Ethics Final Exam

exacting culture

little concern for people but high concern for performance

social responsibility

maximizing positive and minimizing negative impacts on stakeholders

Apathetic Culture

minimal concern for either people or performance

values based ethics culture

relies on a mission statement that defines the core values of the firm and how customers and employees should be treated

organizational probation

use of on site consultants to observe and monitor legal compliance efforts as well as to report the firms progress toward avoiding misconduct to the U.S. Sentencing commission

decentralized organization

-Decision-making authority is delegated down the chain of command -Has fewer internal controls & uses shared values for their ethical standards -Ambiguity in following a rule versus the spirit of rules creates ethical challenges

Ethics as a component of corporate culture

- firms culture forms the basis of ethical decision making - managements sense of an organizations culture might differ from that of the firms employees - higher-level managers need to monitor the organizations values, traditions and beliefs to ensure they represent the desired culture - rewards and punishments imposed by an organization should reflect the culture the top management wishes to create

centralized structure

-Decision-making authority is concentrated in the top-level management -Codes of ethics specify the techniques used for decision making by management -Distance between managers & decision-makers may lead to unethical acts

output controls

-comparing standards with actual behavior - ethics audit, for example

whistle-blowing

-informing the press or government officials about unethical practices within one's organization - there is legal protection to encourage reporting of misconduct

Process controls

-managements commitment to the ethics program and the methods or system for ethics evaluation - daily coaching of managers and employee reminders

reasons codes fail

-not promoted so employees dont read it •not easily accessible •written too legalistically •written vaguely, providing no accurate direction •top management never refers to the code in body or spirit (window-dressing)

compliance orientation

-requires employees to identify with and commit to specific required conduct - uses legal terms, statutes and contracts to teach employees the rules and penalties for noncompliance

ethics officers responsibilities

1.assess needs/risks an organization-wide ethics program must address 2.develop/distribute the code of conduct or ethics 3.conduct training programs 4.establish/maintain confidential services to answer employees' ethical questions 5.monitor effectiveness & make improvements as necessary 5.make sure company is in compliance 6.monitor/audit ethical conduct 7.take action on code violations 8.review/update code

Common Mistakes in Designing and Implementing an Ethics Program

1.failure to understand & appreciate goals 2.setting unrealistic & unmeasurable program objectives 3.senior management's failure to take ownership of the ethics program 4.developing program materials that do not address the needs of the average employee 5.transferring an "American" program to a firm's international operations 6.designing an ethics program that is little more than a series of lectures.

Corporate Social Responsibility (CSR) Report

a sustainability agenda that can create long-term favorable stakeholder responses

formal group

assembly of individuals with an organized structure that is explicitly accepted by the group ex. committees, work groups and teams

research for compliance orientation

both approaches can interest or work toward the same end

effective ethics programs

cannot be assumed by people know how to behave appropriately in a job/firm/business context

informal groups

composed of individuals who have similar interests and band together for purposes that may or may not be relevant to the goals of the organization

Statement of values

conceived by management, fully developed with input from all stakeholders •the terms "code of ethics" & "statement of values" are often used interchangeably

integrative culture

high concern for people and performance ex. Starbucks

caring culture

high concern for people but minimal concern for performance issues

differential association

idea that people learn ethical or unethical behavior while interacting with people who are part of their intimate personal groups

sustainability

includes the assessment and improvement of business strategies, economic sectors, work practices, technologies, and lifestyles in maintaining of the natural environment

power

influence leaders and managers have over the behavior and decisions of their subordinates

motivating ethical behavior

leaders ability in motivating his or her subordinates plays a role in maintaining an ethical organization

code of conduct

more like a regulatory set of rules tend to elicit less debate about specific actions

code of ethics

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

Job performance

product of motivation and ability

updated Foreign Corrupt Practices Act guidelines

reccomend incorporating incentives into the firms corporate culture to encourage ethical behavior

employee diversity

requires explicit communication and training

Sarbanes-Oxley 404

requires firms to adopt a set of values that forms a portion of the companies culture Associated with a companies success or failure

power bases

reward power incent coercive power punish legitimate power position expert power knowledge referent power affiliation

group norms

standards of behavior that groups expect of their members

values orientation

strive to develop shared values - penalties are attached but the focus is on an abstract core of ideals (accountability and commitment) -the foundation of an organizational ethical issue

compliance culture

uses laws and regulatory rules to create compliance codes and requirements

Corporate Culture

values, beliefs, rules, and ceremonies that are accepted, shared and circulated throughout an organization ex. Founders Day at McDonalds

research for values compliance

when personal and organizational values are compatible with one another, it tends to positively influence workplace ethics

FSGO (Federal Sentencing Guidelines for Organizations)

•A "carrot-and-stick" philosophy. •carrot = Avoid penalties should a violation occur •stick = Possibility of being fined or put on probation if convicted of a crime •encourages federal judges to increase fines for organizations that continually tolerate misconduct •reduces or eliminates fines for firms with extensive compliance programs that make due diligence attempts to abide by legal & ethical standards •programs developed in the absence of misconduct will be more effective than one imposed as a reaction to scandal or prosecution

social audit

•assessing & reporting a business's performance in fulfilling the economic, legal, ethical, & philanthropic responsibilities expected of it by its stakeholders •employment, community economic development, volunteerism & environmental impact

the need for organizational ethics programs cont.

•bad apples (employees) •bad barrel (organization) •> misconduct...< trust employees feel toward the organization—and the greater the turnover •companies are vulnerable to ethical problems & legal violations if their employees do not know how to make the right decisions •uncertainty & pressure are a poor combination

Success of an ethics program depends on

•content of the company's code of ethics •frequency & quality of communication regarding the ethics code & program •quality of communication •senior & local management's ability to successfully incorporate ethics into the organization •creating a culture of ethics & compliance

responsibility of the corporation to stakeholders

•corporations are viewed as moral agents that are accountable to stakeholders •coverage of specific issues in the media about a firm adds to its reputation as a moral agent •or detracts as in the case of Goldman Sachs •corporation is created in society to perform specific social functions •accountable to the society for its actions

ethics programs

•designed to encourage ethical decision making in business •must be well-designed to prevent major misconduct •requires oversight by Ethics Officer, General Counsel, or VP HR •only as good as the integrity of the implementation & functioning of checks & balance to provide the proper level of oversight •keys to preventing or enabling misconduct

benefits of ethics auditing

•detects misconduct (before crisis mode) •provides understanding of the ethical culture •improves organizational learning, & facilitates communication & working relationships •improves relationships w/ stakeholders •assesses the effectiveness of programs & policies, which improves operating efficiencies & reduces costs •audit information is used to ensure maximum effectiveness with available resources •identifies potential risks & liabilities •improves an organization's compliance w/ the law

the need for organizational ethics programs cont..

•develop a program by establishing, communicating, & monitoring the ethical value/legal requirements for corporate culture, industry, & country •remember what Barney Rosenberg said about the complexities of international business in MNCs

code of ethics cont.

•generally specifies methods for reporting violations, disciplinary action for violations, & a structure of due process •six values that are desirable for codes of ethics: (1) trustworthiness, (2) respect, (3) responsibility, (4) fairness, (5) caring, & (6) citizenship

systems to monitor and enforce ethical standards

•how employees handle ethically charged situations •role-playing exercises •discussion regarding ethical issues & dilemmas •questionnaires •internal systems that allow employees to report misconduct •consultants •case-management services & software

the need for organizational ethics programs

•impossible to know and understand all laws •sensitizes employees to potential legal/ethical issues in work environments •increases employees' ethical awareness, participation in ethical decision making, & ethical behavior •fosters ethical decision making requires terminating unethical employees & improving the firm's ethical standards

Formal Controls

•input controls such as proper selection of employees, effective ethics training, & strong structural systems (ethics program)

reasons social responsibility is a corporate ethics issue

•socially responsible activities can create competitive advantages •both positive & negative information about products and organizations is more available •organizations can use their products & brand identity to create social value, quality, & consumer loyalty •companies use their sustainable & socially responsible decisions to differentiate their firms & promote their products

ethics audit

•systematic evaluation of an organization's ethics program & performance to determine effectiveness

balanced score card

•uses elements that contribute to organizational performance & success (financial, customer, market, & internal processes)