MNGT 482 - Quiz #2 Study Guide
MNGT 482 - Quiz #2 Study Guide mngt 482
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This 5 page Class Notes was uploaded by Gilmarys Bernal on Friday September 16, 2016. The Class Notes belongs to mngt 482 at Towson University taught by Manoj Basuray in Fall 2016. Since its upload, it has received 31 views.
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Chapter 5 – Organizational Ethics and the Law Corporate culture: is a blend of ideas, customs, traditional practices, company values, and shared meanings that help define normal behavior for everyone who works in a company. Ethical climate: subtle hints and clues that tell employees what behavior is approved and what is forbidden. The unspoken understanding among employees of what is and is not acceptable behavior. Ethical criteria Egoism (selfcenteredness) Benevolence (concern for others) Principle (respect for one’s own integrity) These ethical criteria can be used to describe how individuals, a company, or society at large approach various moral dilemmas. Business Ethics across Organizational Functions 1. Accounting Ethics: honesty, integrity, and accuracy are absolute requirements of the accounting function. Accountants often are faced with conflicts of interest, where loyalty or obligation to the company may be divided or in conflict with self interest. 2. Financial Ethics: finance department and its officers are responsible for managing the firm’s assets and raising capital. Ethical lapses in corporate finance: Kweku Adoboli, a London trader at the Swiss bank UBS, was charged with making trades using the firm’s money without its authorization – a practice known as rogue trading. MFGlobal merged client’s money with broker’s funds to meet broker’s financial obligation resulting in $1.2 billion dollars missing from client’s accounts and systematically violating established regulatory rules. 3. Marketing Ethics: marketing is advertising, distributing, and selling products or services. One issue in marketing ethics emphasizes honesty and fairness in advertising. Consumer health and safety are another key ethics issue in marketing Example: Pharmaceutical companies promoting drugs that are not approved by the Food and Drug Administration (FDA) To improve the ethics of the marketing profession, the American Marketing Association (AMA) has adopted a code of ethics for its members. As marketers, we must: a. Do no harm – consciously avoiding harmful actions or omissions by embodying high ethical standards. b. Foster trust in the market system – this means striving for good faith and fair dealing so as to contribute to the efficacy on the exchange process as well as avoiding deception. c. Embrace ethical values – this means building relationships and enhancing consumer confidence in the integrity of marketing by affirming this core values: honesty, responsibility, fairness, respect, transparency, and citizenship. The Association for Computing Machinery (ACM) code of Ethics and Professional Conduct: This code consists of 24 imperatives formulated as statements of personal responsibility. They include statements to contribute to society and human wellbeing, avoid harm to others, be honest and trustworthy, be fair and take action not to discriminate, honor property rights including copyrights and patents, give proper credit to intellectual property, respect the privacy of others, and honor confidentiality. 4. Information Technology Ethics: ethical challenges in this field involve: Invasion of privacy; The collection and storage of, and access to, personal and business information, especially through ecommerce transactions. Confidentiality of electronic mail communication Copyright protection regarding software, music, and intellectual property, etc. Ethical breach example: GhostNet infiltrated computers around the world and stole documents from hundreds of government and private corporate office, including files from the computer of the Dalai Lama. 5. Other Functional Areas: such as production and operations functions. Mylan Inc., the world third largest manufacturer of generic pharmaceuticals, halted production at is Morgantown, West Virginia. Making Ethics Work in Corporations Improving the quality of a company’s ethical performance by building ethical safeguards into its everyday routines is sometimes called institutionalizing ethics. Building Ethical Safeguards into the Company: Lynn Sharp Paine, a Harvard Business School professor, has described to distinct approaches to ethics programs: Compliancebased approach: seeks to avoid legal sanctions. This approach emphasizes the threat of detection and punishment in order to channel employee behavior in a lawful direction. Increases employees’ willingness to seek ethical advice and sharpened their awareness of ethical issues at work. Integritybased approach: combine a concern for the law with an emphasis on employee responsibility for ethical conduct. Employees are told to act with integrity and conduct their business dealings in an environment of honesty and fairness. Increases employees’ sense of integrity, commitment to the organization, willingness to deliver bad news to supervisors, and their perception that better decisions were made. Top Management Commitment and Involvement (1) Research has shown that the “tone at the top” – the example set by top executives – is critical to fostering ethical behavior. Ethics Policies or Codes (2) The purpose of such codes is to provide guidance to managers and employees when they encounter an ethical dilemma. Research has shown significant differences among countries: Latin America: ethic policies were found to be primarily instrumental – that is, they provided rules and procedures for employees to follow in order to adhere to company policies or societal laws. Japan: most policies were a mixture of legal compliances and statements of the company’s values and mission. Europe and Canada: values and mission was also popular *Ethics policies covers issues such as developing guidelines for accepting or refusing gifts from suppliers, avoiding conflicts of interest, maintaining the security of proprietary information, and avoiding discriminatory personnel practices. Yet researchers have found that ethical policies by itself are insufficient to bring out ethical conduct. * Ethics and Compliances Officers (3) A new position created in offices in response to the 1991 U.S. Corporate Sentencing Guidelines. Ethics Reporting Mechanisms (4) When an employee is reluctant to communicate an ethical issue to a supervisor or someone else in senior management they can turn to their company’s ethics reporting mechanism. They call a helpline or send an email expressing their concerns, anonymously if they wish. Uses of this mechanisms: To provide interpretations of proper ethical behavior involving conflicts of interest and the appropriateness of gift giving. To create an avenue to make known to the proper authorities allegations of unethical conduct To give employees and other corporate stakeholders a way to discover general information about a wide range of workrelated topics Ethics Training Program (5) Generally, the most expensive and timeconsuming element of an ethics program. Studies have shown that only 20 to 40 percent of small businesses formally offer ethics training to their employees. Some experts argued that the explosion of webbased ethics training may not be as effective as the more traditional but expensive facetoface training. Ethic Audits (6) In these audits, the auditor – either a hired outside consultant or an internal employee – is required to note any deviations from the company’s ethical standards and bring them to the attention of the audit supervisor. Six steps to highly effective ethics audits: Start with a detailed foundation Develop metrics Create a crossfunctional team Audit efficiently Look for other issues Respond consistently and communicate Comprehensive Ethics Programs: when all six components explained in this chapter – top management commitment, ethical policies or codes, compliance officers, reporting machines, training programs and audits – are used together, they reinforce each other and become more effective. Corporate Ethics Awards and Certifications: Ethisphere Magazine honors ethical leadership and business practices worldwide based on an Ethical Quotient (EQ) score. This score measures corporate responsibility performance; governance adherence; innovation that contributes to the public’s well being; exemplary leadership to the industry; executive leadership; the firm’s legal, regulatory, and reputation track record; and the internal systems and ethics and compliance program developed at the firm. The Foundation for Financial Service Professionals sponsored the American Business Ethics Award (ABEA). Ethics in Global Economy Unethical activity – bribery, a questionable or unjust payment often to a government official to ensure or facilitate a business transaction. An analysis of Transparency International’s Corruption Perception Index (CPI) revealed that bribetaking was more likely in countries with low per capita income, low salaries for government officials, and less variation in income distribution. Efforts to Curtail Unethical Practices The most common control is through government intervention and regulation. Since 1977, executives representing U.Sbased companies have been prohibited by the U.S. Foreign Corrupt Practices Act (FCPA) from paying bribes to foreign government officials, political parties, or political candidates. To achieve this the FCPA requires U.S. companies with foreign operations to adopt accounting practices that ensure full disclosure of the company’s transactions. Ethics, Law, and Illegal Corporate Behavior Laws vs. Ethics Laws are a society’s attempt to formalize the general public’s ideas about what constitutes right and wrong conduct in various spheres of life. Ethical concepts deal with human dilemmas that frequently go beyond the formal language of law and the meanings given to legal rules. Corporate Lawbreaking and its Cost Whitecollar crime, illegal acts committed by individual, employees, or business professionals such as a fraud, insider trading, embezzlement, or computer crime.