Business Ethics Chapter 3

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

motivation and ethical behavior.

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

the behavior of others by offering them something desirable

Superiors have a strong influence on

the ethics of their subordinates

Differential association refers to

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.

It is important for top managers to determine?

the organization's culture

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

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

Training and communication initiatives should reflect

the unique characteristics of an organization.

Some corporate cultures provide opportunities for unethical conduct because

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.

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

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

Companies are not human, laws and regulations are necessary

to provide formal structural restraints and guidance on ethical issues

The more misconduct occurs at a company, the less .

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

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

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

Centralized firms may have a more difficult time ?

uprooting unethical activity than decentralized organizations.

Corporate culture

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

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

when an individual employee is charged with misconduct.

Work groups are used to subdivide duties

within specific functional areas of a company.

Ethics training must start with a foundation (4 things)

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.

A strong ethics program what things?

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.

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

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

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

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

The two broad structures for organizations are

centralized and decentralized.

Ethical decisions within organizations are often made by ?

committees and formal and informal groups, not by individuals.

a formal group can be divided into?

committees, work groups, and teams

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

companies encourage ethical behavior and discourage undesirable conduct.

In a centralized organization, decision-making authority is

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

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

concern for people concern for performance

Growth needs are satisfied by

creative or productive activities.

Codes require continuous reinforcement to be

effective

Leaders should be both

effective and ethical.

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

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.

An effective ethics program employs a variety of resources to monitor

ethical conduct and measure the program's effectiveness.

Ethics officers are responsible for managing their organizations'

ethics and legal compliance programs.

Without uniform standards and policies of conduct, it is difficult

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

Through legislation and court precedents, society holds companies accountable

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

Group norms are standards of behavior that

groups expect of their members

Motivation is a force within the individual that focuses

his or her behavior toward achieving a goal.

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

in making these values a part of the corporate culture.

Managers cannot assume that employees will automatically

know how to behave when entering a new organization.

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

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

Two types of control systems can be created.

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.

The four organizational cultures can be classified as ?

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

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

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

Section 404 forces firms to ?

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

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

All formal expressions of an organization's culture

A cultural audit is?

An assessment of the organization's values

An Ethics Program Can Help

Avoid Legal Problems.

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

Determining factor in creating a high-integrity organization.

Compliance with Sarbanes-Oxley 404 requires?

Cultural change, not merely accounting changes.

Corporations should have ?

Ethical corporate cultures

The culture of an organization may be ?

Explicitly articulated or left unspoken.

Whistle-blowing means ?

Exposing an employer's wrongdoing to outsiders

Corporations are increasingly viewed as moral agents that are accountable

For their conduct to stakeholders.

All organizations, not just corporations

Have cultures.

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

Institutionalized internal whistle-blowing to encourage discovery of misconduct.

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

Its employees may act unethically, and vice versa.

Culture gives the members of the organization?

Meaning as well as internal rules of behavior

Viewed as moral agents, companies are required to

Obey the laws and regulations that define acceptable business conduct.

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

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

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

The actions of subordinates.

Corporate culture is often expressed informally?

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

Monitor its values, traditions, and beliefs

To ensure they represent the desired culture

Explicit statements of values, beliefs, and customs ?

Usually come from upper management.

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

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

c. Legitimate power stems from the belief that

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

An informal group is defined as two or more individuals with

a common interest but without an explicit organizational structure.

Retaliation is still ?

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

Two main categories of groups affect ethical behavior in business.

a formal group ad an informal group

Compliance-based cultures use

a legalistic approach to ethics.

Expert power is derived from

a person's knowledge

A major step in developing an effective ethics program is implementing

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

Job performance is considered to be a function of ?

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.

A formal group is defined as an?

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

To create motivation ?

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

Ethics officers often report directly to the chief executive officer

and may have some access to the board.

The titles and positions of authority that organizations bestow on individuals

appeal to this traditional view of power

A compliance culture is organized

around risk.

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

as far down the chain of command as possible ?

A committee is a formal group of individuals

assigned to a specific task.

An external audit and review of company activities may

be helpful in developing benchmarks.

An ethics program can help a firm avoid civil liability,

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

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

but they help employees

To promote legal and ethical conduct, an organization should

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.

No matter what their goals, ethics programs are

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

A substantial amount of research indicates that significant

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

It is not common for ethics officers to report

directly to the board of directors.

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

on a single project, such as developing a new product

Both individual ethics and organizational ethics have an impact

on an employee's ethical intention.

2. There are no universal standards for

organizational ethics programs.

Coercive power is essentially

penalizes actions or behaviors.

It can educate employees about the firm's

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

Managers deal with ethical dilemmas by

prescribing or limiting specific activities

Needs or goals may change as a person

progresses through the ranks of the company.

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

proposed additional incentives for whistleblowers.

A values-based ethics culture approach to ethical corporate cultures

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

It can make employees aware of available

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

Organizational leaders use their power and influence to

shape corporate culture.

Relatedness needs are satisfied by

social and interpersonal relationships

3. Ethics is not

something to be delegated to lower-level employees.

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

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

Referent power may exist when one person perceives .

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