiet and substitute with a cheaper yet adequate product from the same manufacturer without any documentation. The other option is sending in a request for substitution and notifying the owner of the need to substitute. Commissions are paid on profitability. What would Jim do?

Scenario C:

Jim’s company won the bid. His product suppliers don’t know that yet. Jim’s purchasing agent is ready to place the orders for the project. Is it fair to request relief pricing and concessions once the project is already in house? What would Jim do?

Scenario D:

Jim’s on vacation and left Bob in charge. Bob gets a bonus when productivity is greater than 80% of billable vs. available hours. Bob’s design staff isn’t busy this week. They could spend some unnecessary time on a couple jobs in backlog to allocate hours to a billable project, or do some non-billable on-line training that decreases his productivity ratios. Bob has to choose between right and wrong when his own paycheck is involved. What would Jim do?

 

Scenario E:

After years of hard work, low margins and building trust, Jim’s company has finally become the sole source A-V technology provider at the largest university in his area. Now that the competitive bidding is done, his sales rep asks what the new pricing model should be. What would Jim do?

 

Just for kicks run my list by your managers at the next meeting and see if the answers are all the same. Then use some of your own real life situations. You will find a lot of conflicting situations and temptations that occur in your business on a daily basis. At the end of that exercise I encourage you to be crystal clear on how you want the ethical situations to play out in your company. It’s the difference between writing the mission and living the mission. CW

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