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Chapter 8—Developing an Effective Ethics Program
MULTIPLE CHOICE
1. Fostering ethical decision making within an organization requires improving the firm’s ethical
standards and
a.
not doing business with suppliers.
b.
implementing a hiring freeze.
c.
training the “bad apples” so they are not bad anymore.
d.
terminating ethical persons.
e.
terminating the “bad apples” in the organization.
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 guarantee an ethical business climate.
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.
3. 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.
their conscience.
d.
their religious values.
e.
their family values.
4. 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.
an ethics officer to oversee the program.
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
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6. What is not a common mistake when designing and implementing an ethics program?
a.
Failing to fully understand the goals of the program
b.
Not setting realistic or measurable goals
c.
Having top management take ownership of the ethics program
d.
Developing materials that do not address the needs of the average employee
e.
Transferring a program between countries and cultures without making adjustments
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
8. For an ethical 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.
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
10. At the heart of the Federal Sentencing Guidelines for Organizations is a
a.
“tit-for-tat” philosophy that punishes wrongdoing.
b.
Golden Rule philosophy.
c.
Iron Fist philosophy 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.
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11. The Federal Sentencing Guidelines for Organizations require federal judges to increase fines for
organizations that continually
a.
improve their ethics programs.
b.
eliminate misconduct.
c.
fail to install a Federal Sentencing Guidelines program.
d.
fail to report ethics program activities.
e.
tolerate misconduct.
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
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
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
15. All of the following are useful in monitoring ethical conduct and measuring the effectiveness of the
ethical program except
a.
observation of employees.
b.
internal audits.
c.
firing.
d.
surveys.
e.
reporting systems.
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16. A code of ethics that does not address specific high-risk activities within the scope of daily activities is
a.
sufficient.
b.
inadequate.
c.
satisfactory.
d.
acceptable as long as individual values prevent misconduct.
e.
acceptable according to the Federal Sentencing Guidelines for Organizations.
17. Organizational _____ can contribute to diminished employee trust and increased employee turnover.
a.
leadership succession
b.
compensation policies
c.
ethics programs
d.
rules
e.
misconduct
18. Most executives feel that which of the following is the primary reason for much of the unchecked
misconduct in business?
a.
Bad employees
b.
An inattentive board of directors
c.
Customer pressures
d.
Financial performance pressures
e.
Inadequate ethics and compliance programs
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 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.
Values and compliance programs both take basically the same approach.
20. Which of the following is a common mistake made in implementing an ethics program?
a.
Setting realistic and measurable program objectives
b.
Developing materials that do not address the needs of the average employee
c.
Adapting a firm’s ethics program to its international operations
d.
Allowing employees to practice the skills they learn in ethics training through case studies
and/or group exercises
e.
Management taking ownership of the ethics program
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21. Aurico is a company that offers ethics hotline maintenance and monitoring services 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
22. Organizations can become “bad barrels” not because of unethical individuals but because
a.
the pressure to succeed creates opportunities that reward unethical decisions.
b.
the pressure to succeed creates opportunities that punish unethical decisions.
c.
they lack leadership.
d.
they lack values.
e.
they have no “bad apples.”
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.
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.
24. Which of the following is not an advantage of having a comprehensive code of conduct?
a.
To guide employees in situations where the ethical course of action is not obvious.
b.
To help a company remain in compliance with complex government regulations.
c.
To help employees fight for satisfactory levels of compensation and benefits.
d.
To help promote constructive social change by raising awareness of the community’s
needs and encouraging employees and other stakeholders to help.
e.
To build public trust and enhance business reputations.
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
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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
27. Which of the following is not a main goal of successful ethics 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 themselves 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.
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.
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.
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
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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 protect the employee committing the misconduct.
e.
hotlines do not work well.
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.
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
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
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.
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ESSAY
36. What are some of the ways that organizations can develop effective ethics programs?
37. How can ethical dilemmas and behavioral simulations help employees make more ethical decisions?
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.
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?
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?