Managing Corp. Integrity Exam 3

Step 1: Secure Commitment of Top Managers and Board of Directors

(add notes if necessary)

Ethics as a component of Corporate Culture

(insert notes - pg. 170-72).

Step 5: Collect and Analyze Relevant Information

- ID the tools or methods for measuring a firm's progress to imropve EE's ethical decisions and conduct.

Receiver of Reports of Misconduct: Reporting Location

- Immediate supervisor - top management - human resource management - hotline/help line - ethics officer - outside the company (not governmental or regulatory authority) - legal

Most Important Attributes for Effective Leadership

- Leading by example - Open Communication - Admitting Mistakes - Handling crises calmly - Bringing out the best in others

Power Shapes Corporate Culture

- Power refers to the influence leaders and managers have over the behavior and decisions of subordinates. Individuals have power over others when their presence causes others to behave differently. - the status and power of leavers is directly correlated to the amount of pressure they exert on EEs to get them to conform to expectations - 5 power bases: 1. reward power; 2. coercive power; 3. legitimate power; 4. expert power; and 5. referent power.

values orientation

- Strives to develop shared values - focuses on ideals, such as accountability and commitment - increase employees' awareness of ethics at work - the foundation of an organizational ethical culture

A strong ethics program includes

- Written code of conduct - Ethics officer to oversee the program - Care in the delegation of authority - Formal ethics training - Auditing, monitoring, enforcement, and revision of program standards

Six Sigma

- a methodology designed to manage process variations that cause defects, defined as unacceptable deviations from the mean or target, and to systematically work toward managing variation to eliminate those defects - objective: to deliver world-class performance, reliability, and value to the end customer Focuses on improving existing processes that do not meet quality specifications or that need to be improved, as well as developing new processes that meet Six Sigma standard. The goal is to reduce defects in products and strive for continual imrovement.

Ethics Audit

- a systematic evaluation of an organization's ethics program and performance to determine the effectiveness - major component includes "regular, complete, and documented measurements of compliance with the company's published policies and procedures. - provides an opportunity to measure conformity to the firm's desired ethical standards - can be a precursor to setting up an ethics program - the concept emerged from the movement to evaluate and report on companies' broader social responsibility initiatives (sustainability) - focus more narrowly on a firm's ethical and legal conduct

Formal Group

- an assembly of individuals with an organized structure that is explicitly accepted by the group - Committee: a formal group of individuals assigned to a specific task - Work groups: formal group, used to subdivide duties within specific functional areas of a company - Teams: formal group, bring together the expertise of employees from several different areas of the organization on a single product - work groups and teams provide the organizational structure for group decision making

Integrative Culture

- combines a high concern for people and performance - an org becomes integrative when superiors recognize employees are more than interchangeable parts - employees have an ineffable quality that helps the firm meet its performance criteria - EX: Starbucks - Starbucks always looks for ways to expand and improve performance. It also exhibits a high concern for people through community causes, sustainability, and employee health care.

Cultural Audit

- companies can classify their corporate culture and identify their specific values, norms, beliefs, and customs by conducting a cultural audit - it is an assessment of an org's values - usually conducted by outside consultants but may be performed internally as well - communication about ethical expectations and support from top management help to identify a corporate culture that encourages ethical conduct or leads to ethical conflict

ethical decision making is influenced by

- corporate culture - coworkers - supervisors - opportunities for unethical behavior

The Open Compliance Ethics Group (OCEG)

- create a universal framework for compliance and ethics management - focuses on non-financial compliance and the more qualitative elements of internal controls - deals with complex issues - by establishing guidelines rather than standards, OCEG provides a tool for each company to use as it sees fit, given its size, scope, structure, industry, and other factors that create individualized needs

Centralized Organization

- decision-making authority is concentrated in the hands of top-level managers, and little authority is delegated to lower levels. - responsibility both internal and external rests with top-management - suited to orgs that make high-risk decisions and have lower-level managers not highly skilled in decision making - usually bureaucratic, and division of labor is well defined - stress formal rules, policies, and procedures backed up with elaborate control systems - because of the top-down approach and distance between managers and decision-makers, these structures can lead to unethical acts - ethical concerns may arise because they have little upward communication - blame shifting or scapegoating may arise (people transfer the blame to others for own their actions) - lack of connectedness can lead EEs to engage in unethical behavior b/c they fail to understand the overall ramifications of their behavior

Decentralized Organization

- decision-making authority is delegated as far down the chain of command as possible - orgs have relatively few formal rules and coordination and control are usually informal and personal - focus is on increasing the flow of communication - main strengths is their adaptability and early recognition of external change - weakness difficulty in responding quickly to changes in policy and procedures established by top management - independent profit centers may deviate from organizational objectives - may have fewer internal controls and use shared values for their ethical standard

Step 3: Define the Scope of the Audit Process

- define scope and monitor progress to ensure its on track - scope depends on type of business, its risks and opportunities - includes defining key subject matter or risk areas important to the audit - ex: sustainability, discrimination, products liability, employee rights, privacy, fraud, financial reporting, legal compliance

Informal Group

- defined as two or more individuals with a common interest but without an explicit organizational structure - usually comprised of individuals in the same department, who have similar interests and ban together for companionship or for purposes that may or may not be relevant to the goals of the org - help develop informal channels of communication (grapevine). very important in every organization and communication flows up, down, sideways, etc. - Grapevine is an important source of individuals to access ethical behavior within an org

Expert Power

- derived from a person's knowledge (or a perception that a person possesses knowledge) - usually stems from a superior's credibility with subordinates - credibility and thus expert power, is positively correlated to the number of years a person worked in a firm or industry, education, and honors he/she has received for performance - the perception that a person is an expert on a specific topic can also confer expert power on him/her - may create ethical problems when used to manipulate others or gain an unfair advantage

Coercive Power

- essentially the opposite of reward power. - instead of rewarding a person for doing something, coercive power penalizes actions or behavior - relies on fear to change behavior - more effective at changing behavior in the long run - people continually subjected to coercion may seek a counterbalance and align themselves with other, more powerful persons, or leave the organization - relationships usually break down in the long run - power is an ethical issue not only for individuals, but also for work groups that establish policy for large orgs

Caring Culture

- exhibits high concern for people but minimal concern for performance issues - it is difficult to find nationally recognizable companies that maintain little or no concern for performance - EX: Ben & Jerry's - Ben & Jerry's embraces community causes, treats its employees fairly, and expends numerous resources to enhance the well-being of its customers.

How Corporate Culture is Expressed

- explicit statement of values, beliefs, customs, and expected behavior come from upper management - memos, written codes of conduct, handbooks, manuals, forms, and ceremonies are formal expressions - through gestures, looks, labels, promotions, programs, and legends

behavioral simulation

- gives participants a hypo ethical issue to review - each participant is assigned a role within the hypo - participants must developed recommended courses of action representing short-, mid-, and long-term considerations

Global Reporting Initiative (GRI)

- has become a prominent framework that companies have adopted to report their social and sustainability progress - advances sustainability reporting, which incorporates the triple bottom line factors of economic, social, and environmental indicators. - Primary goal: the mainstreaming of disclosure on environmental, social, and governance performances - can use to develop a more standardized method of reporting non-financial results in a way users can understand

Integrity

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

Formal Controls

- include input controls (proper selection of EEs, effective ethics training, and strong structural systems like communication systems) - hotliine - ethics help desk

Process Controls

- include management's commitment to the ethics program and the methods or system for ethics evaluation - might involve daily coaching for managers and EE reminders

Characteristics of an Ethical Corporate Culture - defined in Sarbanes-Oxley 404

- includes a requirement that management assess the effectiveness of the organization's internal controls and commission audits of these controls by an external auditor in conjunction with the audit of its financial statements. - requires a firm to adopt a set of values that forms a portion of the company's culture - the evaluation of a corporate culture it mandates is meant to provide insight into the character of an org., its ethics, and transparency - intent --> expose mismanagement, fraud, theft, and abuse

Output Controls

- involve comparing standards with actual behavior - one of the most popular methods of evaluating ethical performance is an ethical audit

Corporate Culture

- is exhibited through the behavioral patterns, concepts, documents such as codes of ethics, and rituals that emerge in an org - gives the members a sense of meaning and purpose; familiarize with the org's internal rules of behavior - values, beliefs, customs, rules, and ceremonies that are accepted, shared, and circulated throughout an org.

Social Audit

- is the process of assessing and reporting on a business's performance in fulfilling the economic, legal, ethical, and philanthropic responsibilities expected of it by its stakeholders. - discuss issues related to a firm's performance in the four dimensions of social responsibility as well as specific ethical issues (employment, community economic development, volunteerism, and environmental impact)

Step 7: Report the Findings

- issue the report - the report should spell out the purpose and scope of the audit, the methods used in the process, the role of the auditor, auditing guidelines followed by the auditor, and reporting guidelines followed by the company

How Ethical Corporate Culture is Measured

- management and the board demonstrate their commitment to integrity, core values, and ethics codes through their communications and actions - every employee is encouraged and required to have hands-on involvement in compliance, especially internal control systems and reporting systems - ethical leadership should start with the tone at the top - employees are expected to receive communication through resolutions and corrective actions related to ethical issues - employees have the ability to report policy exceptions anonymously to any member of the org., including the CEO, other members of management, and the board of directors.

Referent Power

- may exist when one person perceives that his or her goals or objectives are similar to another's - the second person may attempt to influence the first to take actions that allows both to achieve their objectives - for the power relationship to be effective, some sort of empathy must exist between them (identification with others help boost the decision makers confidence)

Whistle-Blowing

- means exposing an employer's wrongdoing to outsiders such as the media or government regulatory agencies - the term is sometimes used to refer to internal reporting of misconduct to management, especially through anonymous reporting mechanisms often called hotlines - legal protection exists to encourage whistle-blowing - Under the sarbanes-oxley act, the DOL directly protects whistle-blowers who report violations of the law and refuse to engage in any action made unlawful - the Corporate and Criminal Fraud Accountability Act (CCFA): protects EE of publically traded firms from retaliation if they report violations of any rule or regulation to the SEC. (also requires attorneys to become internal whistle-blowers) - Dodd Frank Act: proposed additional incentives; aidds in recovery of over $1M, could receive 10-30% - The Sarbanes-Oxley Act and Federal Sentencing Guidelines for Organizations (FSGO): institutionalized internal whistle-blowing to encourage discovery of organizational misconduct - to be effective, whistle-blowing requires that the individual have adequate knowledge of wrongdoing that could damage society - Sarbanes-Oxley & Dodd-Frank made it illegal to discharge, demote, suspend, threaten, harass, or discriminating against a whistle-blower

Ethics Audit (background info)

- primary purpose is to identify the risks and problems in ongoing activities and plan the necessary steps to adjust, correct, or eliminate these ethical concerns - critical to the program's success - FSGO suggests the results of an ethics audit should be reported directly to the board (would prevent high level executives from covering up misconduct)

hotline

- provide support and give employees opportunity to ask questions or report concerns - central contact point where comments, dilemmas and advice can be given

The Triple Bottom Line

- provides a perspective that takes into account the social, environmental, and financial impacts of decisions made within an organization - companies consider the triple bottom line when making an increased commitment to social responsibility, sustainability, or ethics. - the purpose of the variety of measures of performance and goal achievements is to determine the quality and effectiveness of these 3 initiatives. This approach to measuring social, financial, and environmental factors (or people, places, and planet) recognizes that business has a responsibility to positively influence a variety of stakeholders, including customers, employees, shareholders, community, and the natural environment. The challenge is how to evaluate a business's social and environmental impacts since there are no universally standard forms of measuring these criteria.

ISO 19600

- published by the International Organization for Standardization to provide international guidelines for compliance management - these standards are the most widely accepted certifications to provide assurance that various business functions and operations adhere to best practices - emphasizes a principles approach to compliance management based upon commitment, implementation, monitoring and measuring, and continual improvement Key clauses and how they are structured: 1. Plan (context of the organization, leadership, planning) 2. Do (support and operation) 3. Check (performance evaluation) 4. Act (improvement)

Reward Power

- refers to a person's ability to influence the behavior of others by offering them something desirable (money, status, promotion). - rewards could encourage individuals to act in their own self-interest, not necessarily in the interest of stakeholders - in the short run, reward power is not as effective as coersive power

statement of values

- serves the general public and also addresses distinct groups such as stakeholders - fully developed with input from all stakeholders

Step 2: Establish a Committee to Oversee the Ethics Audit

- should include EEs knowledgable about the nature and role of ethics audits, should come from various departments - may recruit in-house counsel or hire outside consultants

Exacting Culture

- shows little concern for people but a high concern for performance - it focuses on the interests of the organization - EX: UPS- UPS employees are held to high standards to ensure maximum performance, consistency of delivery, and efficiency.

Apathetic Culture

- shows minimal concern for either people or performance - individuals focus on their own self-interest - apathetic tendencies can occur in almost any organization - companies view long-serving employees as dead wood and do not take into account past performance - EX: CountryWide Financial - Countrywide seemed to show little concern for employees and customers. The company's culture appeared to encourage unethical conduct in exchange for profits

Nonfinancial measures

- some investors are considering these measures when they analyze the quality of current and potential investments - such as existence of ethics programs, legal compliance, board diversity and independence, and other corporate governance issues like CEO compensation

Group Norms

- standards of behavior groups expect of their members - help define acceptable and unacceptable behavior within a group - define the limit allowed on deviations from group expectations - provide explicit ethical direction - most work orgs develop norms that govern group rates of production and communication with management and provide a general understanding of behavior considered right or wrong - have the power to enforce a strong degree of conformity among group members - sometimes group norms conflict with values/rules of the org. so management must carefully monitor the norms within a group

Legitimate Power

- stems from the belief that a certain person has the right to exert influence and certain others have an obligation to accept it - the titles and positions of authority organizations bestow on individuals appeal to this traditional view of power - many people readily acquiesce to those wielding legitimate power, sometimes committing acts contrary to their beliefs and values - such loyalty to authority figures can be seen in corporations that have strong charismatic leaders and centralized structures

Shared Values (among employees)

- the glue of successful management as well as of business ethics programs - See Johnson Control's model

Differential Association

- 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 - the learning process is more likely to result in unethical behavior if the individual associates primarily with persons who behave unethically - associating with others who are unethical, combined with the opportunity to act unethically, is a major influence on ethical decision-making - studies have found that EEs, especially young managers, tend to go along with their supervisors' moral judgments to demonstrate loyalty

Step 4: Review Org. Mission, Values, Goal, and Policies and Define Ethical Priorities

- the review should include an examination of all formal documents that make explicit commitments to ethical, legal, or social responsibility as well as less formal documents including marketing materials, workplace policies, ethics policies, and standards for suppliers/vendors.

Compliance Culture

- the traditional ethics-based culture focused on compliance - organized around risk - compliance-based structures use a legalistic approach to ethics; they use laws and regulatory rules to create codes and requirements - this approach is good in the short term because it helps management, stakeholders, and legal agencies ensure laws, rules, and the intent of compliance are fulfilled - problem: a lack of long-term focus on values and integrity; also does not teach employees to navigate ethical gray areas

Values-Based Ethics Culture

- this approach to ethical corporate cultures relies upon an explicit mission statement that defines the core values of the firm and how customers and employees should be treated - BOD and upper management might add to the general values statements by formulating specific value statements for its strategic business units (SBU), which can be organized by product, geography, or function within the firm's management structure - the focus is on values such as trust, transparency, and respect to help employees identify and deal with ethical issues - important to explain why rules exist, what the penalties are if the rules are violated, and how employees can help improve the ethics of the company - when developing this approach, a compliance element is also necessary because every organization has employees who will try to take advantage if the risk of being caught is low - Ex: IKEA (pg. 172-73)

Carrot and Stick Philosophy

-Companies that act to prevent misconduct by establishing and enforcing ethical and legal compliance programs may receive a "carrot" and avoid penalties should a violation occur. -The ultimate "stick" is the possibility of being fined or put on probation if convicted of a crime.

Ethics Officers are responsible for:

1) assessing the needs and risks that an organization-wide ethics program 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 that the company is in compliance with government regulations; 6) monitoring and auditing ethical conduct; 7) taking action on possible violations of the company's code, and 8) reviewing and updating the code

3 Common Elements of Culture

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

4 Organizational Cultures

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

factors to consider when developing a code of ethics

1. Consider areas of risk and state the values as well as conduct necessary to comply with laws and regulations. Values are an important buffer in preventing serious misconduct. 2. Identify values that specifically address current ethical issues. 3. Consider values that link the organization to a stakeholder orientation. Attempt to find overlaps in organizational and stakeholder values. 4. Make the code understandable by providing examples that reflect values. 5. Communicate the code frequently and in language that employees can understand. 6. Revise the code every year with input from organizational members and stakeholders.

minimum requirements for ethics and compliance programs

1. Establish standards and procedures to prevent and detect criminal conduct. 2. Ensure the firm's board, top management, and high-level personnel exercise reasonable oversight of those standards and procedures. 3. Make reasonable efforts to keep individuals whom organizations knew or should have known to have engaged in illegal activities out of key positions. 4. Communicate standards and procedures by training directors, employees, and appropriate agents. 5. Monitor and audit the program to detect criminal conduct, evaluate the program periodically, and have a system for reporting suspected violations. 6. Promote and consistently enforce the program through appropriate incentives and appropriate discipline. 7. After criminal conduct is detected, take reasonable steps to respond appropriately and prevent further similar criminal conduct, including necessary modifications to the ethics and compliance program.

Benefits of Having an Ethics Code of Conduct

1. Guide EEs in situations where the ethical course of action is not immediately obvious. 2. Help the company reinforce--and acquaint new EEs 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, 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 EEs. 9. Promote constructive social change by raising awareness of the community's needs and encouraging EEs 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.

Questions to Ask before Engaging in External Whistle-Blowing

1. Have I exhausted internal anonymous reporting opportunities within the organization? 2. Have I examined company policies and codes that outline acceptable behavior and violations of standards? 3. Is this a personal issue that I should be resolving through other means? 4. Can I manage the stress that may result from exposing potential wrongdoing in the organization? 5. Can I deal with the consequences of resolving an ethical or legal conflict within the organization?

Key Goals of Successful Ethics Training Programs

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.

Five Recommendations for Improving Risk Management

1. Review the nature and scope of the risk management function. 2. Develop a risk and compliance plan at the beginning of major projects. 3. Improve performance by applying risk measures and dashboards. 4. Maintain a recovery plan for an ethical or compliance crisis. 5. Communicate risk frameworks and the effectiveness of internal and external controls.

Framework for an Ethics Audit

1. Secure the commitment of top managers and board of directors. 1. Establish a committee to oversee the ethics audit. 3. Define the scope of the audit process, including subject matter areas important to the ethics audit. 4. Review the organization's mission, policies, goals, and objectives and define its ethical priorities 5. Collect and analyze relevant information in each designated subject matter area. 6. Have the results verified by an independent agent. 7. Report the findings to the audit committee and, if approved, to managers and stakeholders.

Johnson Controls four spheres of ethical behavior based upon a stakeholder orientation

1. employees and other team members; 2. company and shareholders; 3. customers, competitors, and suppliers; and 4. public and communities. - At the center of its model is integrity

common mistakes in implementing ethics program

1. not taking the time to answer fundamental questions about the ethics program 2. not setting realistic and measurable 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 employee 5. transferring an "American" program to a firm's international operations 6. designing ethics program that is little more than just lectures

Top Challenges CEOs face in ethics auditing

1. political uncertainty 2. increased regulation 3. technological change 4. cybersecurity 5. management diversity 6. shareholder activism 7. competition 8. conflict management 9. reputation management 10. finding capital

reasons codes of ethics fail

1. the code is not promoted and employees do not read it; 2. the code is not easily accessible; 3. the code is written too legalistically and therefore is not understandable by average employees; 4. the code is written too vaguely, providing no accurate direction; and 5. top management never refers to the code in body or spirit.

5 Factors Significantly Impacting whether an Ethics Program is Successful

1. the content of the company's code of ethics 2. the frequency of communication regarding the ethical code and program 3. the quality of the communication 4. senior management's ability to successfully incorporate ethics into the organization; and 5. local management's ability to do the same.

Variation in Employee Conduct

10% --> follow their own values and beliefs; believe that their values are superior to those of others in the company 40% --> always try to follow company policies 40% --> go along with the work group 10% --> take advantage of situations if the penalty is less than the benefit and the risk of being caught is low

Balanced Scorecard

A management system that focuses on all the elements that contribute to organizational performance and success, including financial, customer, market, and internal processes, and organizational capacity Goal: to develop a broader perspective on performance factors and to foster a culture of learning and growth that improves all organizational communication Developed by Drs. Robert Kaplan and David Norton, it incorporates nonfinancial performance indicators into the evaluation system to provide a more "balanced" view of organizational performance. The system uses 4 metrics (financial, consumer/stakeholder, internal process, and organizational capacity) to measure the overall performance of the firm.

Ethical Crisis Management and Recovery

A significant benefit of ethics auditing is that is may prevent crises resulting from ethical or legal misconduct.

Leaders Inflience Corporate Culture

ADD NOTES (pg. 176-77)

Structural Comparison of Org Types:

Centralized Hierarchy of authority --> Centralized Flexibility --> Low Adaptability --> Low Problem Recognition --> Low Implementation --> High Dealing w/ Changes --> Poor environmental complexity Rules & Procedures --> Many & Formal Division of Labor --> Clear-Cut Span of Control --> Many Employees Use of Managerial Techniques --> Extensive Coordination & Control --> Formal & Impersonal Decentralized Hierarchy of authority --> Decentralized Flexibility --> High Adaptability --> High Problem Recognition --> High Implementation --> Low Dealing w/ Changes --> Good Rules & Procedures --> Few & Informal Division of Labor --> Ambiguous Span of Control --> Few Employees Use of Managerial Techniques --> Minimal Coordination & Control --> Informal & Personal

Benefits of Ethics Auditing

Detects misconduct before it becomes a major problem Helps understand the ethical culture in an organization Highlights trends, improves organizational learning, and facilitates communication and working relationships Improves relationships with stakeholders Helps companies assess the effectiveness of their programs and policies, which improves their operating efficiencies and reduces costs Information derived from audits is used to ensure maximum impact with available resources Identifies potential risks and liabilities and improves an organization's compliance with the law

Examples of Centralized & Decentralized Corporate Cultures

Nike Organizational Culture --> Decentralized Characterized by --> creativity, freedom, informality Southwest Airlines Organizational Culture --> Decentralized Characterized by --> fun, teamwork orientation, loyalty General Motors Organizational Culture --> Centralized Characterized by --> Unions, adherence to task assignments, structured Microsoft Organizational Culture --> Decentralized Characterized by --> creative, investigative, fast paced Proctor & Gamble Organizational Culture --> Centralized Characterized by --> Experienced, dependable, a rich history and tradition of products, powerful

Organizational Culture v. Corporate Culture

Organizational Culture: shared values, norms, and artifacts that influence employees and determine behavior, including ways of solving problems that members (EEs) of an organization share. Corporate Culture: the shared beliefs top managers in a company have about how they should manage themselves and other employees, and how they should conduct their business.

Step 6: Verify the Results

Verification: an independent assessment of the quality, accuracy, and completeness of a company's social report. - independent verification offers a company, its stakeholders, and the general public a measure of assurance that the company reported its ethical performance fairly and honestly

Qui Tam Relator

What the whistle-blower is known as if an employee provides information to the government about a company's wrongdoing under the Federal False Claims Act.

"tone at the top"

a determining factor in the creation of a high-integrity organizations - when leaders are perceived as trustworthy, employee trust increases; leader are seen as ethical and as honoring a higher level of duties - a.k.a. --> leading by example

Motivation

a force within the individual that focuses his or her behavior toward achieving a goal - an organization can create motivation by offering positive incentives that encourage EEs to work towards organizational objectives. But they should not create ambiguous opportunities for misconduct.

Dysfunctional Leaders

abusive and treat employees with contempt and disrespect can use legitimate power to pressure subordinates into unethical behavior. (in these situations, EEs may not voice their concerns)

Relatedness Needs

are satisfied by social and interpersonal relationships

Growth Needs

by creative or productive activities

code of ethics

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

Job performance

considered to be a function of ability and motivation and can be represented by the equation (job performance = ability x motivation). - the equation shows that employees can be motivated to accomplish things, but resources and know-how are also needed to get a job done.

compliance orientation

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

Ethical Disasters

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

codes of conduct

formal statements that describe what an organization expects of its employees

ethics officers

responsible for managing their organizations' ethics and legal compliance programs

6 desirable values for codes of ethics

trustworthiness, respect, responsibility, fairness, caring, and citizenship.