CHAPTER 8 REVIEW

1. Increasingly, corporations are viewed not merely as profit-making entities but also as moral agents that are accountable for their conduct to their employees, investors, suppliers, and customers.

2. A strong ethics program includes:

1. Written code of conduct;

2. An ethics officer to oversee the program;

3. Care in the delegation of authority;

4. Formal ethics training;

5. Rigorous auditing, monitoring, enforcement, and revision of program standards.

3. One reason why ethics programs are required is to help de-sensitize employees to the potential legal and ethical issues within their work environments.

4. A compliance orientation

a. Creates order by requiring that employees identify with and commit to specific required conduct.

b. Uses legal terms statutes, and contracts that teach employees the rules and penalties for noncompliance.

c. Linked to employees’ awareness of ethical issues at work, to their perception that decision making is better because of the program and to their explicit knowledge of rules and expectations that makes decision making easier.

d. Describes what an organization expects of its employees.

5. A value orientation

a. Is the most comprehensive system and consists of general statements, some altruistic or inspirational, that serve as principles and the basis for rules of conduct.

b. Strives to develop shared values.

c. Focuses on an abstract core of ideals such as respect and responsibility.

d. Increases an employees’ awareness of ethics at work , their integrity, their willingness to deliver bad news to supervisors, and the perception that better decisions are made.

6. An ethics program can help a firm avoid civil liability, but the company bears the burden of proving that it has an effective program. A program developed in the absence of misconduct will be more effective than one imposed as a reaction to scandal or prosecution.

7. The Sarbanes-Oxley Act of 2002 established new requirements for corporate governance to prevent fraudulent behavior in business.

8. Codes of conduct will resolve every ethical issue encountered in daily operations, but they help employees and managers deal with ethical dilemmas by prescribing or limiting specific activities.

9. Ethics officers or committees are responsible for oversight of the ethics/compliance program:

a. Assess the needs and risks that an organization-wide ethics program must address

b. Develop, revise, and disseminate the code

c. Conduct training programs for employees

d. Develop effective communication

e. Make sure the company is in compliance with government regulation

f. Establish audits and control systems

g. Take action on possible violations of the code

h. Review and modify the program to improve effectiveness

10. An internal system for employees to report misconduct is an opportunity to register ethical concerns. Examples include an ethics hot line (help desk) and

questionnaires used to serve as benchmarks.

11. The common mistakes designing/implementing an ethics program are

a. Not having a clear understanding of the goals of the program from the beginning

b. Continuous improvement of the ethics program

c. Not setting realistic and measurable program objectives

d. Senior management’s failure to take ownership of the ethics program

e. Developing program materials that do not address the needs of the average employee

f. Transferring a domestic program internationally

g. Designing a program as a series of lectures

12. A compliance program should be deemed effective if it addresses the seven minimum requirements for ethical compliance programs.

13. The accountability and responsibility for appropriate business conduct rests with top management.

14. Ethical compliance can be measured by observing employees as well as through investigating and reporting mechanisms.

15. The key goal of ethics training is to help employees identify ethical issues.

16. An ethical compliance audit is designed to determine the effectiveness of ethics initiatives.