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Corporate culture

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values, norms, artifacts, rituals, history, and unwritten rules that are specific to an organization.

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Culture gives the members of the organization?

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Meaning as well as internal rules of behavior

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All organizations, not just corporations

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Have cultures.

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The Sarbanes-Oxley 404 compliance section codified into law that leaders are responsible for?

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The actions of subordinates.

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Corporations should have ?

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Ethical corporate cultures

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Section 404 forces firms to ?

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Adopt a set of values that must make up a portion of the company's culture.

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Compliance with Sarbanes-Oxley 404 requires?

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Cultural change, not merely accounting changes.

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The culture of an organization may be ?

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Explicitly articulated or left unspoken.

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Explicit statements of values, beliefs, and customs ?

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Usually come from upper management.

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Memos, written codes of conduct, handbooks, manuals, forms, and ceremonies?

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All formal expressions of an organization's culture

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Corporate culture is often expressed informally?

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Through comments, both direct and indirect, that communicate the wishes of management.

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The "tone at the top" is often cited as a ?

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Determining factor in creating a high-integrity organization.

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There are two basic dimensions to describe an organization's culture

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concern for people concern for performance

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The four organizational cultures can be classified as ?

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1. Apathetic 2. Caring 3. Exacting 4. Integrative

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A cultural audit is?

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An assessment of the organization's values

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If a firm's culture encourages unethical behavior,...?

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Its employees may act unethically, and vice versa.

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It is important for top managers to determine?

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the organization's culture

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Monitor its values, traditions, and beliefs

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To ensure they represent the desired culture

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A compliance culture is organized

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around risk.

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Compliance-based cultures use

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a legalistic approach to ethics.

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A values-based ethics culture approach to ethical corporate cultures

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relies upon an explicit mission statement that defines the firm as well as how customers and employees should be treated.

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Differential association refers to

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the idea that people learn ethical or unethical behavior while interacting with others who are part of their role-sets or other intimate personal groups.

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Superiors have a strong influence on

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the ethics of their subordinates

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Whistle-blowing means ?

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Exposing an employer's wrongdoing to outsiders

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Interpersonal conflict ensues when employees think they know the right course of action in a situation ?

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Yet their work group or company promotes or requires a different, unethical decision.

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The Sarbanes-Oxley Act and the Federal Sentencing Guidelines for Organizations (FSGO) have ?

answer

Institutionalized internal whistle-blowing to encourage discovery of misconduct.

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3. The 2010 passage of the Dodd-Frank Act?

answer

proposed additional incentives for whistleblowers.

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4. If an employee provides information to the government about the company's wrongdoing ?

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under the Federal False Claims Act, the whistle-blower is known as a quitam relator.

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Retaliation is still ?

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a concern for whistle-blowers and they often have a difficult time winning their cases

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Organizational leaders use their power and influence to

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shape corporate culture.

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Leaders should be both

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effective and ethical.

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2. There are five power bases from which one person may influence another

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1.Reward 2. Coercive 3. Legitimate 4. Expert 5.Referent

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a. Reward power refers to a person's ability to influence

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the behavior of others by offering them something desirable

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Coercive power is essentially

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penalizes actions or behaviors.

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c. Legitimate power stems from the belief that

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a certain person has the right to exert influence and that certain others have an obligation to accept it.

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The titles and positions of authority that organizations bestow on individuals

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appeal to this traditional view of power

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Expert power is derived from

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a person's knowledge

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Referent power may exist when one person perceives .

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that his or her goals or objectives are similar to another's

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Motivation is a force within the individual that focuses

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his or her behavior toward achieving a goal.

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Job performance is considered to be a function of ?

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ability and motivation, thus Job performance = ability × motivation, meaning that employees can be motivated, but resources and know-how are also needed to get the job done.

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To create motivation ?

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an organization offers incentives to encourage employees to work toward organizational objectives

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An individual's hierarchy of needs may influence his or her ?

answer

motivation and ethical behavior.

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Relatedness needs are satisfied by

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social and interpersonal relationships

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Growth needs are satisfied by

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creative or productive activities.

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Needs or goals may change as a person

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progresses through the ranks of the company.

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The two broad structures for organizations are

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centralized and decentralized.

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In a centralized organization, decision-making authority is

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concentrated in the hands of top-level managers, and little authority is delegated to lower levels.

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In a decentralized organization, decision-making authority is delegated ?

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as far down the chain of command as possible ?

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Unethical behavior is possible in either centralized or decentralized structures when?

answer

specific corporate cultures permit or encourage workers to deviate from accepted standards or ignore corporate legal and ethical responsibilities.

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Centralized firms may have a more difficult time ?

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uprooting unethical activity than decentralized organizations.

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Two main categories of groups affect ethical behavior in business.

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a formal group ad an informal group

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A formal group is defined as an?

answer

an assembly of individuals that has an organized structure accepted explicitly by the group.

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a formal group can be divided into?

answer

committees, work groups, and teams

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A committee is a formal group of individuals

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assigned to a specific task.

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Work groups are used to subdivide duties

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within specific functional areas of a company.

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Teams bring together the functional expertise of employees from several different areas of the organization

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on a single project, such as developing a new product

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An informal group is defined as two or more individuals with

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a common interest but without an explicit organizational structure.

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Group norms are standards of behavior that

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groups expect of their members

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A substantial amount of research indicates that significant

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differences exist in the values and philosophies that influence how the individuals that comprise corporations make ethical decisions.

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A popular way of viewing business ethics is to see it as a ?

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Reflection of the alternative moral philosophies that individuals use to resolve their personal moral dilemmas.

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Ethical decisions within organizations are often made by ?

answer

committees and formal and informal groups, not by individuals.

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Both individual ethics and organizational ethics have an impact

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on an employee's ethical intention.

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If there is ethical congruence between individual ethics and the organizational ethical culture,

answer

there is an increase in the potential for making ethical choices in organizational decision-making.

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Corporations are increasingly viewed as moral agents that are accountable

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For their conduct to stakeholders.

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Through legislation and court precedents, society holds companies accountable

answer

for the conduct of their employees as well as for their decisions and the consequences of those decisions.

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Viewed as moral agents, companies are required to

answer

Obey the laws and regulations that define acceptable business conduct.

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Companies are not human, laws and regulations are necessary

answer

to provide formal structural restraints and guidance on ethical issues

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Understanding the factors that influence the ethical decision-making process can help

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companies encourage ethical behavior and discourage undesirable conduct.

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To promote legal and ethical conduct, an organization should

answer

develop an organizational ethics program by establishing, communicating, and monitoring the ethical values and legal requirements that characterize its history, culture, industry, and operating environment.

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Without uniform standards and policies of conduct, it is difficult

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for employees to determine what behaviors are acceptable in a company. They may make decisions based on how their coworkers and superiors behave.

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A strong ethics program what things?

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1. code of conduct, 2. ethics officer to oversee the program 3. care in the delegation of authority 4. formal ethics training 5. auditing,monitoring, enforcement, and revision of program standards.

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2. There are no universal standards for

answer

organizational ethics programs.

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3. Ethics is not

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something to be delegated to lower-level employees.

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The more misconduct occurs at a company, the less .

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trust employees feel toward the organization -and the greater the turnover will likely be

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A company must have an effective ethics program to ensure that all employees understand its values and comply with

answer

the policies and codes of conduct that create its ethical culture.

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Managers cannot assume that employees will automatically

answer

know how to behave when entering a new organization.

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An Ethics Program Can Help

answer

Avoid Legal Problems.

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Some corporate cultures provide opportunities for unethical conduct because

answer

their management lacks concern or the company has failed to comply with the minimum requirements of the FSGO, which can result in fines or probation.

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An ethics program can help a firm avoid civil liability,

answer

but the company bears the burden of proving that it has an effective program.

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A legal test of a company's ethics program is possible

answer

when an individual employee is charged with misconduct.

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No matter what their goals, ethics programs are

answer

developed as organizational control systems to create predictability in employee behavior.

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Two types of control systems can be created.

answer

1. A compliance orientation creates order by requiring that employees identify with, and commit to, specific required conduct. 2. A values orientation strives to develop shared values, with a focus on core ideals such as respect and responsibility.

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Research has shown that a values orientation creates ethical reasoning among employees. Values-based programs increase

answer

employees' awareness of ethics at work, their integrity, their willingness to deliver information to supervisors, their use of reporting mechanisms, and the perception that better ethical decisions are made.

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Most companies begin the process of establishing organizational ethics programs by developing codes of conduct. Such statements may take three different forms:

answer

1. A code of conduct is a formal statement that describes what an organization expects of its employees. 2. A code of ethics is the most comprehensive and consists of general statements, sometimes altruistic or inspirational, that serve as principles and the basis for rules of conduct. 3. A statement of values is conceived by management and fully developed with input from all stakeholders

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Codes require continuous reinforcement to be

answer

effective

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Research has found that corporate codes of ethics often contain six core values or principles

answer

1. Trustworthiness 2. Respect 3. Responsibility 4. Fairness 5. Caring 6. Citizenship.

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These values will not be effective without distribution, training, and the support of top management

answer

in making these values a part of the corporate culture.

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Codes of conduct will not resolve every ethical issue encountered in daily operations, .

answer

but they help employees

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Managers deal with ethical dilemmas by

answer

prescribing or limiting specific activities

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Ethics officers are responsible for managing their organizations'

answer

ethics and legal compliance programs.

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It is not common for ethics officers to report

answer

directly to the board of directors.

question

Ethics officers often report directly to the chief executive officer

answer

and may have some access to the board.

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A major step in developing an effective ethics program is implementing

answer

a training program and communication system to educate employees about the firm's ethical standards.

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It can educate employees about the firm's

answer

policies and expectations, relevant laws and regulations, and general social standards.

question

It can make employees aware of available

answer

resources, support systems, and designated personnel who can assist them with ethical and legal advice.

question

Ethics training must start with a foundation (4 things)

answer

1. a code of ethics, 2. a procedure for airing ethical concerns, 3. line and staff involvements, 4. executive priorities on ethics that are communicated to employees.

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Training and communication initiatives should reflect

answer

the unique characteristics of an organization.

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An effective ethics program employs a variety of resources to monitor

answer

ethical conduct and measure the program's effectiveness.

question

Observing employees, internal audits, surveys, reporting systems, and investigations

answer

can assess compliance with the company's ethical code and standards.

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An external audit and review of company activities may

answer

be helpful in developing benchmarks.

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Consistent enforcement and necessary disciplinary action

answer

are essential to a functional ethics or compliance program.

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Implementation requires designing activities to achieve

answer

organizational objectives using available resources and given existing constraints.

question

Implementation translates a plan for action into operational terms and establishes a means

answer

by which an organization's ethical performance will be monitored, controlled, and improved.

question

A firm's ability to plan and implement ethical business standards depends in part on

answer

how it structures resources and activities to achieve its ethical objectives.

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If a company determines that its ethical performance has been less than satisfactory,

answer

executives may want to change how certain kinds of decisions are made.

question

Many business leaders recognize that they need to have an ethics program, but few take the time to

answer

answer fundamental questions about the goals of such programs.

question

Maintaining an ethical culture may be impossible if

answer

CEOs do not support an ethical culture.

question

Developing program materials that

answer

do not address the needs of the average employee.

question

5. Transferring an "American" program to

answer

a firm's international operations.

question

In multinational firms, executives should involve overseas personnel

answer

as early as possible in the process.

question

Designing an ethics program that is little more than a series of lectures. In such cases, participants typically recall

answer

less than 15 percent the day after the lecture.

question

In order to implement a successful ethics program,

answer

an organization must have ways of managing, evaluating, and controlling business ethics programs.

question

Viewing a business ethics program as a part of

answer

strategic planning and management activities is critical to the success of any firm.

question

1. Shared values among employees are the "glue" of successful management and control of business ethics programs. When the business ethics program helps to

answer

align and direct activities toward an ethical culture, there will be a commitment to the long-term ethical progress of the firm.

question

Three types of controls are involved with implementing and managing an ethics program.

answer

1. proper controls 2. process controls 3. output controls

question

1. Formal controls for business ethics include input controls that provide

answer

the proper tools and resources (proper selection of employees, ethics training, and structural systems, including communication systems).

question

Process controls include

answer

management commitment to the ethics program and the methods or system for evaluation.

question

Output controls involve setting standards against actual behavior. One of the most popular methods of evaluating ethical performance is ?

answer

an ethics audit.

question

An ethics audit is a

answer

systematic evaluation of an organization's ethics program and performance to determine whether it is effective.

question

An ethic audit

answer

includes regular, complete, and documented measurements of compliance, measuring conformity to the firm's desired ethical standards.

question

An ethic audit can be

answer

a precursor to setting up an ethics program.

question

It identifies the firm's current ethical standards, policies, and risk areas

answer

so that an ethics program can effectively address problem areas.

question

A social audit is the process of

answer

assessing and reporting a business's performance in fulfilling the economic, legal, ethical, and philanthropic responsibilities expected of it by its stakeholders

question

Social reports often discuss issues related to a firm's performance in the four dimensions of social responsibility as well as to specific social responsibility and ethical issues such as

answer

staff issues, community economic development, volunteerism, and environmental impact.

question

In contrast, ethics audits focus on more narrow issues related to

answer

assessing and reporting on a firm's performance in terms of ethical and legal conduct.

question

3. An ethics audit can be a component of a social audit. Ethics auditing is similar to

answer

financial auditing in that it employs similar procedures and processes to create a system of integrity that includes objective reporting

question

There are many reasons why companies choose to understand, report on, and improve their ethical conduct.

answer

1. One reason is to detect ethical misconduct before it becomes a major problem.

question

Accounting scandals and legal and ethical transgressions have encouraged companies to better account for

answer

their actions in a wide range of areas including corporate governance, ethics programs, customer relationships, employee relations, environmental policies, and community involvement.

question

Measuring the ethical work climate is one way to learn about the ethical culture of an organization. The auditing process can

answer

highlight trends, improve organizational learning, and facilitate communication and working relationships

question

B. One of the greatest benefits of the auditing process is

answer

improved relationships with stakeholders

question

Just as companies develop crisis management plans to prepare to, respond to, and recover from natural disasters, they should also .

answer

prepare for ethical disasters, which can result in substantial legal and financial costs, disrupt operations, reduce productivity, destroy organizational reputation, and erode stakeholder confidence

question

Despite the high costs of misconduct, U.S. companies are failing to identify and manage

answer

ethical, social, economic, and environmental concerns.

question

Ethical disasters follow recognizable phases of escalation, from ethical-issue recognition and the decision to act unethically

answer

To the organization's discovery of and response to the act.

question

iAnticipation of and intervention during these situations can

answer

stave off organizational disaster.

question

Contingency planning assesses risks, plans for

answer

these potential occurrences, and provides ready tools for responding to ethical crises.

question

The process of ethical disaster recovery planning involves assessing the

answer

organization's values, developing an ethics program, performing an ethics audit, and developing contingency plans for potential ethical disasters.

question

The Sarbanes-Oxley Act has focused on questionable accounting.

answer

and the metrics that destroy shareholder value

question

On the other hand, models exist (Six Sigm Balanced Scorecard, and the Triple Bottom Line) to

answer

capture structural and behavioral organizational ethical performance.

question

Six Sigma is a methodology to manage process variations that cause

answer

defects, defined as unacceptable deviation from the mean or target, and to systematically work toward managing variation to eliminate those defects.

question

Balanced Scorecard is a method for measuring

answer

a company's activities in terms of its vision and strategies.

question

The Triple Bottom Line captures a

answer

an expanded spectrum of values and criteria for measuring organizational (and societal) success—economic, environmental, and social

question

The purpose of nonfinancial measures is to determine

answer

the wholeness and soundness of the many aspects of a business that enhance ethics and profits without increasing risk.

question

The Global Reporting Initiative (GRI), which advances sustainability reporting, has become

answer

a prominent framework that companies have adopted to report their social and sustainability progress.

question

Businesses can use the GRI to come up with a more

answer

standardized method of reporting nonfinancial results in a way that users of the reports can understand.

question

b. Companies benefit because the GRI provides tools for 4 things ?

answer

1.Improving their implementation of the triple bottom line 2.The disclosure of their progress in this area 3.The ability to compare their sustainability efforts to those of other companies. 4. The chance to enhance their reputation in the eyes of stakeholders.

question

Users benefit because this standardized sustainability reporting provides them with

answer

a benchmark to compare companies' sustainability initiatives.

question

AccountAbility is an international membership organization committed to enhancing the performance of organizations and to ?

answer

developing the competencies of individuals in social and ethical accountability and sustainable development.

question

a. The AA1000 process standards link the definition and embedding of an organization's values to the

answer

development of performance targets and to the assessment and communication of organizational performance.

question

b. AA1000 ties social and ethical issues into

answer

the organization's strategic management and operations.

question

6. Open Compliance Ethics Group created a universal framework for compliance and ethics management. It ?

answer

a. Focus on non-financial compliance and qualitative elements of internal controls. b. Guidelines that companies can utilize as they see fit. c. Offers tools and certification procedures.

question

Although ethics audits provide many benefits for individual companies and their stakeholders,

answer

they do have the potential to create risks.

question

a. A firm may uncover a serious ethical problem that it would prefer not to disclose until

answer

it can remedy the situation.

question

b. It may find that one or more of its stakeholders' criticisms

answer

cannot be dismissed or easily addressed.

question

d. The auditing process imposes burdens

answer

(especially with regard to record keeping) and costs for firms that undertake it.

question

e. The process of auditing and reporting a firm's ethics programs is

answer

no guarantee that it will avoid challenges related to its efforts.

question

f. Because this type of auditing is relatively new, there are few common standards

answer

to judge disclosure and effectiveness or to make comparisons.

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