How ethical is it to give and receive gifts 4

[arunmrao]

In India the festive season is just over and it will begin soon all over the western world. This is the time when in the corporate world there is hectic giving and receiving of gifts. In exchangs business favors are returned.How appropriate is it in today's society to give and receive gifts. I request the members to give their opininon Personally I am against it and do not encourage in the business circles that I interact with.

This being the festive season I hope it may be on top of everyone's mind.

 

[gerhardf]

pat,

While I can relate to most of your post, your comment about tipping in Germany doesn't match my experience. (I'm German, and even though I don't live there currently, I lived there the first 30 years of my life.)

The price of the goods in a restaurant include a percentage for service, which is a part of what in the US is the tip. While an additional tip is not generally expected, it is often given if the service was good.

My point here is that the notion that the tip could be something bad has never been raised in my presence there. It's not required, but it is never seen as anything negative -- not by the waiter, not by his boss, and not by other patrons.

Gerhard

 

[ctopher]

During the holiday seasons, I don't give gifts or receive them with business associates. I almost feel like people expect them. I prefer to do it sometimes during off season, only to a select few.
Just my 2 cents.

 

[TheBlacksmith]

My company also stresses is not so much the "fact" of impropriety, but rather, the "appearance" of impropriety. However I happily live in the "gray zone" of dinners, etc. because I fail to see how we can have meaningful, even heated discussions during work hours without some understanding of each other's personality which is gained in a non-business social setting.

Blacksmith

 

[IRstuff]

The point is that dinners together are not banned, per se. If you went Dutch, there would no question whatsoever.

TTFN

 

[IRstuff]

While one might argue whether a $10 or $20 meal represents a sufficient "bribe," the fact that many of the posts cite "building personal relationships" as an outcome of such meals suggest that those who do not ply you with a meal will not get an opportunity to develop those same relationships.

This means that the meal did, in fact, affect your ability to fairly compare two choices; one that provided you with a meal and gave you a warm and fuzzy feeling beyond the written proposal, and one that had to stand on the merits of a written proposal.

Therefore, since it did affect your decision, a priori, it was a successful bribe.

TTFN

 

[HgTX]

I see tremendous variation in gift policies, year-round. I go to a conference at which some attendees sometimes buy a round of golf at a nearby club for whoever's interested. Clearly not a bribe, since anyone who knows the host is welcome to join in, but a very expensive gift, and perhaps something that might associate the host with happier vibe than their competitors. The golf-loving government workers grit their teeth and decline. A lot of the private sector workers accept the invitation.

Various government agencies set dollar amount limits on gifts. For us it's $25 or "ordinary business lunch". For others it's $2.99. For others, they can't accept so much as a pencil with the company logo on it. So I have a collection of ballcaps, squishy toys, mugs, and travel alarms. On the other hand I'm not allowed to let anyone cover my airfare to visit their facility, give me a ride in their company airplane (even if we're both headed to the same place), or comp me a hotel room. I have a friend who works for a company we do business with, and I can never accept his offers of the extra room in his hotel suite. I've met other people who can't accept offers of a cheap breakfast.

We used to get Christmas gifts in the office here--a box of pecans, a giant chocolate bar. Polite word was sent back to the givers that we really can't accept those, and they've stopped.

Then there's "ordinary business lunch". A lot of us take the view that if our employers (who include the taxpaying public) think that we can be bought with a steak, then we really shouldn't be on the payroll at all, and we interpret the provision pretty loosely. Others in the same agency won't accept lunch as a matter of principle. If the shop foreman buys our inspector lunch on a daily basis, though, that's seen as a problem. If the inspector comes to start expecting daily lunch, that's a bigger problem.

But the thing is, we worry about gifts and the perception thereof. It's harder to control human relationships, and tough to say how much that should be controlled. I go to conferences and work on committees with all kinds of people who my agency might do business with. If we're normal human beings, after a while some of us will make friends. Now what? To me that's a stronger factor than any fancy dinner or round of golf. And that's where the salesfolk are smart. It's not so much the gifts they hand out--it's the personal relationships they build. Good technical salespople will do what they can to make themselves your first point of contact when you have a question about their industry. They'll be people you're glad to see when you run into each other. And there's no way to regulate that. Even if you could, people change roles--someone moves from private sector to public, and they need to sever their social ties from their old job? Can one tell when someone is being friendly and when they are, in essence, prostituting themselves?

Tough stuff.

Hg

 

[gerhardf]

HgTX: "Can one tell when someone is being friendly and when they are, in essence, prostituting themselves?"

Probably the problem is not whether one is genuinely friendly or is just faking being friendly, the problem is whether this is affecting your decision to buy from him and if so, whether this is a problem.

IRstuff wrote: "Therefore, since it did affect your decision, a priori, it was a successful bribe."

Now that nice smile (whether genuine or fake) could have affected my decision, and thus it could be called a successful bribe.

But then, when deciding, we often consider something like "I have a better feeling about this vendor" or so. It's hard to tell where this comes from, and it's difficult to work without it. It's also not easy to say what the monetary value is of working with vendors or clients that you like; you can't say that this is something not to be considered, because it can actually affect your staff's well-being and your company's bottom line and thus does have a value just like the dollar values in the proposals.

So the nice smile might after all not have been a bribe, but a service...

 

[patprimmer]

gerhardf

Sorry I slightly misrepresented the tipping situation in Germany. As you describe it it sounds identical to the situation here in Australia. During my stay in Germany, I saw tipping as somewhat less common than here, and may have exaggerated to make the example more suitable to my argument.

IRstuff

Not all business is done by written proposal, and some services can be to abstract to be included in a written proposal.

When in sales and marketing, I always considered my job was to identify the customers true and perceived needs, then look at my range to try to find a fit, then recommend our product if suitable, or a competitors product if ours was not suitable. This at times involved many long discussions, and required very effective communication. I found that really getting to know the person greatly improved this communication.

Without the trust that came from really knowing someone, the conversations were constrained and guarded, as parties did not want to divulge anything that might make the other think he might have an advantage that might effect the price, or that might be passed on to the opposition.

If it took say 5 extra hours in meetings to finally get the information required to make the best recommendation, then by paying for a lunch, you saved yourself and the customer that 5 hours. Your customer might or might not, then decide to pass on the same information to your competitors as he might decide that they also need that info to make their best recommendation, or he might decide that as you provided a better service with less effort on his part, that you should properly be rewarded with the advantage you obtained from that extra service.



Regards
pat pprimmer@acay.com.au
eng-tips, by professional engineers for professional engineers
Please see FAQ731-376 for tips on how to make the best use of Eng-Tips Fora.

 

[IRstuff]

You're arguing in circles. The same lunch with a different vendor could have reaped an even better solution. Moreover, there is no guarantee that the person you interfaced with will even stay with the project, potentially resulting in miscommunication later.

The point of ethics is to level the playing field and to minimize unfair advantages. Because you choose to spent more time with one particular vendor, that vendor will invariably have an unfair advantage over any other vendor.

TTFN

 

[HgTX]

Which gets back to what I brought up. Salespeople who comes around more often without pissing anyone off will have an advantage, because they will be a known quantity, and a likeable one at that. Standard sales technique. It works. Is everyone it works on unethical?

Hg

 

[IRstuff]

Not necessarily. Ethics rules are situationally contextual. Clearly, receiving gifts from family friends and relatives have nothing to do with ethical rules.

Business is different as are business situations. In Japan, at least in the past, business meals were a necessary component of doing business, because it was highly driven by personal relationships. If there is little differentiation between suppliers, then there is little harm that can come from that.

In a situation where ideas and overall program performance is critical, a deep personal relationship can swing the decision making process, particularly, if that supplier has been able to get "insider" information through that relationship. When two engineers get together to discuss a procurement, it's nearly inevitable that some additional information heretofore undisclosed will get revealed that may give that supplier a competitive advantage.

Even the nature of the "gift" can result in different behavior. A $10 pen dropped in the mail, as an overt gift, may simply put you on guard to avoid favoritism. A $10 meal with an hour or so of "face" time, may likewise put you on guard, but that face time may bias you to make additional allowances that you wouldn't have made without the personal interaction.

Conversely, of course, our internal marketing classes teach us to go out to make these personal connections specifically to get "G2" and insight into the decision making process. A happy day for us is the release of a procurement where we got in on the ground floor and influenced the specifications in our favor. All of this has to be done without exchanging gifts or other compensation, of course.

The rules that we are supposed to adhere to are design to try and eliminate such biases, but, at the same time, our marketing strives to create those warm and fuzzies to gain some advantage. And clearly, a supplier who has been, in the past, honest and working to your (and his) success will always get extra brownie points in any future procurement.

TTFN

 

[gerhardf]

IRstuff, what constitues a "level playing field" or an "unfair advantage"? Probably every vendor I've worked with in the past (if that was successful) has an advantage over a new vendor. Is that unfair?

 

[davidinindy]

My wife is an attorney, and has recieved tickets to ball games, gift certificates to restaraunts, and coutless
piles of cookies. She shares these with her less-visible coworkers, however this is causing much friction in her office. She put some very valuable tickets in a hat, and drew the name of the person who'd get them. She couldv'e kept them, as they were given to her personally by a client.
Anyway, Some people were not happy with the way she handled it. Another client gave her tickets to another game. She chose to go, and take a coworker who helped on one of their major projects. so everyone was asking why she didn't have a drawing for those. She's about to decline all further gifts at this point.
I have never recieved much beyond cookies and cards from my suppliers or customers, so don't have much to relate to.

 

[HgTX]

What didn't they like about drawing names from a hat??

Ballgames and hat drawings...that brings me back. When I was in grad school, the teaching assistants were unionized (this is not the forum to discuss the merits and faults of unions), and I was a contract negotiator. The administration (aka Management) kept trying to offer our negotiating team box seats to basketball games (in the year when our team was red hot). We thought that was inappropriate and kept refusing. Finally their lead negotiator walked in, threw a set of tickets on the table, and walked out. We ended up giving them to the membership via a drawing.

Hg

 

[IRstuff]

I thought it was pretty obvious that we're talking about insider information, preferential treatment, etc., not inate abilities or better personnel/ideas/products.

TTFN

 

[patprimmer]

It is not unethical to try to earn an advantage with better service or more suitable product.

It is unethical to try to buy an advantage with a bribe.

There are grey areas, including exploiting a relationship.

It is human nature to favour those we like and/or trust. To try to ban that will be as unsuccessful as any other law or rule that tries to ban things we naturally do.

Certainly if one vendor gets a chance to improve his service over a lunch, others are entitled to the same consideration if they choose to offer.

Lunches would be a bribe if the vendor was simply tendering supply of a tightly specified commodity, but it is not a bribe if it assists in your working together, toward a better value for money specification.

To give some degree of preferential treatment to a vendor who provides a service that saves your company money is not unethical. The true test of ethics is how much preference is asked for or given vs the value of the extra service.

To give someone inside information of a commercial nature (like the competitors quote) is certainly unethical, but to give someone the necessary information so they can formulate their most suitable offer is not only ethical, but desirable.

Regards
pat pprimmer@acay.com.au
eng-tips, by professional engineers for professional engineers
Please see FAQ731-376 for tips on how to make the best use of Eng-Tips Fora.

 

[IRstuff]

It's unethical if you don't do the same thing for all the potential suppliers.

Working lunches after the procurement are less questionable.

A "working" lunch prior to making a decision essentially says that you've made a decision to work with that supplier and that any other supplier will be wasting time and money to attempt to compete. That's unethical and rude to boot.

TTFN

 

[IRstuff]

And it it's truly information that would make any supplier's proposal better, why would you only give it to one supplier?

TTFN

 

[patprimmer]

It's a working lunch, not a monogamous marriage. You can do it with more than one person. If the person buying the lunch expects it to be an exclusive right, then it is a bribe.

I have bought many clients lunch and the decision has still gone against me, so the lunches certainly did not indicate a done deal in those cases.

A lunch after the deal is done is more likely to be a reward for the favourable decision, as there is no longer a need to determine what is really required for the best deal, at least not until next time.

Regards
pat pprimmer@acay.com.au
eng-tips, by professional engineers for professional engineers
Please see FAQ731-376 for tips on how to make the best use of Eng-Tips Fora.

 

[gerhardf]

Well, my point was that there is a sometimes large grey zone with issues like "preferential treatment" and "better personnel".

What makes a differentiated treatment preferential? (I hardly ever treat two people the same.)
What makes a preferential treatment unethical? (If you have children or siblings or know families with children, you probably noticed that quite often all of them feel they got less than they deserve -- and all of them at the same time. Which they feel quite strong about, and think this is unethical.)
Which qualities in a vendor are ethical to be considered as part of him being "better personnel", and which are not? (There's a lot of grey in between him knowing the application technologies very well -- generally considered ethical -- and him offering you kickbacks from overcharged contracts -- generally considered unethical.)

So the original question still stands: What constitues a "level playing field", or an "unfair advantage"? It's easy to use such expressions, as everybody thinks he/she has a rough idea what they should mean, and everybody knows that the "level playing field" is the good guy, and the "unfair advantage" is the bad guy. But it is much more difficult to describe (other than by a few, often extreme, examples) what exactly those expressions mean, in a way that is actually helpful. They probably don't serve very well for anything except for murkying the waters.