SMU Data and Models

Steel Buyers Basics: Ethics

Written by John Packard

Buyers and sellers of steel are often exposed to ethical questions in their everyday activities. Some of the ethical issues which arise are fairly easy to discern as being ethical or unethical while others reside in a much tougher to distinguish gray area.

Mario Briccetti and I were speaking about doing an ethics article and in the process we found the perception of what is ethical and what is not can be manipulated based on what side of the transaction you find yourself.

What was originally proposed as a simple one article subject morphed into something quite different. This became clear to us when we started to consider the opinions of our readers who may view ethics and ethical behavior as being something entirely different than what Mario and I see from our sales or purchasing backgrounds.

So what do ethics mean?

According to the Oxford Dictionary ethics is described as, “moral principles that govern a person or group’s behavior.”

This, however, is a little vague for conducting business between companies and individuals within each organization. So we wanted to provide some structure in a business context to ethics and ethical behavior. We will get to that in a moment.

First, what are some of the subjects that can be viewed as having ethical connotations that steel-related companies find themselves involved with on a daily basis?

Insider Trading
Conflicts of Interest
Misrepresentation of Product
Fair Dealing
Lack of Clear Description of Needs
Protection of Company Assets
Protection of Proprietary Information
Invoicing and Payment Issues

We are quite certain as you look around your office, as well as reflecting on the dealings you may have with outside organizations, that you could add a number of new items to the list presented above. However, ethics and what is ethical behavior can vary depending on the culture you find yourself in.

Mario and I wanted to come up with a guideline as to what is ethical and in the process Mario came across the following quote from Warren Buffet:

“…I want employees to ask themselves whether they are willing to have any contemplated act appear the next day on the front page of their local paper – to be read by their spouses, children and friends – with the reporting done by an informed and critical reporter.”

Mr. Buffet’s guideline is exactly that – a guideline.  Yet we believe this is more effective than a set of elaborate rules attempting to define each and every type of situation that could arise between a buyer and a seller.  

We make decisions each and every day regarding how fair and honest we are going to be with one another. Sometimes, we will forget that in reality the decisions being made are affecting more than just you. Unethical decisions can have long lasting implications on both your reputation as well as that of your company – and sometimes decisions related to ethical behavior can result in financial losses, destruction of companies and of employees.

A few examples which come immediately to our minds are:

Contracts between a supplier and end user – when is it ethical to void or adjust the terms of an existing contract?

Billing methods – is it ethical to assume or make the decision to alter the billing method of preference for a company?

Insider trading – Is it ethical for those negotiating pricing contracts to trade stock in each other’s company?

Short paying of invoices – Is it ethical to short pay invoices without the express approval of the counter party?

Price negotiations – is it ethical to misrepresent either the prices your company is receiving from a competitor or that are being collected in the marketplace in order to influence the final price outcome?

You may have opinions on the examples outlined above or, you may have a question which is haunting you and your company at this moment. Please share your opinions and examples with Steel Market Update as we will delve deeper into this subject as long as our readers are engaged.

You can become part of the discussion by sending us an email to:

Written by: Mario Briccetti and John Packard

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