Peter Green came home to his wife and new baby a dejected man. What a contrast to the morning, when he had left the apartment full of enthusiasm to tackle his first customer in his new job at Scott Carpets. And what a customer! Peabody Rug was the largest carpet retailer in the area and accounted for 15% of the entire volume of Peter's territory. When Peabody introduced a Scott product, other retailers were quick to follow with orders. So when Bob Franklin, the owner of Peabody Rug, had called Peter’s boss John Murphy expressing interest in "Carpet Supreme," Scott's newest commercial duty home carpet, Peter knew that a $45,000-$50,000 order was a real probability, and no small show for his first sale. And it was important to do well at the start, for John Murphy had made no bones about his scorn for the new breed of salespeople at Scott Carpet.
Murphy was of the old school. In the business since his graduation from a local high school, he had fought his way through the stiffest retail competition in the nation to be District Manager of the area at age 58. Murphy knew his textiles, and he knew his competitors' textiles. He knew his customers, and he knew how well his competitors knew his customers. Formerly, when Scott Carpet had needed to fill a sales position, it had generally raided the competition for experienced personnel, put them on a straight commission, and thereby managed to increase sales and maintain its good reputation for service at the same time. When Murphy had been promoted eight years ago to the position of District Manager, he had passed on his sales territory to Harvey Katchorian, a 60 year-old mill rep and son a of an immigrant who had also spent his life in the carpet trade. Harvey had had no trouble keeping up his sales and had retired from the company the previous spring after 45 years of successful service in the industry. Peter, in turn, was to take over Harvey's accounts, and Peter knew that John Murphy was not sure that his original legacy to Harvey was being passed on to the best salesperson.
Peter was one of the new force of salespeople from Scott's Sales Management Program. In 1996 top management had created a training program to compensate for the industry's dearth of younger salespeople with long-term management potential. Peter, a college graduate, had entered Scott's five-month training program immediately after college and was the first graduate of the program to be assigned to John Murphy's district. Murphy had made it known to top management from the start that he did not think the training program could compensate for on-the-job experience, and he was clearly withholding optimism about Peter's prospects as a salesperson despite Peter's fine performance during the training program.
Peter had been surprised, therefore, when Murphy volunteered to accompany him on his first week of sales "to ease your transition into the territory." As they entered the office at Peabody Rug, Murphy had even seemed friendly and said reassuringly, "I think you'll get along with Bob. He's a great guy—knows the business and has been a good friend of mine for years."
Everything went smoothly. Bob liked the new line and appeared ready to place a large order with Peter the following week, but he indicated that he would require some "help on the freight costs" before committing himself definitely. Peter was puzzled and unfamiliar with the procedure, but Murphy quickly stepped in and assured Bob that Peter would be able to work something out.
After the meeting, on their way back to the Scott Carpets' district office, Peter asked Murphy about freight costs. Murphy sarcastically explained the procedure. Because of its large volume, Peabody regularly "asked for a little help to cover shipping costs," and got it from all or most suppliers. Bob Franklin was simply issued a credit for defective merchandise. By claiming he had received second-quality
