The Impact of Organizational factors on Sales Force Unethical Behavior in Sri Lankan Life Insurance Industry

Abstract

As a service providing company image and success of the insurance industry vastly depend on the ethical behavior of their salespersons. Because they are the persons who have direct relationship with customers which in turn builds up the customer’s satisfaction and trust towards the organization. Therefore managers must have the knowledge of the key determinants of unethical behavior of their salespersons if they want to ensure the ethical behavior among salespersons. Different factors contribute to this behavior and organizational factors were more important among them. The purpose of this research was to identify the organizational factors affecting the unethical behavior of salespersons in Sri Lankan life insurance industry. An extensive literature review was conducted and five organizational factors were identified as impacting on unethical behaviour of salespersons in Sri Lankan life insurance industry. Namely, they were manager behavior, sales targets, organizational culture, code of ethics and a rewarding system. Data were collected from 200 individual salespersons from 10 life insurance companies through the structured questionnaire. The stratified random sampling method was used for the selection of the respondents to the sample and data were analyzed using multiple regression. The findings of the research indicated that manager behavior, sales targets and rewarding system significantly predict the unethical behavior of salespersons. Further, it revealed that sales targets predict unethical behavior strongly, compared to the rewarding system and manager behavior. Findings of this research also gave some implication on the code of ethics where there is no code of ethics in the companies or if exists, not practiced or enforced. Accordingly, research provides recommendations that can be used to minimize the unethical behavior of salespersons. To improve the generalization of the findings, future research should broaden the sample by including general insurance companies and finance companies. Continuingresearch is needed to analyze the other factors in addition to organizational factors and future research could also look at customer perspective rather than the salesperson perspective.