It’s time to talk about business ethics

As someone who writes regularly, I can tell you that some columns are easier to write than others.

This is one of those tougher ones because the subject matter is delicate and, truth be told, makes me a bit discouraged.

I need to talk to you this week about business ethics, and perhaps the lack of them.

I am willing to bet that the minute I brought up business ethics, many of you recalled the recent and unexpected shutdowns of United Furniture Industries (parent of Lane Furniture), Klaussner Furniture and Mitchell Gold + Bob Williams, and how this trifecta of tragedies robbed thousands of workers of their livelihoods.

You’re probably also questioning why these companies allegedly gave loyal employees no notice. I wondered the same thing.

And while moves like these certainly tarnish the reputation of the home furnishings sector, a recent string of conversations I’ve had with some reps now leads me to believe that some independent sales reps may also need to take a good hard look at how ethically they treat fellow reps.

After receiving several phone calls from reps angry over the behavior of other reps, I received this letter that essentially expressed the same concerns.

Although I won’t reveal the author of the letter, I am going to quote directly from his letter to me.

The rep wrote the following: “With Klaussner, Lane and other companies closing, and with companies like Hillsdale and others getting rid of independent reps, I am seeing very bad behavior out there. 

“Just recently, an IHFRA member based in the Northeast area that was associated with one of the companies that closed basically took a line from a long-standing rep and has taken other territories from other reps. The rep he took the line from was offered the opportunity to work for him for 50% of the commission he was making previously.

“While I know many people are hurting out there, there is no excuse for this behavior from the rep or the manufacturer that went along with it. No integrity.”

He went on to say, “There are a lot of factories/suppliers that will take business any way they can get it and don’t care, and this encourages bad behavior by reps. This behavior is awkward, it wastes time and efforts, and creates distrust between the retailer, the supplier and the reps. If it doesn’t get addressed, a lot of talented people are going to just leave the industry, and a lot of younger people will never really have a chance to make it.”

The rep suggested that I devote a column to this issue, and since I agree that this behavior is counterproductive and unbecoming to our industry, here it is.

But I feel that simply calling attention to the issue is not enough. I think we need guidelines, a code of ethics for reps, if you will, to establish some sort of ground rules.

Here is my short list:

Honesty, trust and integrity: Sales reps should always be honest and transparent in their dealings with each other. They should not engage in deceptive practices or make false claims about their products or services. When independent sales reps treat each other fairly, it promotes a culture of trust and respect within the industry. Knowing that your fellow reps won’t actively seek to undermine your efforts builds confidence in the network and encourages collaboration.

Confidentiality: Independent sales reps often have access to sensitive information about their clients and products. They should respect confidentiality agreements and not share this information with competitors or unauthorized parties.

Fair competition: Sales reps should compete fairly and ethically. They should not engage in practices that harm competitors or engage in price-fixing, bid-rigging or other anti-competitive behavior.

Respect: Sales reps should treat each other with respect and professionalism. This includes refraining from disparaging comments or actions that harm the reputation of other reps or their businesses.

Avoiding conflicts of interest: Sales reps should avoid conflicts of interest that could compromise their integrity. This includes not representing conflicting products or services to the same clients without disclosure and consent.

Compliance with laws and regulations: Independent sales reps must comply with all relevant laws and regulations in their industry and region. This includes adhering to anti-bribery laws, data protection regulations and industry-specific codes of conduct.

Transparency in compensation: Sales reps should be transparent about their compensation structures and terms with clients and other sales reps. Hidden fees or undisclosed commissions can harm trust and reputation.

Customer-centric approach: Sales reps should prioritize the best interests of their customers. They should aim to provide solutions that genuinely meet the needs of clients rather than pushing products or services for the sake of commissions.

Prompt payment: If one sales rep subcontracts work to another, they should ensure prompt and fair payment for services rendered. Delays in payment can strain relationships and harm the reputation of both parties.

Resolution of disputes: When conflicts or disputes arise between independent sales reps, they should make a good-faith effort to resolve them through negotiation or mediation before pursuing legal action.

Continued professional development: Sales reps should invest in their professional development to stay current with industry trends, technologies and best practices.

Environmental and social responsibility: Sales reps should consider the environmental and social impact of the products or services they represent and promote ethical and sustainable options when available.

While these are just guidelines, the journey of a thousand miles begins with the first step.

When it comes to ethical business practices, let’s not just talk the talk. It’s imperative that we walk the walk.

6 thoughts on “It’s time to talk about business ethics

  1. Ray,
    Enjoyed reading the article having spent 20 yrs on the road as a rep. That said, the past 20+ yrs I’ve been on the management/manufacturing/retail side. As a VP sales I have been frustrated, concerned, disappointed with the rep trade .
    Concerned that reps are pushing themselves to extinction. Frustrated with rep work attitudes & willingness to do the job. Disappointed that reps are unwilling to take on challenges, carry new categories they’ve yet to carry, cover their territory effectively.
    My employer(s) & I take to the road ourselves, with a box truck loaded with samples to meet, train & work with our reps at the buyers location. We’ve had 6 long runs beginning at the end of the pandemic; 2 east coast, 2 west coast, 2 southeast from TX east thru FL. During those extensive runs of approx 2-3k miles + 25-40 stops, we met with our reps, but were stunned by the lack of reps out there calling on the trade. On each tour we were lucky to see 2 reps. As a rep I worked 5 days/week with an occasional few days off the road monthly.
    I understand the current cost of travel, it’s oppressive. Rep avg 3.5% comm rates & carry on avg 5 lines. That said, a rep needs to do the work to get the yield.
    AI, modern tech is making presentations far easier, faster, more cost effective to make presentations. We will continue doing our road shows, but reps need to decide how to keep their jobs. Perhaps learn AI, become more skilled at PowerPoint, reduce their territory size, fire the dealers that do not partner with their vendors & order consistently. They can do more & better RSA training. Stay relevant!
    We pay reps 8%, empowering them to negotiate any portion of their comms as they’d like. Vendors are struggling with margin; they can do better as well & offer the rep a better than avg comm rate. I support reps & hope they can prove to the trade they are still & forever a viable cog in their success.

    Steve Eisler

    1. Steve,
      Thanks for taking the time to pen a very fair and cogent letter. As with anything in life, nothing is black or white. There are great reps, good reps, mediocre reps and poor reps. I think every rep, or every supplier or retailer for that matter, makes a decision to be all in, mostly in, partly in or faking it.

      The bottom line is that in a perfect world, we all bring our A games, we treat others ethically and they treat us in the same way.
      Would that we all could live in that perfect world. In the meantime, all we can do as individuals, is to be the best we can be.

      Again, thanks for writing!

  2. Ray, I applaud you for taking initiative in a code of conduct for sales reps. There clearly has been an erosion of ethics over the last 15 years. Much due to the financial ups and downs the industry has gone through since the 2008 recession. As financial fortunes changed, so did the old way of doing business. Basically it became dog eat dog.

    I am a supplier. And have always about 30 independent reps representing the line. Among the areas that impact me the most are related to confidentiality . As well as full disclosure of lines they represent. This area has become very murky. And has tarnished in my eyes the reputation of many reps that at one time I held in high regard. The other area that I am very upset about is the lack of technology skills from many sales reps. It’s amazing how little knowledge many have on basic computer skills. And how many refuse to adapt to new POs tools such as AMP which by now is the industry standard. Very frustrating.

    Ray, I feel in order for a code of ethics to work in todays environment, there needs be some teeth in it. Like expulsion from IHFRA. Otherwise, I feel matters will only get worse over time.

    As suppliers, I realize we are not without fault. As we may encourage bad behavior to gain a competitive edge. This is the nature of the supplier side. We are always looking for an edge to gain market share. But if the Reps refuse to cooperate due to consequences, this would reign in some of this behavior from the supply side as well.

    We currently are in an era where many suppliers view sales reps as a thing of the past. I for one am not part of that group. But I cannot overlook the lack of new knowledge reps need to gain to stay viable. Many sales reps are older and not willing to stay up to date with new technology. This makes the supplier to have to cover for the areas where they are lacking. And eventually creates a lower image of the value of the sales rep in an organization. This is something that sales reps need to recognize and be required to be able to execute on their own. Another area where I have seen a total loss of knowledge is how to read a dealers floor. I have always preached to my salesforce, do not make a presentation to a buyer without understanding their floor first. Otherwise you will come across as a fool. And loose the buyers attention right away. Killing any hopes of earning his or her business. I was thought a long time ago that this was the best way of bringing value and success to any presentation. But many of todays sales reps do not understand their competition. And by this do not know how to read a floor. They are uniformed of what goes on outside of their immediate lines. And don’t know where they stack up against a dealers current assortment. I really don’t see how any sales rep in todays competitive environment can survive unless they bring the Supplier and their dealers. Maybe this method of marketing is a dying breed. And we are all going down the path of AI. All I can say is the clock is ticking for Sales Reps. And unless they step up their game, suppliers and dealers will create new ways to market and service their customers.

    1. You not only hit the nail on the head, Felipe, you hammered it home! Like it or not, Covid-19 turned everything upside down and what may have been good enough pre-Covid sure is not good enough today. Sadly, I agree that for some reps, the ones that don’t or won’t improve, the clock is ticking and in time, their clocks will be cleaned.

      But, to be fair, I hear that clock ticking for each of us. We need to be better or we face being forgotten!

  3. Hi Ray,

    I’m one of those “younger” reps trying to get into this industry. Working hard, geared towards working with small boutique dealers and independent interior designers. I specialize in custom, quality, and bespoke American furnishings, and firmly believe in supporting my small business owners over big box.

    I’ll admit. I AM one of those reps that’s probably not on the road enough. Unfortunately, I cannot afford to be. I got into this after the collapse of Art Van Furniture. During the midst of the pandemic. Starting in October of 2020. I do tend to take the digital approach in communications and making sure my accounts are up to date.

    I have also felt an immense burn by being betrayed after 6 months of work for a senior rep and never receiving payment. I’d love to pick your mind, and get some advice for the future.

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