The boundaries of ethics
‘I understand you stopped offering promotional gifts and started donating the budget to charity? Well, that’s a great initiative. Really, admirable! But ehh, you did get me a box of red wine didn’t you?..’
The time when buyers had to clear their entire garage to run a temporary wine trade is in the past. Luckily, a lot has changed. A buyer once told me that a supplier, after a long, heavy but righteous negotiation showed his personal appreciation by giving him f. 1000,- (this is the Dutch currency before the Euro, implying this happened a long time ago). The supplier was oblivious of the harm he did, but got himself on the eternal blacklist and lost his trade.
All this attention you get as a buyer feels quite nice. I am important, people want to get with me, are polite to me and they laugh at my jokes. But it’s important to realise that you ‘owe’ this attention to your position and not to your personality. The second element requires real hard work. Being trustworthy, showing respect and being your authentic self. One of the few aspects of buying that WTP does not yet cover, but matter even more in a world where honesty and transparency play an even greater role. And within this science, it’s the buyers job to be ethical in negotiations and make professional choices. And this remains difficult.
I’ll outline three situations:
1. Lying or bluffing
It’s allowed to evoke suggestion. Because, what’s more fun in negotiating than to keep your cards closed? But you cannot lie, because that equals cheating. And you don’t want to win by cheating, right? However, it’s so tempting to say that someone else is offering a more attractive price, even if that’s not the case. We can prevent this by playing with the art of language. “You’re too expensive” becomes “Currently you’re not offering the best comprehensive deal.” By saying this you do not only involve the price but also other terms and conditions.
“Someone else is offering €5,-“ becomes “I expect to close this deal with a price below €5,-.” You’re not insinuating anything but the ambition to reach a certain price. “If you do not lower your price, you will lose me as a client” becomes “I need you to realise that, with your current price, I’m going to buy somewhere else.” Apart from the fact that lying (even in business ethics) is illegal, it’s also prosecutable. It does not only harm your own reputation, but also the reputation of your employer.
Eitherway, this element will surely disappear in time, with all the relevant available data and the need for companies to become even more transparent.
2. Tell or don’t say anything
What do we do when the bonus our supplier pays is too much? Cash it gratefully or telling it honestly? I myself believe that honesty is the best policy en that’s why you then call your supplier to point out his mistake. The reactions it evokes are amazing and the credit you accrue is worth gold. But in all honesty, I have made an exception myself. With that one supplier that made my work so much harder, earned way too much money and the behaviour of my contact was dubious for years. With this supplier, I see it as a compensation that I can justify for myself. Wrong? Probably. The same applies to a trip through Italy with a colleague that speaks the language. It can be quite convenient to keep this quiet in the introduction and to listen how their internal debate develops. Wrong? It sure is, but certainly amusing!
3. Sympathetic or businesslike
Doing business in low-wage countries? Right or wrong? Too often I hear buyers say: No, we don’t buy our products in India, because we do not want to risk any trouble. Needless to say, it is important to be very careful. But if you refuse radically, people in developing countries will remain poor. And if this is your position, you can’t buy components in China either, or Russia or even America, right? A supplier from China once sent me a letter about a substantial price increase, caused by a measure to shorten the workday of their employees. A wonderful initiative.. The only thing that remained for me to decide was whether I was okay with the fact that this would be compensated in my price. Maybe I’d rather see it compensated in the price of my competitors?
A professional company honours an ethical code, signed by it’s employees. Not just read, but signed. As as basis, the Dutch Nevi has compiled a wonderful code, but it’s wisely to complement this with relevant matters within your own organization. If your industry is known for the amount of free products from suppliers, make sure you agree upon what happens with the products afterwards. And if there are some occassional parties, determine in advance whether it’s useful, who will go when and how it’s communicated within your organization. Some companies have a strict zero tolerance policy: we do not accept business gifts, do not go to free football games, won’t join suppliers for lunch and when we visit a factory we pay our own hotel and take care of our own dinner. This a clear policy. However, I think there’s something in between. It can be a useful thing to have some informal contact with a supplier over some scrambled eggs. Just make sure you don’t be tempted to go to a free football game in the middle of a tender.
And if you’re in occasional doubt (nothing is more human), you can use the same rule that is used in stealing: when you have the feeling you’re doing something wrong; when you rather don’t have colleagues seeing how you’re behaving, it is wrong. You’re usually smart enough yourself.