Business Ethics Test 3 – Flashcards

A compliance element

Innovation and Risk Taking Attention to Detail Outcome Orientation People Orientation Aggressiveness Team Orientation Stability

Statements, both direct and indirect. Shared values are expressed by instituting informal dress codes, working late, participating in extracurricular activities. Can be expressed through gestures, looks, labels, promotions, programs, and legends

Group norms are standards of behavior groups expect of their members. Characteristics: govern group rates of production and communication with management, provide a general understanding of behavior considered right or wrong, ethical or unethical.

Management's sense of an organization's culture may not be in line with the values and ethical beliefs that actually guide a firm's employees.

To create motivation, an organization offers incentives that encourage employees to work toward organizational objectives.

Upward communication

Labeled traitor or terminated, forced to retire

1. culture is shared among individuals belonging to a group or society 2. culture is formed over a relatively long period of time 3. culture is relatively stable

Decentralized organization

1. Management and the board demonstrate their commitment to strong controls 2. Every employee is encouraged and required to have hands-on involvement in compliance 3. Every employee is encouraged and empowered to report policy exceptions. 4. Employees are expected to be in the communication loop through resolutions and corrective actions. 5. Employees have the ability to report policy exceptions anonymously to any member of the organization.

Centralized organizations tend to be more ethical

1. reward power - influencing a person's behavior by offering a reward 2. coercive power - opposite of reward power, behavior is penalized 3. Legitimate power - certain people have right to exert influence and others have an obligation to accept it 4. Expert power - derived from a person's knowledge, superiors credibility with subordinates 5. referent power - one person perceives that his or her goal or objectives are similar to another's

An apathetic culture shows minimal concern for either people or performance. Individuals focus on their own self-interest.

An exacting culture shows little concern for people but a high concern for performance, organization focuses on its own interest.

One major concern is whistle blowers will go external with the information rather than internal. Whistle blowers might go straight to the SEC

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

two or more individuals with a common interest but without an explicit organizational structure.

adequate knowledge of wrongdoing that could damage society.

combines a high concern for people and performance. Superiors recognize employees are more than interchangeable parts

exhibits high concern for people but minimal concern for performance issues.

Individual and organizational ethics

the idea that people learn ethical or unethical behavior while interacting with others who are part of their role-sets or belong to other intimate personal groups. Associating with others who are unethical creates an opportunity for unethical behavior.

SOX and FSGO institutionalized internal whistle-blowing to encourage discovery for organizational misconduct.

an assessment of an organization's value. The audit is conducted by outside consultants but may be performed internally

The ethics officer is usually responsible for implementing all disciplinary actions for violations of the firm's ethical standards.

Value based programs

To avoid this problem, ethics programs-including codes of conduct and training materials-should include feed back from employees from across the firm, not just the legal department.

Written codes of conduct Ethics officers to oversee the program Careful delegation of authority Formal ethics training Rigorous auditing, monitoring, enforcement, and revision of program standards

Failure to understand and appreciate goals Setting unrealistic/immeasurable objectives Unsupportive top management Ineffective or incomprehensible content Transferring an "'American" program to a firm's international operations Designing a program that is little more than a series of lectures resulting in low recall

1. Code of Ethics is most comprehensive; consists of general statements serving as principles and the basis for the rules in a code of conduct 2. Statement of values - Serves the general public and addresses stakeholder interests 3. Code of Conduct - is a formal statement with the organizations expectations of its employees

Carrot-and-stick philosophy

Top managers tend to focus on financial performance because of their jobs and personal identities are often intimately connected to their firms' quarterly returns.

Effective programs employ various methods to measure effectiveness Observing employees Internal audits and investigations Surveys Reporting systems External audits

misconduct

code of conduct code of ethics statement of values ethics officer formal ethics training systems of monitoring, auditing, and enforcement ethics audit social audit

their own observations of how their coworkers and superiors behave.

formal statements that describe what an organization expects of its employees.

compliance orientation creates order by requiring employees identify with and commit to specific require conduct. Values orientation strives to develop shared values, the focus is more on an abstract core of ideals such as accountability and commitment.

consistent enforcement and disciplinary action are essential

1. continually tolerate misconduct 2. due diligence attempts to abide by legal and ethical standards.

Sarbanes-Oxley and the amendments to the FSGO

inadequate ethics and compliance programs

Value based programs 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.

1. Identify key risk areas employees will face. 2. Provide experience in dealing with hypothetical or disguised ethical issues within the industry through mini-cases, online challenges, DVDs, or other experiential learning opportunities. 3. Let employees know wrongdoing will never be supported in the organization and employee evaluations will take their conduct in this area into consideration. 4. Let employees know they are individually accountable for their behavior. 5. Align employee conduct with organizational reputation and branding. 6. Provide ongoing feedback to employees about how they are handling ethical issues. 7. Allow a mechanism for employees to voice their concerns that is anonymous, but provides answers to key questions (24-hour hotlines). 8. Provide a hierarchy of leadership for employees to contact when they are faced with an ethical dilemma they do not know how to resolve.

ethics officers should report to the board of directors rather than the general counsel. Because top managers may be more vulnerable to pressures placed on them to push employees to engage in unethical activities and thereby become more competitive.

to promote legal and ethical conduct. Without ethics programs, it is difficult for employees to determine what behaviors are acceptable within a company.

1. educate employees about the firm's policies and expectations, relevant laws and regulations, and general social standards. 2. make employees aware of available resources, support systems and designated personnel who can assist them with ethical and legal advice. 3. empower employees to ask tough questions and make ethical decisions 4. make employees aware of ethical issues 5. increase the importance of ethics training to employees 6. increase employees' confidence they can make the correct decision when faced with an ethical dilemma.

1. Guide employees in situations where the ethical course of action is not immediately obvious. 2. Help the company reinforce—and acquaint new employees with—its culture and values. A code can help create a climate of integrity and excellence. 3. Help the company communicate its expectations for its staff to suppliers, vendors, and customers. 4. Minimize subjective and inconsistent management standards. 5. Help a company remain in compliance with complex government regulations. 6. Build public trust and enhance business reputations. 7. Offer protection in preempting or defending against lawsuits. 8. Enhance morale, employee pride, loyalty, and the recruitment of outstanding employees. 9. Promote constructive social change by raising awareness of the community's needs and encouraging employees and other stakeholders to help. 10.Promote market efficiency, especially in areas where laws are weak or inefficient, by rewarding the best and most ethical producers of goods and services.

Ethics officers are responsible for managing the ethics and legal compliance programs 1. assessing the needs and risks an organizations-wide ethics programs must address 2. developing and distributing a code of conduct or ethics 3. conducting training programs for employees 4. establishing and maintaining a confidential service to answer employees' questions about ethical issues 5. making sure the company is in compliance with government regs. 6. monitoring and auditing ethical conduct 7. taking action on possible violations of the company's code 8. reviewing and updating the code