Wednesday, February 20, 2008

Twenty percent

By now no one who has not been living under a rock these past two weeks will fail to recognize the name Jun Lozada or know some part of the misadventure that has befallen him. And while there's much preoccupation about the whos and the whens and the wheres and the hows, the question at the back of my mind is: why did a decent and intelligent fellow like Jun Lozada get involved in a such a dirty deal in the first place?

The problem, I'm afraid, is not limited to Jun Lozada. As soon as we enter what the jaded like to call the Real World, we are initiated into the gray areas that hover between what is right and what is permissible. These two are not always the same thing. With a nudge and a wink they tell us: cooperate, this is the way it's always been done. You don't have to play, they coo, just turn a blind eye.

It happens in the interplay between customers and vendors. It starts out small: "Throw in an extra USB flash memory and you have a deal." Sometimes it comes under the guise of tough negotiation: "Throw in a two-week training for us in Singapore and you have a deal."

Are these actually free? Of course not. Somehow somewhere someone has to pay for it.

Pretty soon, this becomes a regular practice, so much so that vendors instinctively "cost in" these extras. People become adept at asking for and hiding these freebies. What's an acceptable figure? 5%? 10%? How about the magic number, 20%? Conveniently this falls under "marketing expense."

Does this sound fishy? It doesn't matter. A wink and a nudge. That's the way it's always done. Makisama ka na lang.

And so like a rubber band, we expand the permissible area of our ethics to accommodate these situations. Pretty soon, a "marketing expense" of 20% becomes normal, an undeniable obligation even. If Jun Lozada was scandalized it was not because the kickback was there. It was because Abalos dared to push the envelope to 40%. Thus the famous words: "Bubukol iyan."

Before we point a sanctimonious finger at Jun Lozada and condemn him for his elastic ethics, consider all these other situations we take as a matter of course:

  • Free trips to conferences in exchange for helping to "push" their products.
  • "Educational" trips to another city or another country paid for by the vendor.
  • Discounts and freebies not reflected in invoices or delivery receipts.
  • Soliciting samples or donations from a vendor for a company event or during holidays.

    Really, what determines the ethical boundaries? Is it the amount? Is it the intent? What's acceptable? Have you done it? Should we condone such practices?

    1. Free stuff. Everybody loves free stuff. Some even love it so much that they disregard the means it was acquired as long as it's free.

      There's also this thought in the back of every supply officer's mind that the vendor/agent is earning a hefty commission and he wants some of that.

      Also, what about swag? I like swag. hehehe.

    2. Free? Oh no, somebody always ends up paying for it. ;-)

      I like swag, too. But it kind of gets tacky after a while.

    3. You absolutely got it right here Doms. I remember how this was used to be done back in the days and it was never an issue to add those "extras" on to the purchase price. It's still the norm, I guess, for private enterprise to have those "extras" built into contracts but it should be different when it's the people's money involved.

      But where to draw the line? I'm not sure and I think this could all be normal business practice everywhere else.

    4. Hi, Chaz: yeah, a little "extra" for that added advantage.

      But it gets worse: what if you're given the product for "free" in the expectation of lock-in elsewhere? You know who I'm talking about.

    5. Excellent post as always, dom.

      The grayness of the world also applies to something I always ask people: when you're caught while driving (for one reason or another), do you offer a bribe?

      It's easier to get off paying the cop/traffic aide. But obviously, we're not helping the light side of the world any bit.