Chapter 8

Question 1

Increasingly, corporations are viewed not merely as profit-making entities, but also…

Answer 1

As moral agents accountable for the conduct to their stakeholders

Question 2

Society holds companies accountable for the conduct and decision making of their employees through:

Answer 2

Legislation and court precedents

Question 3

A reason why ethics programs are required in one form or another

Answer 3

To sensitize employees to the potential legal and ethical issues within their work environment

Question 4

Studies show ethics programs can:

Answer 4

• Increase employee’s ethical awareness
• Increase participation in ethical decision making
• Increase ethical behavior

Question 5

A “Bad Apple”

Answer 5

A person who will always do things in their self-interest regardless of their organization’s goals or accepted standards of conduct

Question 6

A “Bad Barrel”

Answer 6

An organization can become one, because the pressures to succeed create opportunities that reward unethical decisions

Question 7

To promote legal and ethical conduct

Answer 7

An organization should develop a program by establishing, communicating, and monitoring ethical values and legal requirements that characterize its history, culture, industry, and operating environment

Question 8

A strong ethics program includes:

Answer 8

• A written code of conduct
• An ethics officer to oversee the program
• Careful delegation of authority
• Formal ethics training
• Management of program standards

Question 9

Normative Myopia

Answer 9

The tendency of managers to overlook ethical issues

Question 10

A Culture of Short-term performance as a company’s highest priority can:

Answer 10

Diminish ethical decision making

Question 11

____ is a key component of an engaged workforce

Answer 11

Trust

Question 12

An effective risk assessment involves examining:

Answer 12

• Legal issues
• Environmental issues
• Health & Safety

Question 13

Justifications for unethical and illegal behavior:

Answer 13

• Survive an economic downturn
• Meet financial targets
• Improve financial performance

Question 14

Top Unethical/ Illegal Actions CFO’s would justify:

Answer 14

1) Offering entertainment
2) Change assumptions: valuations/reserves
3) Cash Payments
4) Personal gifts or services

Question 15

The ultimate “Stick”

Answer 15

Is the possibility of being fined or put on probation if convicted of a crime

Question 16

Foreign Corrupt Practices Act

Answer 16

Guidelines recommend incorporating incentives into the firm’s corporate culture to encourage ethical behavior

Question 17

U.S. Sentencing Commission

Answer 17

Evaluates the organizations responsibility for the individual’s behavior during the process of an investigation

Question 18

Compliance Orientation

Answer 18

Creates order by requiring employees to identify with and commit to specific required conduct

Question 19

Values Orientation

Answer 19

Strives to develop shared values

Question 20

Advantage of a Value’s Orientation

Answer 20

It gives employees a clearly defined basis on which to make decisions

Question 21

Values-based programs

Answer 21

Increase employees’ awareness of ethics at work, integrity, willingness to deliver information to supervisors, use of reporting mechanisms, and perception that ethical decisions are being made

Question 22

Compliance-based programs

Answer 22

Are linked to employee’s awareness of ethical risks at work and a clear understanding of rules and expectations that facilitates decision making

Question 23

Codes of Conduct

Answer 23

Formal statements that describe what an organization expects of its employees

Question 24

Code of Ethics

Answer 24

The most comprehensive and consists of general statements, sometimes altruistic or inspirational, that serve as principles and as the basis for rules of conduct.

Question 25

Key Reasons why Code of Ethics fail

Answer 25

1) the code is not promoted and employees do not read it 2) the code is not easily accessible 3) the code is written too legalistically and therefore is not understandable by average employees 4) the code is written too vaguely, providing no accurate direction 5) top management never refers to the code in body or spirit

Question 26

Statement of Values

Answer 26

Serves the general public and also addresses distinct groups such as stakeholders. Values statements are conceived by management and are fully developed with input from all stakeholders.

Question 27

Benefits of having an Ethics Code:

Answer 27

1) Guide employees in situations where the ethical course of actions is not obvious 2) Help the company reinforce its culture and values 3) Help the company communicate its expectations for its staff to suppliers, vendors, and customers

Question 28

Ethics Officers

Answer 28

Responsible for managing their organizations’ ethics and legal compliance programs.

Question 29

Behavioral Simulation

Answer 29

Gives participants a short, hypothetical ethical issue situation to review

Question 30

A key component of managing an effective and efficient ethics program

Answer 30

Is a firm grasp of techniques that clearly communicate the company’s values, culture, and policies for dealing with ethical issues to employees

Question 31

First Goal of Successful Ethics Training Programs

Answer 31

Identify key risk areas employees will face.

Question 32

Ways to help determine the effectiveness of a firm’s ethics training.

Answer 32

Employee surveys and the incorporation of ethics measurements in performance appraisal systems

Question 33

4 ways a company can assess compliance with its ethical code and standards.

Answer 33

- Observing employees - Conducting internal audits - Circulating surveys - Instituting reporting systems

Question 34

Questionnaires can serve as:

Answer 34

Benchmarks in an ongoing assessment of ethical performance by measuring employees’ ethical perceptions of their company, their superiors, their coworkers, and themselves

Question 35

Hotlines

Answer 35

Provide support and give employees the opportunity to ask questions or report concerns. The most effective ethics hotlines operate on an anonymous basis

Question 36

Two major reasons for why employees do not report observed misconduct include:

Answer 36

1) Fear of retaliation | 2) Making personal value judgments about whether it would be worthwhile to report the misconduct

Question 37

Implementation

Answer 37

Requires designing activities to achieve organizational objectives using available resources and given existing constraints

Question 38

Centralizing key decisions

Answer 38

Centralization may reduce the opportunities lower-level managers and employees have to make unethical decisions

Question 39

Decentralizing key decisions

Answer 39

Allows lower-level managers, who are familiar with the local business environment and local culture and values, to make more decisions

Question 40

First Common mistake in designing/ implementing an Ethics Program

Answer 40

Failure to understand and appreciate the goals of an Ethics Program

Question 41

Second Common mistake in designing/ implementing an Ethics Program

Answer 41

Not setting realistic and measurable program objectives

Question 42

Third Common mistake in designing/ implementing an Ethics Program

Answer 42

Senior management’s failure to take ownership of the ethics program; Board should have the ultimate responsibility and oversight

Question 43

Fourth Common mistake in designing/ implementing an Ethics Program

Answer 43

Developing program materials that do not address the needs of the average employee

Question 44

Fifth Common mistake in designing/ implementing an Ethics Program

Answer 44

Transferring an “American” program to a firm’s international operations

Question 45

Sixth Common mistake in designing/ implementing an Ethics Program

Answer 45

Designing an ethics program that is little more than a series of lectures