MAN 3065 Chapter 8

39. What is the role of an ethics officer within an organization? What are his or her duties? To whom does the FSGO guidelines recommend that the ethics officer report?

ANSWER: Ethics officers are usually responsible for assessing the needs and risks to be addressed in an organization-wide ethics program, developing and distributing a code of conduct or ethics, conducting training programs for employees, establishing and maintaining a confidential service to answer questions about ethical issues, making sure the company is complying with government regulations, monitoring and auditing ethical conduct, taking action on possible violations of the company's code, and reviewing and updating the code. FSGO guidelines suggest the ethics officer report to the board of directors rather than the general counsel.

42. The best way to develop an ethical corporate culture is to provide character education to existing employees or hire employees with good character and sensitize them to ethical issues. a. True b. False

ANSWER: False

45. Companies should model their ethics training and communication initiatives after those of their competitors'. a. True b. False

ANSWER: False

37. How can ethical dilemmas and behavioral simulations help employees make more ethical decisions?

ANSWER: Many feel "hands on" training when employees are forced to confront actual or hypothetical ethical dilemmas helps them understand how their organization would like them to deal with potential problems. Lockheed Martin, for example, developed training games that include dilemmas that can be resolved in teams. Each team member offers his or her perspective, thereby helping other team members fully understand the ramifications of a decision for coworkers and the organization.

36. What are some of the ways that organizations can develop effective ethics programs?

ANSWER: Refer to Table 8-1, Minimum Requirements for Ethics and Compliance Programs. 1. Standards and procedures, such as codes of ethics, that are reasonably capable of detecting and preventing misconduct 2. High-level personnel who are responsible for an ethics and compliance program 3. No substantial discretionary authority given to individuals with a propensity for misconduct 4. Standards and procedures communicated effectively via ethics training programs 5. Systems to monitor, audit, and report misconduct 6. Consistent enforcement of standards, codes, and punishment 7. Continuous improvement of the ethics and compliance program

44. The FSGO encourages federal judges to reduce or eliminate fines for firms with extensive compliance programs that make due diligence attempts to abide by ethical and legal standards. a. True b. False

ANSWER: True

46. The support of top management is essential to the successful effectiveness of an ethics and compliance program. a. True b. False

ANSWER: True

47. The most effective hotlines operate on an anonymous basis and are supported 24 hours a day, 365 days a year. a. True b. False

ANSWER: True

48. One common problem found with corporate codes of ethics is that the codes were written too legalistically. a. True b. False

ANSWER: True

50. Centralization may reduce the opportunities lower-level managers and employees have to make unethical decisions. a. True b. False

ANSWER: True

51. When creating and maintaining an ethical culture, corrective action involves rewarding employees who comply with company policies and standards and punishing those who do not. a. True b. False

ANSWER: True

12. Which of the following legislation has increased the responsibilities on ethics officers and boards of directors to monitor financial reporting? a. Sarbanes-Oxley Act b. Robinson-Patman Act c. Ethics Officer Responsibility Act d. Sherman Antitrust Act e. Enron Financial Responsibility Act

ANSWER: a

14. Top managers tend to focus on _____ because their jobs and personal identity are often connected to quarterly returns. a. financial performance b. employee satisfaction c. ethical performance d. the board of directors' recommendations e. adherence to the code of conduct

ANSWER: a

19. Which of the following is an advantage of a values-based ethics program over a compliance-based one? a. Employees learn to make decisions based on values such as fairness, compassion, respect, and transparency. b. Diverse employees no longer have differing values. c. It requires employees to identify with and commit to specific required conduct. d. A values orientation uses legal terms, statutes, and contracts that teach employees the rules and penalties for noncompliance. e. Unlike values-based programs, compliance-based programs cannot prevent misconduct.

ANSWER: a

22. Organizations can become "bad barrels" because a. the pressure to succeed creates opportunities that reward unethical decisions. b. employees do not have the expertise needed to make ethical decisions. c. management does not understand complex ethical decisions. d. they do not allow employees to pursue their own individual values. e. the majority of their employees are unethical.

ANSWER: a

3. A strong ethics program includes all of the following elements except a. a clause promising good stock market performance. b. a written code of conduct or ethics. c. formal ethics training. d. auditing, monitoring, enforcement, and revision of standards. e. high-level personnel to oversee the program.

ANSWER: a

32. The ultimate "stick" associated with the FSGO is fines or probation, which involves on-site observation by consultants, monitoring of the company's ethical compliance efforts, and a. reporting to the U.S. Sentencing Commission on the company's progress in avoiding misconduct. b. installation of an ethics hotline. c. payment of any penalties levied. d. appointment of an appropriate high-level manager to oversee the company's program. e. divestiture of all assets.

ANSWER: a

4. In the absence of ethics programs, employees are likely to make decisions based on a. their observations of how their coworkers and superiors behave. b. how they and their family members behave at home. c. whatever they can get away with. d. their educational backgrounds. e. what they did at their previous organizations.

ANSWER: a

41. Which document serves the general public and also addresses distinct groups such as stakeholders? a. Statement of values b. Code of conduct c. Code of ethics d. Federal Sentencing guidelines e. Ethics policies

ANSWER: a

49. What is especially useful for monitoring and enforcing ethical performance? a. The existence of an internal system to report misconduct b. Observing the ethical behavior of a manager c. Developing industry benchmarks for acceptable behavior d. External evaluations of ethical behavior e. The use of regulatory agencies to police behavior

ANSWER: a

8. For an ethics and compliance program to properly function, a. consistent enforcement and disciplinary action are essential. b. employees must be monitored using any means necessary. c. it is not necessary to set measurable program objectives. d. the same program should be used in all countries of operation, regardless of cultural differences. e. the company must wait until after misconduct occurs to develop a means of preventing it.

ANSWER: a

7. A(n) _____ orientation creates order by requiring that employees identify with and commit to specific required conduct, whereas a(n) _____ orientation strives to develop shared standards. a. obedience; values b. compliance; values c. legal; values d. values; compliance e. values; obedience

ANSWER: b

15. What is one of the responsibilities of an ethics officer? a. Prosecuting illegal activities b. Signing off on financial documents c. Monitoring and auditing ethical conduct d. Conducting employee performance evaluations e. Answering the ethics hotline

ANSWER: c

31. One of the main reasons employees do not report observed misconduct is a. apathy. b. most employees do not observe any misconduct. c. fear of retaliation. d. laws and regulations do not protect employees. e. hotlines do not work well.

ANSWER: c

43. What is the difference between a code of ethics and a code of conduct? a. A code of conduct consists of general statements that serve as principles and as the basis for rules of conduct. b. A code of ethics consists of formal statements that describe what an organization expects of its employees. c. A code of ethics is more comprehensive than a code of conduct. d. A code of conduct serves the general public. e. A code of ethics tends to elicit less debate about specific actions.

ANSWER: c

6. Because a corporation can be considered a moral agent, it is therefore a. obligated to perform philanthropic responsibilities. b. required to have an ethics officer. c. responsible to society for its actions. d. required to adopt moral philosophies. e. willing to act ethically.

ANSWER: c

26. In the long run, a(n) ______ orientation may be better for companies, perhaps because it increases employees' awareness of ethics issues at work. a. code b. obedience c. compliance d. values e. Individual

ANSWER: d

28. The individual responsible for implementing disciplinary action for violation of a firm's ethics standards is usually the a. CEO. b. president. c. immediate supervisor. d. ethics officer. e. Chairman of the Board.

ANSWER: d

25. A _____ generates an ethical program that creates order by requiring that employees identify with and commit to specific required conduct using legal terms and statutes. a. values orientation b. code of conduct c. statement of values d. code of ethics e. compliance orientation

ANSWER: e

33. Which of the following strives to create order by requiring that employees identify with and commit to specific required conduct? a. Conduct orientation b. Values orientation c. Coercive orientation d. Obedience orientation e. Compliance orientation

ANSWER: e

29. To ensure that an ethics program addresses the needs of the average employee, it should include all of the following except a. feedback from employees across the firm. b. a question-and-answer section. c. additional resources for guidance. d. lengthy legal documents. e. checklists, illustrations, and cartoons where appropriate.

ANSWER: d

30. ____ serve as a central contact point where critical comments, dilemmas, and advice can be assigned to the person most appropriate for handling a specific case. a. Training programs b. Mission statements c. Codes of conduct d. Hotlines e. Boards of directors

ANSWER: d

35. With regard to ethics, training and communication initiatives should reflect a. the structure of the board of directors. b. the organization's stock performance. c. the organization's size. d. the unique characteristics of an organization. e. the self-interest of the CEO.

ANSWER: d

1. In the "bad apple-bad barrel" analogy, the bad barrel refers to a. unethical employees. b. a corrupt society. c. a criminal organization. d. indifferent management. e. an unethical corporate culture.

ANSWER: e

11. The Federal Sentencing Guidelines for Organizations require federal judges to increase fines for organizations that continually a. hire employees later found to be unethical. b. implement a compliance instead of a values orientation. c. fail to install a Federal Sentencing Guidelines program. d. fail to report ethics program activities. e. tolerate misconduct.

ANSWER: e

17. When measuring the effectiveness of an ethics program, it is important to a. hire an ethics officer. b. perform a financial audit. c. adopt a compliance orientation. d. establish rules for compliance. e. get input from employees.

ANSWER: e

18. What is a major problem organizations tend to have when implementing organizational ethics program? a. They fail to adopt formal corporate codes of ethics. b. The government's requirements for ethics programs are too ambiguous. c. Wall Street investors demand that companies take illegal action to increase profits. d. Financial problems make ethical conduct impossible to pursue. e. Top managers don't integrate codes, values, and standards into their firms' corporate cultures.

ANSWER: e

24. Which of the following is true about a compliance orientation? a. Employees are more likely to accept a compliance orientation over a values orientation. b. A compliance orientation is superior to a values orientation. c. A compliance orientation can aid in organizational ethical decision making. d. The most successful companies have adopted a compliance orientation. e. The use of legal terms, statutes, and contracts teach employees the rules and penalties for noncompliance.

ANSWER: e

21. Aurico is a company that offers ethics hotline maintenance for organizations. Which component of the Federal Sentencing Guidelines for Organizations compliance program does this service help organizations to satisfy? a. Code of conduct b. Enforcement of standards, codes, and rules c. Delegation of authority to ethical persons d. Systems for monitoring, auditing, and reporting misconduct e. Ethics training

ANSWER: d

27. Which of the following is not a main goal of successful ethics training programs? a. Identify key risk areas that employees will face. b. Align employee conduct with organizational reputation and branding. c. Provide a hierarchy of leadership for employees to contact when they are faced with an ethical dilemma that they do not know how to resolve. d. Allow employees to solve ethical issues using their best judgment. e. Allow a mechanism for employees to voice their concerns that is anonymous, but allows for the provision of feedback to key questions.

ANSWER: d

10. At the heart of the Federal Sentencing Guidelines for Organizations is a a. "tit-for-tat" philosophy that punishes wrongdoing. b. foundation based on the Golden Rule philosophy. c. Iron Fist philosophy that severely punishes wrongdoing. d. carrot-and-stick philosophy that rewards efforts to improve ethics. e. utilitarian philosophy of the greatest good for the greatest number.

ANSWER: d

38. What are the major features of a successful ethics training program and communication systems? Think of an example of a company with strong employee ethics training.

ANSWER: Refer to Table 8-6, page 206, 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.

40. Discuss the advantages and disadvantages of implementing an ethics program with a compliance orientation versus one with a values orientation. Is one better than the other at maintaining an ethical organization?

ANSWER: Research into compliance- and values-based approaches reveals that both types of programs can interact or work toward the same end, but a values orientation has the added benefit of sparking ethical reasoning among employees. Values-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. Compliance-based programs are linked to employees' awareness of ethical risks at work and a clear understanding of rules and expectations that facilitates decision making. In the final analysis, both orientations can be used to help employees and managers; however, a values-based program is the foundation of an organizational ethical culture.

16. What is one of the goals of ethics training? a. To completely eliminate any chances of misconduct. b. To identify key risk areas employees will face. c. To make the company look good to stakeholders. d. To comply with legal requirements. e. To train employees on how to address every ethical situation they encounter.

ANSWER: b

2. Which of the following statements about codes of conduct is false? a. They are formal statements of what an organization expects of its employees. b. They address every ethical issue that an employee may face. c. They help employees determine what behaviors are acceptable. d. They provide rules and guidelines for employees to follow. e. They should be specific enough to be reasonably capable of preventing misconduct.

ANSWER: b

20. Which of the following is a common mistake made in implementing an ethics program? a. Setting specific program objectives b. Developing materials that are not understandable by the average employee c. Adapting a firm's ethics program to its international operations d. Allowing lower-level employees to make ethical decisions e. Having one person take responsibility for implementing the ethics program

ANSWER: b

23. Which of the following statements about training is false? a. It can educate employees about the firm's policies and expectations, as well as about relevant laws and regulations and general social standards. b. It can dictate personal ethics on the job so employees no longer have differences in beliefs. c. It can make employees aware of available resources, support systems, and designated personnel who can assist them with ethical and legal advice. d. It can empower employees to ask tough questions and make ethical decisions. e. It can affect the influence of organizational culture, coworkers and superiors, and opportunity.

ANSWER: b

34. Because top managers may be more insensitive to ethical issues due to their focus on financial performance, the FSGO guidelines suggest that ethics officers report to the _____ instead. a. stock market b. board of directors c. middle managers d. customers e. Stakeholders

ANSWER: b

5. _____ are formal statements that describe what an organization expects of its employees in terms of ethical behavior. a. Mission statements b. Codes of conduct c. Policies on confidentiality d. Environmental policies e. The Federal Sentencing Guidelines for Organizations

ANSWER: b

13. _____ may be more inclined to engage in unethical organizational conduct because of social isolation that creates insensitivity and a lower level of motivation to regulate ethical decision making. a. Low-level employees b. International managers c. Top managers d. Government officials e. Fortune 500 companies

ANSWER: c

9. Which of the following is the most comprehensive? a. Code of values b. Code of conduct c. Code of ethics d. Statement of values e. Statement of principles

ANSWER: c