Ethics Quiz 8, 9

The _________________ captures an expanded spectrum of values and criteria for measuring organizational (and societal) success—economic, environmental, and social impacts of decisions made within the organization.

triple bottom line

Regardless of its degree of comprehensiveness, a code of ethics should reflect ____________ desires for compliance with the values, rules, and policies that support an ethical culture.

upper managers'

At the heart of the FSGO is a _________________ philosophy. Companies that act to prevent misconduct by establishing and enforcing ethical and legal compliance programs may receive a _________ and avoid penalties should a violation occur. The ultimate ________ is the possibility of being fined or put on probation if convicted of a crime.

"carrot-and-stick" "carrot" "stick"

are increasingly viewed as moral agents that are accountable for their conduct to stakeholders.

corporations

follow recognizable phases of escalation, from ethical-issue recognition and the decision to act unethically to the organization's discovery of and response to the act.

Ethical disasters

must start with a foundation, a code of ethics, a procedure for airing ethical concerns, line and staff involvements, and executive priorities on ethics that are communicated to employees

Ethics training

The __________ encourages companies to assess their key risk areas and customize a compliance program to address these risks and satisfy key effectiveness criteria.

FSGO

Research has found that corporate codes of ethics often contain six core values or principles. What are they?

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

is a formal statement that describes what an organization expects of its employees

A code of conduct

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

A code of ethics

_________________ is a management system that focuses on all of the elements that contribute to organizational performance and success, including financial, customer, market, and internal processes.

Balanced Scorecard

_____________________ and______________________ are essential to a functional ethics or compliance program

Consistent enforcement and necessary disciplinary action

Anticipation of and intervention during these situations can stave off organizational disaster. _________________________________________assesses risks, plans for these potential occurrences, and provides ready tools for responding to ethical crises.

Contingency planning

The _____________________ provide standards that organizations can use in ethics auditing.

FSGO's seven steps for effective ethical compliance, the Sarbanes-Oxley Act, and the Dodd-Frank Act

Common Mistakes in Designing and Implementing an Ethics Program

Many business leaders recognize that they need to have an ethics program, but few take the time to answer fundamental questions about the goals of such programs. The first mistake is a failure to understand and appreciate the goals of an ethics program. A second mistake is not setting realistic and measurable program objectives. Senior management's failure to take ownership of the ethics program is a third mistake. Maintaining an ethical culture may be impossible if CEOs do not support an ethical culture Developing program materials that do not address the needs of the average employee is the fourth mistake Transferring an "American" program to a firm's international operations is the fifth mistake. In multinational firms, executives should involve overseas personnel as early as possible in the process. A final mistake is designing an ethics program that is little more than a series of lectures. In such cases, participants typically recall less than 15 percent the day after the lecture

why companies choose to understand, report on, and improve their ethical conduct.

One reason is to detect ethical misconduct before it becomes a major problem. Accounting scandals and legal and ethical transgressions have encouraged companies to better account for their actions in a wide range of areas including corporate governance, ethics programs, customer relationships, employee relations, environmental policies, and community involvement. Measuring the ethical work climate is one way to learn about the ethical culture of an organization. The auditing process can highlight trends, improve organizational learning, and facilitate communication and working relationships

_______________________ created a universal framework for compliance and ethics management.

Open Compliance Ethics Group

_______________ permit shareholders and investors to judge whether a firm is achieving the goals it established, and whether it abides by the values that it specified as important.

Regular audits

The _______________________ has focused on questionable accounting and the metrics that destroy shareholder value. On the other hand, models exist (Six Sigma, the Balanced Scorecard, and the Triple Bottom Line) to capture structural and behavioral organizational ethical performance.

Sarbanes-Oxley Ac

____________ is a methodology to manage process variations that cause defects, defined as unacceptable deviation from the mean or target, and to systematically work toward managing variation to eliminate those defects.

Six Sigma

Viewing a business ethics program as a part of blank and blank is critical to the success of any firm

Strategic planning and management activities

_____ ________ must communicate with managers at the operations level and enforce overall ethical standards within the organization

Top executives

Implementation

_____________________ requires designing activities to achieve organizational objectives using available resources and given existing constraints. ___________________ translates a plan for action into operational terms and establishes a means by which an organization's ethical performance will be monitored, controlled, and improved

A major step in developing an effective ethics program is implementing_____________ and _______________ to educate employees about the firm's ethical standards

a training program and communication system

Five items have a significant impact on whether an ethics program is successful:

a. the content of a company's code of ethics b. the frequency of communication regarding the ethical code and program c. the quality of communication d. senior management's ability to successfully incorporate ethics into the organization e. local management's ability to do the same.

Ethics is not something to be delegated to lower-level employees.a. If a company's leadership fails to provide the vision and support needed for ethical conduct, then _____________________________

an ethics program will not be effective

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

an individual employee is charged with misconduct

Organizations can become "_____________ ," not because individuals are bad, but the pressures to succeed create opportunities that reward unethical decisions

bad barrels

An external audit and review of company activities may sometimes be helpful in developing __________________________.

benchmarks of compliance

Although recommended as best practice, it is not common for ethics officers to report directly to the board of directors. Ethics officers often report directly to the _____________________ and may have some access to the board

chief executive officer

An ethics program can help a firm avoid _____ ____________, but the company bears the burden of proving that it has an effective program.

civil liability

Today, society expects to see organizational members adhere to ethical principles and standards specified through company ethics programs. Most companies begin the process of establishing organizational ethics programs by developing ____________________.

codes of conduct

A ________ ________ ________ __________ does not evolve through independent individual and interpersonal relationships.

coherent ethical corporate culture

creates order by requiring that employees identify with, and commit to, specific required conduct

compliance orientation

Observing employees, internal audits, surveys, reporting systems, and investigations can assess ________________________________.

compliance with the company's ethical code and standards

These values will not be effective without distribution, training, and the support of top management in making these values a part of the _____________. Codes of conduct will not resolve every ethical issue encountered in daily operations, but they help employees and managers deal with ethical dilemmas by prescribing or limiting specific activities

corporate culture

Full awareness of a company's philosophy of management, rules, and procedures can strengthen both the _____________ and ___________ of peers and supervisors

corporate culture and the ethical stance

Just as companies develop _______________________________________ to prepare to, respond to, and recover from natural disasters, they should also prepare for ethical disasters, which can result in substantial legal and financial costs, disrupt operations, reduce productivity, destroy organizational reputation, and erode stakeholder confidence.

crisis management plans

The audit process should include a review of the ______________ & _______________. The company's overall mission may incorporate ethics objectives, but these may also be found in separate documents, including those that focus on social responsibility.

current mission statement and strategic objectives

The ____________ in conducting the audit is to secure the commitment of the firm's top management and, if it is a public corporation, its board of directors. The next step is to establish a committee or team to oversee the audit process.

first step second step in ethics audit process

A company must have an ___________________ to ensure that all employees understand its values and comply with the policies and codes of conduct that create its ethical culture

effective ethics program

When measuring the effectiveness of an ethics program, it is important to get input from _________________

employees

If a company is not making progress toward creating and maintaining an ethical culture, it needs to determine why and take corrective action, either by _________________________________.

enforcing current standards more strictly or setting higher standards.

The process of _________________________________ involves assessing the organization's values, developing an ethics program, performing an ethics audit, and developing contingency plans for potential ethical disaster

ethical disaster recovery planning

An ________________ can be a component of a social audit. _______________ is similar to financial auditing in that it employs similar procedures and processes to create a system of integrity that includes objective reporting.

ethics audit

In contrast, ______________ focus on more narrow issues related to assessing and reporting on a firm's performance in terms of ethical and legal conduct.

ethics audits

Organizational ethics programs also must have oversight by high-ranking persons known to respect legal and ethical standards called

ethics officers

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

formal controls: include input controls that provide the proper tools and resources (proper selection of employees, ethics training, and structural systems, including communication systems). process controls: include management commitment to the ethics program and the methods or system for evaluation. output controls: involve setting standards against actual behavior. One of the most popular methods of evaluating ethical performance is an ethics audit

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

how it structures resources and activities to achieve its ethical objectives

Without uniform standards and policies of conduct, it is difficult for employees to determine what behaviors are acceptable within a company, and they may make decisions based on _______________________.

how their coworkers and superiors behave

Key reasons codes of ethics fail are:

i) the code is not promoted and employees do not read it ii) the code is not easily accessible iii) the code is written too legalistically and is not understandable by employees iv) the code is written too vaguely, providing no accurate definition v) top management never refers to the code in body or spirit.

The word ____________ implies a balanced organization that not only makes ethical financial decisions but is also ethical in the more subjective aspects of its corporate culture.

integrity

The existence of an ____________________________ that allows employees to report misconduct is especially useful for monitoring and evaluating ethical performance (e.g., anonymous hotlines).

internal system

Through _________________ , society holds companies accountable for the conduct of their employees as well as for their decisions and the consequences of those decisions.

legislation and court precedents

Viewed as __________ ____________ , companies are required to obey the laws and regulations that define acceptable business conduct. However, because companies are not human, laws and regulations are necessary to provide formal structural restraints and guidance on ethical issues

moral agents

There are _______________ for organizational ethics programs

no universal standards

A greater number of investors are considering ________________ —such as the existence of ethics programs, legal compliance, board diversity and independence, and other corporate governance issues like CEO _______________ —when they analyze the quality of current and potential investments.

non financial measures & compensation

Although much of the regulatory focus of corporate ethics and compliance is driven by financial measures, to have integrity, the organization also has to focus on _________________ of performance

nonfinancial areas

The purpose of ______________ is to determine the wholeness and soundness of the many aspects of a business that enhance ethics and profits without increasing ris

nonfinancial measures

To promote legal and ethical conduct, an organization should develop an ______________________ by establishing, communicating, and monitoring the ethical values and legal requirements that characterize its history, culture, industry, and operating environment.

organizational ethics program

No matter what their goals, ethics programs are developed as organizational control systems to create _______________ in employee behavior.

predictability

among employees are the "glue" of successful management and control of business ethics programs. When the business ethics program helps to align and direct activities toward an ethical culture, there will be a commitment to the long-term ethical progress of the firm.

shared values

One of the greatest benefits of the auditing process is improved relationships with _________________

stakeholders

is conceived by management and fully developed with input from all stakeholders

statement of values

A ________________ includes a written code of conduct, an ethics officer to oversee the program, careful delegation of authority, formal ethics training, and auditing, monitoring, enforcement, and revision of program standards.

strong ethics program

Some corporate cultures provide opportunities for unethical conduct because their management lacks concern or ____________________, which can result in penalties and loss of public confidence

the company has failed to comply with the minimum requirements of the FSGO

The more misconduct occurs at a company, the less trust employees feel toward the organization—and _____________________.

the greater the turnover will likely be

What are the two types of control systems.

value orientation & compliance orientation

Research has shown that a ___________ 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.

values orientation

strives to develop shared values, with a focus on core ideals such as accountability and commitment

values orientation