Chapter 04 The Corporate CultureImpact and Implications

True / False Questions

1.(p. 145) Due to diverse employee groups and management styles, the work culture of a
large global firm in one country will differ significantly from the work culture of the
same firm halfway around the world.
FALSE
Despite the fact that corporations have many locations, with diverse employee groups
and management styles, an individual working for a large global firm in one country
will share various aspects of her or his working culture with someone working for the
same firm halfway around the world.
2.(p. 146) Corporate culture shapes, and is shaped, by the people who are members of the
organization.
TRUE
While culture shapes the people who are members of the organization, it is also
shaped by the people who comprise it.
3.(p. 148) Differing individual perception of culture makes it easier to define the specific
culture within an organization.
FALSE
Defining the specific culture within an organization is not an easy task since it is
partially based on each participant's perception of the culture.
4.(p. 149) In situations where an organization lacks strong leadership for ethical decision
making despite the clarity of law, the business culture is likely to be the determining
factor in the decision.
FALSE
In situations where the law provides an incomplete answer for ethical decision
making, the business culture is likely to be the determining factor in the decision.
5.(p. 151) Organizations with similar missions, rules, and legal regulations, can have
significantly different cultures.
TRUE
According to the examples of FEMA and the Coast Guard provided in the text, it is
fair to say that FEMA and the Coast Guard are two very similar organizations with
similar missions, rules, and legal regulations; but they have significantly different
cultures.
6.(p. 152) Organizations that have a traditional approach to culture can be classified
ascompliance-based cultures.
TRUE
In the 1990s, a distinction came to be recognized in types of corporate culture: some
firms were classified as compliance-based cultures (the traditional approach) while
others were considered to be values-based or integrity-based cultures.
7.(p. 153) A values-based culture recognizes that where rules do not apply, the firm must
rely on the personal integrity of its workforce during decision-making.
TRUE
A values-based culture recognizes that where a rule does not apply the firm must rely
on the personal integrity of its workforce when decisions need to be made.
8.(p. 155) Ethics is held as a priority if the general counsel serves as the ethics officer in
her "spare time," even if no additional resources are allocated to that activity.
FALSE
Ethics was not a priority if the general counsel served as the ethics officer in her
"spare time," and no additional resources were allocated to that activity.
9.(p. 157) "Quietly ethical" executives within the confines of the top management team
are likely to be perceived as ethical leaders because they have the support of the top
management.
FALSE
If an executive is "quietly ethical" within the confines of the top management team,
but more distant employees do not know about her or his ethical stance, they are not
likely to be perceived as an ethical leader.
10.(p. 158) An appropriate method of leadership is insufficient to establish a leader as
being ethical.
TRUE
Certainly ethically appropriate methods of leadership are central to becoming an
ethical leader. But while some means may be ethically better than others (e.g.,
persuasion rather than coercion), it is not the method alone that establishes a leader as
ethical.
11.(p. 161) In the absence of other values denoted by a code of conduct within an
organization, the only value becomes profitat any cost.
TRUE
Before impacting the culture through a code of conduct or statement of values, a firm
must first determine its mission so that decision makers have direction when
determining dilemmas. In the absence of other values, the only value
is profitat any cost.
12.(p. 162) In the development of guiding principles for the firm, articulation of a clear
vision regarding the firm's direction is a step that precedes the step of asking yourself
what you stand for or what the company stands for.
FALSE
In the development of guiding principles for the firm, it is critical to first ask yourself
what you stand for or what the company stands for. The second step is the articulation
of a clear vision regarding the firm's direction.
13.(p. 163) One of the most determinative elements of integration is communication.
TRUE
One of the most determinative elements of integration is communication because
without it there is no clarity of purpose, priorities, or process.
14.(p. 165) Whistleblowing to external groups is usually preferred over internal
mechanisms for reporting wrongdoing.
FALSE
Because whistleblowing to external groups, such as the press and the legal authorities,
can be so harmful to both the whistleblower and to the firm itself, internal
mechanisms for reporting wrongdoing are preferable for all concerned.
15.(p. 167) Lack of any generally accepted fundamental values for the organization is a
clear sign of a "toxic" culture.
TRUE
The first clear sign of a "toxic" culture would be a lack of any generally accepted
fundamental values for the organization.
16.(p. 169) The United States Sentencing Commission is an independent agency that
regulates sentencing policies in the federal court system.
TRUE
The United States Sentencing Commission (USSC), an independent agency in the
United States Judiciary, was created in 1984 to regulate sentencing policy in the
federal court system.
Multiple Choice Questions
17.(p. 145) Which of the following is true about corporate culture?
A.Corporate cultures shape the people of the organization, without getting affected by them.
B.Corporate cultures are generally static, but can be changed by voluntary action of the top
managers.
C.Corporate cultures can hinder individuals in making the "right" decisions.
D.In large global firms, corporate cultures differ significantly for two firms located in different
countries.
Individuals can be helpedor hinderedin making the "right" or "wrong" decision
(according to their own values) by the expectations, values and structure of the
organization in which they live and work.
18.(p. 146) Which of the following statements is incorrect about corporate
culture? A. One strong business leader is not enough to have an impact on corporate
culture.
B.Even in decentralized corporations, there is a sense of culture in organizations.
C.Businesses have unspoken yet influential standards and expectations.
D.Corporate culture is always changing.
Organizational cultures are a bit like moving an iceberg. One person cannot alter its
course alone; but strong leaderssometimes from within, but often at
the topcan have a significant impact on a culture. A strong business leader can
certainly have a significant impact on a corporate culture.
19.(p. 148) Defining the specific culture within an organization is a difficult task. Which
of the following is a factor that is partially responsible for this difficulty and impacts
the organizational culture in a circular way?
A.Method for feedback
B.Openness in communication
C.Transparency of operation
D.Perception of participants
Defining the specific culture within an organization is not an easy task since it is
partially based on each participant's perception of the culture. In fact, perception may
actually impact the culture in a circular waya culture exists, we perceive it to be a
certain type of culture, we respond to the culture on the basis of our perception, and
we thereby impact others' experience of the culture.
20.(p. 149) Which of the following situations could result in the business culture
becoming a determining factor in ethical decision-making?
A. Lack of adequate judgmentB. Laws being ambiguous
C.Lack of strong leadership
D.Stagnant or decreasing profits
In situations where the law provides an incomplete answer for ethical decision
making, the business culture is likely to be the determining factor in the decision.
21.(p. 151) The comparison between the Federal Emergency Management Agency
(FEMA) and the United States Coast Guard shows:
A.the efficiency levels within federal bodies.
B.the inequity encountered in all professional organizations.
C.that decisions need to be made to benefit the stakeholders.
D. that similar missions, legal regulations, and rules do not translate into similar
cultures.
It is fair to say that FEMA and the Coast Guard are two very similar organizations
with similar missions, rules, and legal regulations, but with very different cultures.
The decisions made throughout both organizations reflect the culture of each.
22.(p. 152) Which of the following statements is true about ethical corporate
cultures? A.Ethical organizational culture cannot have a direct impact on the bottom
line.
B. If attended to and supported, a strong ethical culture can serve as a deterrent to
stakeholder damage.
C.Even if ignored, organizational culture could reinforce a perception that "anything goes," and
"any way to a better bottom line is acceptable," building long-term sustainability.
D.The responsibility for creating and sustaining ethical corporate cultures rests on law
enforcement agencies.
If attended to and supported, a strong ethical culture can serve as a deterrent to
stakeholder damage and improve bottom line sustainability.
23.(p. 152) Which of the following approaches to culture is traditional?
A.Values-based
B.Integrity-based
C.Customer-based
D.Compliance-based
In the 1990s, a distinction came to be recognized in types of corporate culture: some
firms were classified as compliance-based cultures (the traditional approach) while
others were considered to be values-based or integrity-based cultures.
24.(p. 152-153) The distinction between compliance-based and integrity-based cultures is
most evident in:
A.marketing and economics.
B.business administration and law.
C.accounting and auditing.
D.training and sales.
The distinction between compliance-based and values-based cultures perhaps is most
evident in accounting and auditing situations; but it can also be used more generally to
understand wider corporate cultures.
25.(p. 153) Which of the following cultures will empower legal counsel and audit offices
to mandate and to monitor conformity with the law and with internal codes?
A.Customer-based culture
B.Integrity-based culture
C.Values-based culture
D. Compliance-based culture
A compliance-based culture will empower legal counsel and audit offices to mandate
and to monitor compliance with the law and with internal codes.
26.(p. 153) Which of the following is true about corporate culture?
A. An integrity-based culture is one that reinforces a particular set of rules.
B. A compliance culture is only as strong and as precise as the rules that workers are
expected to follow.
C.Values-based organizations do not include a compliance structure.
D.A values-based culture emphasizes obedience to the rules as the primary
responsibility of ethics.
The argument in favor of a values-based culture is that a compliance culture is only as
strong and as precise as the rules with which workers are expected to comply.
27.(p. 153) When would a values-based organization rely on the personal integrity of its
workforce when decisions need to be made?
A. In a situation where rules do not apply.
B.In a crisis situation where the leader is absent.
C.In a situation where the goal is to change the organizational culture drastically.
D.In a situation where immediate decision is required.
A values-based culture recognizes that where a rule does not apply the firm must rely
on the personal integrity of its workforce when decisions need to be made.
28.(p. 153) Which of the following is a feature of an evolved and inclusive ethics
program, as opposed to a traditional compliance-oriented program?
A. Meeting regulatory requirements
B. Helping to unify a firm's global operations
C.Minimizing risks of litigation and indictment
D.Improving accountability mechanisms
The goals of a more evolved and inclusive ethics program may entail a broader and
more expansive application to the firm, including maintaining brand and reputation,
recruiting and retaining desirable employees, helping to unify a firm's global
operations, creating a better working environment for employees, and doing the right
thing in addition to doing things right.
29.(p. 155) Which of the following statements about ethics and ethics officers is correct?
A.Ethics officers were first introduced to the corporate structure in the early 1980s.
B.Ethics is not taken seriously if an individual is hired into an exclusive position as ethics
officer.
C.Ethics is taken as a priority even if no additional resources are allocated to that activity.
D.Ethics was not a priority if the general counsel served as the ethics officer in her "spare time."
Ethics was not a priority if the general counsel served as the ethics officer in her
"spare time," and no additional resources were allocated to that activity.
30.(p. 157) Identify the correct statement about ethical leaders.
A.Individuals perceived as ethical leaders avoid doing things that "traditional leaders" do.
B.A "quietly ethical" executive is likely to be perceived as an ethical leader.
C. An ethical leaders' traits and behaviors must be socially visible.
D. People perceive that the ethical leader's goal is consistent job performance by being
"quietly ethical."
An ethical leader's traits and behaviors must be socially visible and understood in
order to be noticed and influence perceptions.
31.(p. 158) In the corporate context, Enron executives Ken Lay and Jeffrey Skilling
were:
A.effective and ethical leaders.
B.ineffective and unethical leaders.
C.effective but unethical leaders.
D.ineffective but ethical leaders.
In the corporate context, Enron executives Ken Lay and Jeffrey Skilling were
successful, effective business leaders. They were also unethical leaders.
32.(p. 158) The means used to motivate others and achieve one's goals plays a key role in
distinguishing between:
A. silent leaders and visible leaders. B.effective leaders and ethical leaders.
C.informal leaders and formal leaders.
D.silent leaders and ethical leaders.
One key difference between effective leaders and ethical leaders lies with the means
used to motivate others and achieve one's goals.
33.(p. 158) Ethically appropriate methods of leadership alone are insufficient for
establishing ethical leadership. Identify the other element.
A. The ends or objective towards which the leader leads.
B.The prevailing culture in the external environment.
C.The ethical nature of the team members.
D.The personality traits of the team members.
While some means may be ethically more appropriate than others (e.g., persuasion
rather than coercion), it is not the method alone that establishes a leader as ethical.
The other element of ethical leadership involves the end or objective towards which
the leader leads.
34.(p. 159) If we judge a leader solely by the results produced, we are following the
ethical tradition of:
A.deontological ethics.
B.virtual ethics.
C.classicism.
D. utilitarianism.
If we judge a leader solely by the results producedthe utilitarian greatest good for
the greatestnumberwe may ignore the mistreatment of workers that was necessary
to achieve that end.
35.(p. 161) Which of the following is usually the only "value" in an organization in the
absence of any other established values?
A. Profit-at any cost
B.Ethical behavior
C.Legal compliance even when laws are ambiguous
D.Customer satisfaction
In the absence of values in an organization, the only value is profitat any cost.
36.(p. 162) What serves as an articulation of the fundamental principles at the heart of the
organization and should guide all decisions without abridgment?
A.Annual report
B.Vision statement
C.Mission statement
D.Income statement
The mission statement or corporate credo serves as an articulation of the fundamental
principles at the heart of the organization and those that should guide all decisions,
without abridgment.
37.(p. 162) As with the construction of a personal code or mission, it is critical to
first: A.articulate a clear vision regarding the firm's direction.
B. ask yourself what you stand for or what the company stands for.
C.to believe that the culture is actually possible, achievable.
D.to identify clear steps as to how the cultural shift will occur.
As with the construction of a personal code or mission, it is critical to first ask
yourself what you stand for or what the company stands for.
38.(p. 162) The second step in the development of guiding principles for the firm
is: A.asking yourself what you stand for or what the company stands for.
B. the articulation of a clear vision regarding the firm's direction.
C.to identify clear steps as to how the cultural shift will occur.
D.to believe that the culture is actually possible, achievable.
The second step in the development of guiding principles for the firm is the
articulation of a clear vision regarding the firm's direction.
39.(p. 163) Identify the most determinative element in integration, without which, there
is no clarity of purpose, priorities, or process.
A.Ethics
B.Leadership
C.Mores
D. Communication
One of the most determinative elements of integration is communication because
without it there is no clarity of purpose, priorities, or process.
40.(p. 165) Which of the following involves the disclosure of unethical or illegal
activities to someone who is in a position to take action to prevent or punish the
wrongdoing?
A. Whistleblowing
B.Redlining
C.Gentrification
D.Flyposting
Whistleblowing involves the disclosure of unethical or illegal activities to someone
who is in a position to take action to prevent or punish the wrongdoing.
41.(p. 165) Identify the correct statement about whistleblowing.
A.It involves the disclosure of illegal activities, and not unethical activities.
B.It may seem disloyal, but it does not harm the business.
C. It can occur both internally and externally.
D. It can expose illegal and unethical activities, but cannot end them.
Whistleblowing can occur internally, as when Sherron Watkins reported her concerns
to Ken Lay regarding Enron. Whistleblowing can also occur externally when
employees report wrongdoing to legal authorities.
42.(p. 167) Which of the following allows organizations to uncover silent vulnerabilities
that could pose challenges later to the firm, serving as a vital element in risk
assessment and prevention?
A. Strict implementation of the code of conduct. B.Ongoing assessment of the
corporate culture.
C.Free-flowing communication between hierarchies.
D.Ethics ombudsmen and hotlines.
Monitoring and an ongoing ethics audit allow organizations to uncover silent
vulnerabilities that could pose challenges later to the firm, thus serving as a vital
element in risk assessment and prevention.
43.(p. 167) What is the term used to describe a potentially damaging or ethically
challenged corporate culture?
A."Caustic" culture
B."Pyrophoric" culture
C."Corrosive" culture
D."Toxic" culture
A potentially damaging or ethically challenged corporate culture is sometimes
referred to as a "toxic" culture.
44.(p. 169) Which of the following prescriptions of the United States Sentencing
Commission (USSC) assigns most federal crimes to one of 43 "offense levels," based
on the severity of the offense?
A. Federal Sentencing Guidelines for Organizations
B.Federal Guidelines of Offense for Organizations
C.Federal Prescription of Offensive Levels
D.The Doctrine of Offensive Levels for Organizations
Beginning in 1987, the USSC prescribed mandatory Federal Sentencing Guidelines
for Organizations. These prescriptions, based on the severity of the offense, assign
most federal crimes to one of 43 "offense levels."
45.(p. 169) The Supreme Court separated the "mandatory" element of the Federal
Sentencing Guidelines for Organizations from their advisory role, holding that their
mandatory nature:
A.made it impossible to pass an accurate sentence.
B.discouraged whistleblowing.
C. violated the Sixth Amendment right to a jury trial.
D. encouraged internal whistleblowing.
In the October 2004 decision in U.S. v. Booker, the Supreme Court separated the
"mandatory" element of the Federal Sentencing Guidelines for Organizations from
their advisory role, holding that their mandatory nature violated the Sixth Amendment
right to a jury trial.
46.(p. 170) Which of the following directed the USSC to consider and to review its
guidelines for fraud relating to securities and accounting, as well as to obstruction of
justice, and specifically asked for severe and aggressive deterrents in sentencing
recommendations?
A. Bank Secrecy Act
B. Sarbanes-Oxley Act
C.Gramm-Leach-Bliley Act
D.Financial Services Modernization Act
The USSC strived to use the Federal Sentencing Guidelines for Organizations to
create both a legal and an ethical corporate environment. This effort was supported by
the Sarbanes-Oxley Act, which subsequently directed the USSC to consider and to
review its guidelines for fraud relating to securities and accounting, as well as to
obstruction of justice, and specifically asked for severe and aggressive deterrents in
sentencing recommendations.
Fill in the Blank Questions
47.(p. 146) Every organization has a _____ fashioned by a shared pattern of beliefs,
expectations, and meanings that influence and guide the thinking and behaviors of the
members of that organization.
culture
Every organization has a culture fashioned by a shared pattern of beliefs, expectations,
and meanings that influence and guide the thinking and behaviors of the members of
that organization.
48.(p. 146) If one joins a firm with a culture that supports values than those with which
one is comfortable, there will be a _____ for better or worse.
values conflict
If you join a firm with a culture that supports other values than those with which you
are comfortable, there will be values conflictsfor better or worse.
49.(p. 148) The phrases "that's how things have always been done here" or "that's our
prevailing climate," tells us that culture can serve to _____ an organization in the
common ways of managing issues.
constrain
The culture can also serve to constrain an organization in the common ways of
managing issues, as in the typical phrases, "that's how things have always been done
here" or "that's our prevailing climate."
50.(p. 148) Defining the specific culture within an organization is not an easy task since
it is partially based on each participant's _____ of the culture.
perception
Defining the specific culture within an organization is not an easy task since it is
partially based on each participant's perception of the culture.
51.(p. 149) In situations where the _____ provides an incomplete answer for ethical
decision making, the business culture is likely to be the determining factor in the
decision.
law
In situations where the law provides an incomplete answer for ethical decision
making, the business culture is likely to be the determining factor in the decision.
52.(p. 151-152) The _____ tradition reminds us that we are as likely to act out of habit and
based on character as we are to act after careful deliberations.
virtue ethics
When we talk about decision making, it is easy to think in terms of a rational,
deliberative process in which a person consciously deliberates about and weighs each
alternative before acting. But the virtue ethics tradition reminds us that our decisions
and our actions are very often less deliberate than that. We are as likely to act out of
habit and based on character as we are to act after careful deliberations.
53.(p. 152) Values-based cultures are also known as _____ cultures.integrity-based
In the 1990s, a distinction came to be recognized in types of corporate culture: some
firms were classified as compliance-based cultures (the traditional approach) while
others were considered to be values-based or integrity-based cultures.
54.(p. 153) A _____ culture will empower legal and audits offices to mandate and
monitor compliance with the law and with internal codes.
compliance-based
A compliance-based culture will empower legal counsel and audit offices to mandate
and to monitor compliance with the law and with internal codes.
55.(p. 153) The argument in favor of a values-based culture is that a compliance culture
is only as strong and as precise as the _____ with which workers are expected to
comply.
rules
The argument in favor of a values-based culture is that a compliance culture is only as
strong and as precise as the rules with which workers are expected to comply.
56.(p. 155) Ethics holds a higher position in the firm if a highly skilled individual is hired
into an exclusive position as _____ and is given a staff and a budget to support the
work required. ethics officer
Ethics was not a priority if the general counsel served as the ethics officer in her
"spare time," and no additional resources were allocated to that activity. Ethics holds a
different position in the firm if a highly skilled individual is hired into an exclusive
position as ethics officer and is given a staff and a budget to support the work
required.
57.(p. 157) If an executive is "quietly ethical" within the confines of the top management
team, but more distant employees do not know about her or his ethical stance, they are
not likely to be perceived as a(n) __.
ethical leader
If an executive is "quietly ethical" within the confines of the top management team,
but more distant employees do not know about her or his ethical stance, they are not
likely to be perceived as an ethical leader.
58.(p. 158) While some means may be ethically more appropriate than others (e.g.,
persuasion rather than coercion), it is not the method alone that establishes a leader as
ethical. The other element of ethical leadership involves the _____ towards which the
leader leads.
end or objective
While some means may be ethically more appropriate than others (e.g., persuasion
rather than coercion), it is not the method alone that establishes a leader as ethical.
The other element of ethical leadership involves the end or objective towards which
the leader leads.
59.(p. 159) One of the key manifestations of ethical leadership is the articulation of
_____ for the organization.
values
One of the key manifestations of ethical leadership is the articulation of values for the
organization.
60.(p. 165) _____ involves the disclosure of unethical or illegal activities to someone
who is in a position to take action to prevent or punish the wrongdoing.
Whistleblowing
Whistleblowing involves the disclosure of unethical or illegal activities to someone
who is in a position to take action to prevent or punish the wrongdoing.
61.(p. 169) The Federal Sentencing Guidelines for Organizations, based on the severity
of the offense, assign most federal crimes to one of 43 " ___."
offense levels
Beginning in 1987, the USSC prescribed mandatory Federal Sentencing Guidelines
for Organizations that apply to individual and organizational defendants in the federal
system, bringing some amount of uniformity and fairness to the system. These
prescriptions, based on the severity of the offense, assign most federal crimes to one
of 43 "offense levels."
Essay Questions
62.(p. 145-146) What is a corporate culture? How does it shape an employee?
Every organization has a culture, fashioned by a shared pattern of beliefs,
expectations, and meanings that influence and guide the thinking and behaviors of the
members of that organization. While culture shapes the people who are members of
the organization, it is also shaped by the people who comprise it. Even in this age of
decentralized corporations and other institutions, there remains a sense of culture in
organizations. This is especially true in small local firms, but it is just as true of major
global corporations. Despite the fact that corporations have many locations, with
diverse employee bases and management styles, an individual working for a large
global firm in one country will share various aspects of her or his working culture
with someone working for the same firm halfway around the world. This is not to say
that their working environments cannot be wholly different in many regards; the
culture, however, survives the distance and differences.
Businesses also have unspoken yet influential standards and expectations. If you join
a firm with a culture that supports other values than those with which you are
comfortable, there will be valuesconflictsfor better or worse.
63.(p. 146-148) How can culture be both positive and negative in its nature?
A firm's culture can be its sustaining value - that which offers it direction and stability
during challenging times. It can, however, also serve to constrain an organization in
the common ways of managing issues, as in the typical phrases such as "that's how
things have always been done here" or "that's our prevailing climate the stability that
can be a benefit at one time can be a barrier to success at another.
64.(p. 148-149) In addition to attitudes, and behaviors, list the other determinants of
culture within an organization.
Several of the elements that are easiest to perceive, such as attitudes and behaviors,
are only a small fraction of the elements that comprise the culture. In addition, culture
is present in and can be determined by exploring any of the following, among others
tempo of work, the organization's approach to humor, methods of problem solving,
the competitive environment, incentives, individual autonomy, and hierarchical
structure.
Even with this list of cultural elements, it can be difficult for individuals in a firm to
identify the specific characteristics of the culture within which they work. Culture
becomes so much a part of the environment that participants do not even notice its
existence.
65.(p. 149) How are the corporate culture and ethics related in an organization?
The law can be ambiguous in determining if a business should make a reasonable
accommodation for an employee with certain types of disabilities (allergies, arthritis,
dyslexia etc.). In situations where the law is an incomplete guide for ethical decision-
making, the business culture is likely to be the determining factor in the decision.
Ethical businesses must find ways to encourage, to shape, and to allow ethically
responsible decisions.
An ethical culture would be one in which employees are empowered and expected to
act in ethically responsible ways even when the law does not require it.
66.(p. 151-152) Explain how corporate culture and virtue ethics are related.
The cultivation of habits, including the cultivation of ethical virtue, is greatly shaped
by the culture in which one lives. When we talk about decision-making, it is easy to
think in terms of a rational, deliberative process in which a person consciously
deliberates about and weighs each alternative before acting. But the virtue ethics
tradition reminds us that our decisions and our actions are very often less deliberate
than that. We are as likely to act out of habit and based on character than we are to act
after careful deliberations. So the question of where we get our habits and character
isall-important.
Part of the answer surely is that we can choose to develop some habits rather than
others. But it is also clear that our habits are shaped and formed by education
and trainingby culture. It also takes place in the workplace, where individuals
quickly learn appropriate and expected behaviors. Intentionally or not, business
institutions provide an environment in which habits are formed and virtues, or vices,
are created.
67.(p. 152) How can an ethical culture have a direct effect on the bottom line of an
organization?
If attended to and supported, a strong ethical culture can serve as a deterrent to
stakeholder damage and improve bottom line sustainability. If ignored, the culture
could instead reinforce a perception that "anything goes," and "any way to a better
bottom line is acceptable," destroyinglong-term sustainability.
68.(p. 152-153) Describe how a values-based culture works.
A values-based culture is one that reinforces a particular set of values rather than a
particular set of rules. Certainly, these firms may have codes of conduct; but those
codes are predicated on a statement of values and it is presumed that the code includes
mere examples of the values' application. Integrating these values into the firm's
culture encourages a decision- making process that uses the values as underlying
principles to guide employee decisions rather than ashard-and-fast rules.
The argument in favor of a values-based culture is based on the fact that a compliance
culture is only as strong and as precise as the rules with which workers are expected to
comply. A firm can only have a certain number of rules and the rules can never
unambiguously apply to every conceivable situation. A values-based culture
recognizes that where a rule does not apply, the firm must rely on the personal
integrity of its workforce when decisions need to be made. This is not to say
that values-based organizations do not include a compliance structure.
69.(p. 153) How does a compliance-based structure work?
A compliance-based culture emphasizes obedience to the rules as the primary
responsibility of ethics. A compliance-based culture will empower legal and audits
offices to mandate and monitor compliance with the law and with internal codes.
70.(p. 153) Explain the reasoning behind the popularity of the values-based culture.
The argument in favor of a values-based culture is based on the fact that a compliance
culture is only as strong and as precise as the rules with which workers are expected to
comply. Avalues-based culture recognizes that where a rule does not apply, the firm
must rely on the personal integrity of its workforce when decisions need to be made.
71.(p. 154-155) How are leaders responsible for supporting ethical decision-making?
If the goal of corporate culture is to cultivate values, expectations, beliefs, and
patterns of behavior that best and most effectively support ethical decision-making, it
becomes the primary responsibility of corporate leadership to steward this effort.
Leaders are charged with this duty in part because stakeholders throughout the
organization are guided to a large extent by the "tone at the top."
If a leader is perceived to be shirking her or his duties, misusing corporate assets,
misrepresenting the firm's capabilities, or engaging in other inappropriate behavior,
stakeholders receive the message that this type of behavior is not only acceptable, but
perhaps expected and certainly the way to get ahead in that organization. Instead, if a
leader is clearly placing her or his own ethical behavior above any other
consideration, stakeholders are guided to follow that role model and to emulate that
priority scheme.
Beyond personal behavior, leadership sets the tone through other mechanisms such as
the dedication of resources. Ethical business leaders not only talk about ethics and act
ethically on a personal level, but they also allocate corporate resources to support and
promote ethical behavior. There is along-standing credo of management: "budgeting
is all about values." More common versions are "put your money where your mouth
is" and "walk the talk."
72.(p. 156-157) What characters are requisite within a leader to be perceived as being
ethical?
One study of the nature of ethical leadership emphasized the importance of being
perceived as apeople-oriented leader, as well as the importance of leaders engaging in
visible ethical action. Traits that were also important included receptivity, listening,
and openness, in addition to the more traditionally considered traits of integrity,
honesty, and trustworthiness. Finally, being perceived as having a broad ethical
awareness, showing concern for multiple stakeholders, and using ethical decision
processes are also important. Those perceived as ethical leaders do many of the things
"traditional leaders" do (e.g., reinforce the conduct they are looking for, create
standards for behavior, and so on), but they do that within the context of an ethics
agenda. People perceive that the ethical leader's goal is not simply job performance,
but performance that is consistent with a set of ethical values and principles. Finally,
ethical leaders demonstrate caring for people (employees and external stakeholders) in
the process.
73.(p. 158) What are the differences between an effective leader and an ethical leader?
Leaders guide, direct, and escort others towards a destination, an effective leader is
someone who does this successfully and, presumably, efficiently. Effective leaders are
able to get followers to their common destination. But not every effective leader is an
ethical leader. One key difference lies with the means used to motivate others and
achieve one's goals. Effective leaders might be able to achieve their goals through
threats, intimidation, harassment, and coercion. One can also lead using more
attractive means such as modeling ethical behavior, persuasion, or simply using one's
institutional role.
Certainly ethically appropriate methods of leadership are central to becoming an
ethical leader. Creating a corporate culture in which employees are empowered and
expected to make ethically responsible decisions is a necessary part of being an
ethical business leader. But while some means may be ethically better than others
(e.g., persuasion rather than coercion), it is not the method alone that establishes a
leader as ethical. While perhaps necessary, ethical means of leading others are not
sufficient for establishing ethical leadership. The other element of ethical leadership
involves the end or objective towards which the leader leads.
74.(p. 159-162) What is a code of conduct? What is its role within an organization?
One of the key manifestations of ethical leadership is the articulation of values for the
organization. Before impacting the culture through a code of conduct or statement of
values, a firm must first determine its mission. In the absence of other values, the only
value is profit at any cost. Therefore, without additional guidance from the top, a
firm is sending a clear message that a worker should do whatever it takes to reap
profits.
A code of conduct, therefore, may more specifically delineate this foundation both for
internal stakeholders such as employees and for external stakeholders such as
customers. The code has the potential to both enhance corporate reputation and
provide concrete guidance for internaldecision-making, thus creating a built-in risk
management system.
By establishing the core tenets on which a company is built, corporate leadership is
effectively laying down the law with regard to the basis and objectives for all future
decisions.
75.(p. 163) What is the last determining factor for the success of a code to impact
culture?
To have an effective code that will successfully impact culture, there must be a belief
throughout the organization that this culture is actually possible, achievable. If
conflicts remain that will prevent certain components from being realized, or if key
leadership is not on board, no one will have faith in the changes articulated.
76.(p. 163-165) How is communication important for the integration of an ethical culture?
What is whistleblowing?
Integrating an ethical culture throughout a firm and providing means for enforcement
is vitally critical both to the success of any cultural shift and to the impact on all
stakeholders. One of the most determinative elements of integration is communication
because without it, there is no clarity of purpose, priorities, or process.
Communication of culture must be incorporated into the firm's vocabulary, habits, and
attitudes to become an essential element in the corporate life,decision-making, and
determination of success.
Whistleblowing involves the disclosure of unethical or illegal activities to someone
who is in the position to take action to prevent or punish the wrongdoing.
Whistleblowing can expose and end unethical activities, but it can also seem disloyal,
it can harm the business, and it can extract significant costs on the whistleblower.