Human Resource ManagementBusiness Ethics and Corporate Social Responsibility

1) Bernard Madoff was most likely able to accomplish his Ponzi scheme because ________. A) politicians protected his securities firmB) laws failed to regulate bond investmentsC) investors did not question his high returnsD) police were unable to find sufficient evidenceAnswer: CExplanation: C) Madoff's case involved providing a consistent 10 percent to 12 percent annual returns in good markets and bad. People did not question him. Investors wanted to believe in the Holy Grail, so rational thoughts did not interfere with disbelief.

2) All of the following changes have been implemented by the SEC as a result of the Madoff scandal EXCEPT ________. A) requiring investors to register each trade with the governmentB) expanding the technology budget to improve enforcementC) rewarding individuals for cooperating with investigationsD) establishing five specialized enforcement unitsAnswer: AExplanation: A) As a result of the Madoff scandal, the SEC expanded its budget for use on key technology projects that will restructure vulnerable areas in its regulatory system and improve its enforcement division.The reforms include a so-called "Seaboard Memo for individuals" spelling out how they will be rewarded if they cooperate in investigations. There will also be five specialized enforcement units to tackle crimes such as Ponzi schemes, bribery, and insider trading.

3) Which term refers to the discipline that deals with what is good and bad or right and wrong? A) morals and traditionsB) social responsibility C) cultural norms D) ethics Answer: DExplanation: D) Ethics is the discipline dealing with what is good and bad, or right and wrong, or with moral duty and obligation.

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4) Which of the following firms has NOT been exposed for ethical and often illegal exploits?A) EnronB) Arthur AndersenC) WorldComD) Charles SchwabAnswer: D

Explanation: D) Enron, Arthur Anderson, and WorldCom have been involved with ethical and illegal problems. Charles Schwab has a history of honesty and transparency.

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5) In a recent survey, what percent of investors said they would move their account if they discovered the company was involved in unethical behavior?A) 17%B) 37%C) 67%D) 97%Answer: CExplanation: C) CEOs have to be clear that unethical behavior is not acceptable. In one survey, 67 percent of investors said they would move their account if they discovered the company was involved in unethical behavior.

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6) The CEO of GE begins and ends each annual meeting by ________. A) introducing the firm's senior officialsB) reviewing the firm's financial detailsC) stating the firm's integrity principles D) asking stockholders for their opinionsAnswer: CExplanation: C) Jeff Immelt, GE's CEO, begins and ends each annual meeting of 220 officers and of its 600 senior managers by restating the company's fundamental integrity principles: "GE's business success is built on our reputation with all stakeholders for lawful and ethical behavior. Commercial considerations never justify cutting corners. Upholding this standard is the specific responsibility of the leaders in the room."

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7) What do most of the 500 largest corporations in the United States have?A) social responsibility auditsB) environmental auditsC) codes of ethicsD) podcastsAnswer: CExplanation: C) Most of the 500 largest corporations in the United States now have a code of ethics, which encompasses written conduct standards, internal education, and formal agreements on industry standards, ethics offices, social accounting, and social projects.

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8) With regards to ethics, most of the 500 largest corporations in the U.S. now have a code of ethics. Which of the following would LEAST likely be included in the codes? A) ethics offices B) social accounting C) conduct standards D) performance appraisalsAnswer: DExplanation: D) Most of the 500 largest corporations in the United States now have a code of ethics, which encompasses written conduct standards, internal education, and formal agreements on industry standards, ethics offices, social accounting, and social projects.

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9) What ethical breaches in business today have involved hundreds of executives and led to numerous high-profile resignations?A) stock-options-backdatingB) excessive severance payC) unethical salariesD) insider tradingAnswer: AExplanation: A) Ethical breaches in business continue today. Stock-options-backdating has involved hundreds of executives and led to the resignations of some high-profile executives.

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10) What was the primary focus of many financial firms involved in the 2008/10 financial crisis? A) human resourcesB) short-term profitsC) customer serviceD) long-range returnsAnswer: BExplanation: B) Companies that focused on short-term profits seemingly to the exclusion of everything else were the culprits of the 2008/10 financial crisis. Other organizations had a steady moral compass and went safely through it. Charles Schwab & Co. and US Bancorp have largely avoided the financial disaster because they both focus on customer service, honesty, and transparency.

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11) Which of the following is a strategy used by Costco? A) outsourcing all administrative tasks to reduce HR costsB) focusing on short-term profits to benefit stockholdersC) offering the CEO a high salary and few stock optionsD) paying high wages to retain good employees

Answer: DExplanation: D) For years, Wall Street analysts have criticized Costco's management for paying high wages and keeping employees around for a long time, but Costco's CEO believed that it was strategic for long term growth and success to keep good employees. The CEO gets a compensation package that includes a relatively low salary and bonus but a much larger amount in stock options.

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12) The minimum standards of ethical behavior in a firm are based on ________, while higher standards are established by ________. A) corporate policies; human resourcesB) co-workers; mission statementsC) organizational culture; lawsD) laws; corporate leadershipAnswer: DExplanation: D) Compliance with the law sets the minimum standard of ethical behavior; ethics is much more, however. There must be leaders who are able and willing to instill ethics throughout the culture of the organization because laws are only the beginning of the solution.

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13) According to the text, sources of ethical guidance and personal beliefs are the basis for ________. A) the model of ethicsB) economic modelingC) behavior modelingD) the model of philosophyAnswer: AExplanation: A) According to the model of ethics, a person or organization is ethical if two relationships are strong and positive. The two elements of the relationship are sources of ethical guidance and personal beliefs about right and wrong.

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14) According to the text, what are the two key elements in the model of ethics? A) moral background and cultural normsB) sources of ethical guidance and personal moral beliefsC) social awareness and cultural normsD) sources of ethical guidance and education levelAnswer: BExplanation: B) According to the model of ethics, a person or organization is ethical if two relationships are strong and positive. The two elements of the relationship are sources of ethical guidance and personal beliefs about right and wrong.

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15) Which of the following would LEAST likely be a source of ethical guidance? A) holy books B) lawsC) friendsD) testsAnswer: DExplanation: D) One might use a number of sources to determine what is right or wrong, good or bad, moral or immoral. These sources include the Bible and other holy books. Another source of ethical guidance is the behavior and advice of our parents, friends, and role models. Laws also offer guidance to ethical behavior, prohibiting acts that can be especially harmful to others.

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16) As a professional, what should be your primary source of ethical guidance in the workplace? A) corporate HR policiesB) corporate code of ethics C) corporate mission statementD) corporate proceduresAnswer: BExplanation: B) For most professionals, there are codes of ethics that prescribe certain behavior. Without this conscience that has developed it might be easy to say, "Everyone does it," "Just this once won't hurt," or "No one will ever know."

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17) Which term refers to the strength of the relationship between what an individual or an organization believes to be moral and correct and what available sources of guidance suggest is morally correct?A) Type I ethicsB) Type II ethicsC) Type III ethicsD) Type IV ethicsAnswer: AExplanation: A) The strength of the relationship between what an individual or an organization believes to be moral and correct and what available sources of guidance suggest is morally correct is Type I ethics. Type II ethics is the strength of the relationship between what one believes and how one behaves.

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18) Jeff, a manager at Quik Electronics, believes it is acceptable to not hire minorities, despite the fact that almost everyone condemns this practice. Jeff is unethical based on ________.

A) Type I ethicsB) Type II ethicsC) Type III ethicsD) Type IV ethicsAnswer: AExplanation: A) The strength of the relationship between what an individual or an organization believes to be moral and correct and what available sources of guidance suggest is morally correct is Type I ethics. Type II ethics is the strength of the relationship between what one believes and how one behaves.

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19) The manager of a computer firm believes it is acceptable to bribe government officials, despite the fact that such actions are illegal. Which type of ethics suggest that the manager is unethical? A) Type IB) Type IIC) Type IIID) all of the aboveAnswer: AExplanation: A) The strength of the relationship between what an individual or an organization believes to be moral and correct and what available sources of guidance, such as laws, suggest is morally correct is Type I ethics. Type II ethics is the strength of the relationship between what one believes and how one behaves.

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20) Type I ethics is best defined as the strength of the relationship between ________. A) an individual's moral beliefs and the individual's behaviorB) morals presented by external sources and the punishment for unethical actsC) an individual's moral beliefs and the morals presented by external sourcesD) morals exhibited by most of society and the unethical actions of friends and role modelsAnswer: CExplanation: C) The strength of the relationship between what an individual or an organization believes to be moral and correct and what available sources of guidance, such as laws, suggest is morally correct is Type I ethics. Type II ethics is the strength of the relationship between what one believes and how one behaves.

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21) Type II ethics is best defined as the strength of the relationship between ________. A) an individual's moral beliefs and the individual's behaviorB) morals presented by external sources and the punishment for unethical actsC) an individual's moral beliefs and the morals presented by external sourcesD) morals exhibited by most of society and the unethical actions of friends and role models

Answer: AExplanation: A) The strength of the relationship between what an individual or an organization believes to be moral and correct and what available sources of guidance, such as laws, suggest is morally correct is Type I ethics. Type II ethics is the strength of the relationship between what one believes and how one behaves.

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22) The strength of the relationship between what one believes and how one behaves is referred to as what type of ethics? A) Type I B) Type II C) Type III D) Type IV Answer: BExplanation: B) Type II ethics is the strength of the relationship between what one believes and how one behaves. The strength of the relationship between what an individual or an organization believes to be moral and correct and what available sources of guidance suggest is morally correct is Type I ethics.

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23) What type of ethics is involved when a HR manager knows that it is wrong to discriminate but does so anyway? A) Type I B) Type II C) Type III D) Type IV Answer: BExplanation: B) Type II ethics is the strength of the relationship between what one believes and how one behaves. The strength of the relationship between what an individual or an organization believes to be moral and correct and what available sources of guidance suggest is morally correct is Type I ethics.

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24) What type of ethics is involved if a board of directors considers it wrong to pay excessive salaries to the CEO, yet pays executive salaries that are outrageous? A) Type I B) Type II C) Type III D) Type IV Answer: BExplanation: B) Type II ethics is the strength of the relationship between what one believes and

how one behaves, such as in the example provided. The strength of the relationship between what an individual or an organization believes to be moral and correct and what available sources of guidance suggest is morally correct is Type I ethics.

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25) What type of ethics is involved if a manager knows that it is wrong to pay bribes yet decides to pay bribes anyway?A) Type IB) Type IIC) Type IIID) Type IVAnswer: BExplanation: B) Type II ethics is the strength of the relationship between what one believes and how one behaves, such as in the example provided. The strength of the relationship between what an individual or an organization believes to be moral and correct and what available sources of guidance suggest is morally correct is Type I ethics.

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26) Generally, people are considered ethical if they possess ________. A) either Type I or Type II ethicsB) either Type II or Type III ethicsC) both Type I and Type II ethicsD) both Type 1 and Type III ethicsAnswer: CExplanation: C) Generally, a person is not considered ethical unless the person possesses both types of ethics. The strength of the relationship between what an individual or an organization believes to be moral and correct and what available sources of guidance suggest is morally correct is Type I ethics. Type II ethics is the strength of the relationship between what one believes and how one behaves, such as in the example provided.

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27) Which of the following laws was NOT enacted for the purpose of legislating business ethics? A) Federal Sentencing Guidelines for Organizations ActB) Procurement Integrity ActC) Sarbanes-Oxley ActD) Taft-Hartley ActAnswer: DExplanation: D) The Taft-Hartley Act was enacted to monitor the power and activities of unions. The other three laws were three attempts made by the government to legislate business ethics.

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28) What law prohibits the release of source selection and proposal information? A) Federal Sentencing Guidelines for Organizations B) Procurement Integrity Act C) Sarbanes-Oxley Act D) Federal Contract Protection Act Answer: BExplanation: B) The Procurement Integrity Act of 1988 prohibits the release of source selection and contractor bid or proposal information. Also, a former employee who served in certain positions on a procurement action or contract in excess of $10 million is barred from receiving compensation as an employee or consultant from that contractor for one year.

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29) Which law prohibits a former employee who served in certain positions on a contract in excess of $10 million from receiving compensation as an employee or consultant from that contractor for one year?A) Federal Sentencing Guidelines for OrganizationsB) Procurement Integrity ActC) Sarbanes-Oxley ActD) Federal Contract Protection ActAnswer: BExplanation: B) The Procurement Integrity Act of 1988 prohibits the release of source selection and contractor bid or proposal information. Also, a former employee who served in certain positions on a procurement action or contract in excess of $10 million is barred from receiving compensation as an employee or consultant from that contractor for one year.

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30) What law was passed in response to reports of military contracts for $500 toilet seats? A) Federal Sentencing Guidelines for Organizations B) Sarbanes-Oxley Act C) Federal Contract Protection Act D) Procurement Integrity Act Answer: DExplanation: D) The Procurement Integrity Act of 1988 prohibits the release of source selection and contractor bid or proposal information. The Act was passed after there were reports of military contracts for $500 toilet seats.

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31) What federal law offers easier punishments for wayward corporations that have ethics programs in place? A) Federal Sentencing Guidelines for Organizations B) Procurement Integrity Act C) Sarbanes-Oxley Act D) Federal Contract Protection Act Answer: AExplanation: A) The 1992 Federal Sentencing Guidelines for Organizations Act (FSGO) outlined an effective ethics training program and explained the seven minimum requirements for an effective program to prevent and detect violations. The FSGO promised softer punishments for wayward corporations that already had ethics programs in place.

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32) What federal law outlined an effective ethics training program and explained the seven minimum requirements for an effective program to prevent and detect violations?A) Federal Sentencing Guidelines for OrganizationsB) Procurement Integrity ActC) Sarbanes-Oxley ActD) Federal Contract Protection ActAnswer: AExplanation: A) The 1992 Federal Sentencing Guidelines for Organizations Act (FSGO) outlined an effective ethics training program and explained the seven minimum requirements for an effective program to prevent and detect violations. The FSGO promised softer punishments for wayward corporations that already had ethics programs in place.

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33) Which of the following was NOT included in the FSGO? A) guidelines for ethics standardsB) job security for whistleblowersC) guidelines for providing ethics trainingD) system for anonymously reporting misconductAnswer: BExplanation: B) The FSGO promised softer punishments for wayward corporations that already had ethics programs in place. In the law were recommendations regarding standards, ethics training, and a system to report misconduct anonymously. The Sarbanes-Oxley Act provided protections for whistleblowers.

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34) According to the FSGO, ________ were supposed to be responsible for the prevention of white collar crimes in an organization. A) attorneysB) top executivesC) common stockholdersD) organizational stakeholdersAnswer: BExplanation: B) According to the FSGO, executives were supposed to be responsible for the misconduct of those lower in the organization. If executives were proactive in their efforts to prevent white collar crime it would lessen a judgment against them and reduce the liability.

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35) Which law most likely prompted organizations to create codes of ethics and install ethics hotlines? A) Corporate and Auditing Accountability, Responsibility, and Transparency ActB) Federal Sentencing Guidelines for Organizations ActC) Procurement Integrity ActD) McCarran-Ferguson ActAnswer: BExplanation: B) The McCarran-Ferguson Act relates insurance regulation rather than business ethics. The FSGO led organizations to create ethics officer positions, install ethics hotlines, and develop codes of ethics in hopes of lessening ethics judgments against the firm and reducing the firm's liability.

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36) Which law criminalizes many corporate acts that were previously relegated to various regulatory structures? A) Federal Sentencing Guidelines for Organizations B) Procurement Integrity Act C) Sarbanes-Oxley Act D) Federal Contract Protection Act Answer: CExplanation: C) The Corporate and Auditing Accountability, Responsibility, and Transparency Act of 2002 criminalized many corporate acts that were previously relegated to various regulatory structures. Known as the Sarbanes––Oxley Act, its primary focus is to redress accounting and financial reporting abuses in light of corporate scandals.

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37) Which law was passed to redress accounting and financial reporting abuses in light of corporate scandals? A) Federal Sentencing Guidelines for Organizations B) Procurement Integrity Act C) Sarbanes-Oxley Act D) Federal Contract Protection Act Answer: CExplanation: C) The Corporate and Auditing Accountability, Responsibility, and Transparency Act of 2002 criminalized many corporate acts that were previously relegated to various regulatory structures. Known as the Sarbanes––Oxley Act, its primary focus is to redress accounting and financial reporting abuses in light of corporate scandals.

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38) Which law contains broad employee whistle-blower protections against firms and managers that retaliate or harass employees who report suspected corporate wrongdoing? A) Sarbanes-Oxley Act B) Procurement Integrity Act C) Federal Sentencing Guidelines for Organizations D) Federal Contract Protection Act Answer: AExplanation: A) The Sarbanes-Oxley Act contains broad employee whistle-blower protections that subject corporations and their managerial personnel to significant civil and criminal penalties for retaliating, harassing, or discriminating against employees who report suspected corporate wrongdoing.

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39) Erica, an accountant, notices suspicious accounting practices at the firm where she is employed. She wants to report the unethical behavior to authorities but is worried that she might be harassed or demoted as a result. Which law was passed to protect Erica in this situation? A) Federal Contract Protection Act B) Procurement Integrity Act C) Taft-Hartley ActD) Sarbanes-Oxley Act Answer: DExplanation: D) The Sarbanes-Oxley Act contains broad employee whistle-blower protections that subject corporations and their managerial personnel to significant civil and criminal penalties for retaliating, harassing, or discriminating against employees who report suspected corporate wrongdoing.

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40) John provides information to the SEC about conduct by his employer that he believes constitutes securities fraud. Which law most likely protects John from being demoted for his actions?

A) Federal Contract Protection Act B) Procurement Integrity Act C) Sarbanes-Oxley Act D) Taft-Hartley Act Answer: CExplanation: C) The Sarbanes-Oxley Act states that management may not discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee protected by the Act. It protects any employee who lawfully provides information to governmental authorities concerning conduct he or she reasonably believes constitutes mail, wire, or securities fraud; violations of any rule or regulation issued by the SEC; or violations of any other federal law relating to fraud against shareholders.

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41) Which 2003 Supreme Court case upheld Sarbanes-Oxley's whistleblower-protection rule?A) Dothard v Rawlingson B) Bechtel v Competitive Technologies Inc. C) O'Connor v Consolidated Coin Caterers Corp. D) Grutter v Bollinger Answer: BExplanation: B) In the 2003 Bechtel v Competitive Technologies Inc. Supreme Court case involving wrongful termination under Sarbanes–Oxley's whistle-blower-protection rule, the Court ruled that the company violated the Act by firing two employees and ordered them reinstated. They were fired because during a meeting they had raised concerns about the company's decision not to report, on its SEC filing, an act they thought should have been disclosed.

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42) The Supreme Court ruling in Bechtel v Competitive Technologies Inc. upheld which federal law? A) McCarran-Ferguson ActB) Sarbanes-Oxley Act C) Davis-Bacon ActD) Taft-Hartley ActAnswer: BExplanation: B) In the 2003 Bechtel v Competitive Technologies Inc. Supreme Court case involving wrongful termination under Sarbanes–Oxley's whistle-blower-protection rule, the Court ruled that the company violated the Act by firing two employees and ordered them reinstated. They were fired because during a meeting they had raised concerns about the company's decision not to report, on its SEC filing, an act they thought should have been disclosed.

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43) According to the Sarbanes-Oxley Act, any SEC reporting bank that does not have a code of ethics must ________.A) submit a report to Congress B) provide an explanationC) pay a significant fine D) develop an ethics code Answer: BExplanation: B) Sarbanes-Oxley requires publicly traded companies to disclose whether or not they have adopted a code of ethics for senior officers. The Act does not require SEC reporting banks and bank-holding companies to have a code of ethics, but if an SEC reporting company does not have one, it must explain why.

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44) Which of the following is NOT required by the Sarbanes-Oxley Act? A) Publicly traded firms must disclose whether they have a code of ethics for top executives.B) Publicly traded firms must not discharge employees who report ethical abuses. C) Bank-holding companies and SEC reporting banks must have codes of ethics.D) Corporations must not provide financial loans to executives or directors.Answer: CExplanation: C) The Sarbanes-Oxley Act does not require SEC reporting banks and bank-holding companies to have a code of ethics. It requires publicly traded companies to disclose whether or not they have adopted a code of ethics for senior officers. The Act states that management may not discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee protected by the Act. The law prohibits loans to executives and directors.

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45) Executives and managers at ABC Enterprises actively encourage a strong ethical culture at the firm. Which of the following would be the most likely result of the firm's actions? A) increased employee interest in development programsB) frequent use of human resource information systemsC) changes in corporate communication methodsD) improvements in organizational performanceAnswer: DExplanation: D) By fostering a strong ethical culture, firms are better able to gain the confidence and loyalty of their employees and other stakeholders, which can result in reduced financial, legal, and reputation risks, as well as improvements in organizational performance.

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46) Which term refers to a statement of the values adopted by the company, its employees and its directors? A) code of ethics B) ethical policies

C) vision statementD) code of conductAnswer: AExplanation: A) The code of ethics is a statement of the values adopted by the company, its employees, and its directors, and sets the official tone of top management regarding expected behavior. A code of conduct tells employees what the rules of conduct are.The code of ethics helps employees know what to do when there is not a rule for something.

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47) Julia works as a production supervisor, and she believes one of her subordinates is drinking during his lunch break. Julia's employer does not have a specific rule regarding the subordinate's behavior. Which of the following would most likely assist Julia with her problem in this situation?A) corporate code of ethicsB) corporate vision statementC) corporate code of conductD) federal legislationAnswer: AExplanation: A) A distinction needs to be made between a code of conduct and a code of ethics; the former should tell employees what the rules of conduct are. The code of ethics helps employees know what to do when there is not a rule for something.

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48) Lincoln Enterprises recently fired two employees who were caught stealing tools from the firm's warehouse. As a result, the CEO of Lincoln wants to strengthen the firm's ethical culture and prevent future violations by redesigning the firm's ethics program. Which of the following questions is LEAST relevant when developing Lincoln's new ethics program? A) What behavior is expected of Lincoln employees?B) What is the opinion of stakeholder's regarding Lincoln's ethics?C) How are ethical situations communicated and resolved at Lincoln?D) What is the process for Lincoln establishing a corporate giving program?Answer: DExplanation: D) Corporate giving programs are types of CSR programs and are less relevant to how the firm re-designs its ethics program. The firm should review the expected behavior of employees, the thoughts of stakeholders, and the current procedures for handling ethical problems.

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49) Which of the following is NOT a major provision in the SHRM code of ethics? A) professional responsibility B) cultural understanding C) professional development D) fairness and justiceAnswer: BExplanation: B) Major provisions in the SHRM code of ethics include professional responsibility, professional development, ethical leadership, fairness and justice, conflicts of interest, and use of information. Cultural understanding is not a provision in the SHRM code of ethics.

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50) Vision Technologies wants to gain the confidence of employees and customers by developing a strong ethical culture. Which of the following methods would be the best way for the firm's HR department to accomplish this goal? A) placing the code of ethics on the firm's intranetB) posting the code of ethics in the breakroomC) providing ethics training to employeesD) having employees sign ethics contractsAnswer: CExplanation: C) To build and sustain an ethical culture, organizations need a comprehensive framework that encompasses communication of behavior expectations, training on ethics and compliance issues, stakeholder input, resolution of reported matters, and analysis of the entire ethics program. Posting a code of ethics online or in a breakroom is less likely to be effective. Having employees sign ethics contracts is helpful but less effective than providing training.

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51) A code of ethics establishes the ________ that the organization lives by. A) policies B) procedures C) valuesD) technologiesAnswer: CExplanation: C) The code of ethics is a statement of the values adopted by the company, its employees, and its directors, and sets the official tone of top management regarding expected behavior.

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52) Riley Manufacturing recently developed a code of ethics. Which of the following topics is most likely covered in the document? A) business conduct B) fair competition

C) HR issues D) all of the above Answer: DExplanation: D) Topics typically covered in a code of ethics might be business conduct, fair competition, and workplace and HR issues.

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53) According to Walmart's code of ethics, Edward, an employee in the sales department, cannot accept gifts from suppliers because such actions would be a ________. A) conflict of interest B) double standardC) regulatory breachD) discriminatory actAnswer: AExplanation: A) Firms involving purchasing and sales typically establish in a code of ethics that accepting gifts from suppliers constitutes a conflict of interest. At Walmart, it is considered unethical to accept gifts from suppliers. Gifts are either destroyed or given to charity.

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54) In order to maintain the importance of a code of ethics to employees, large firms frequently ________.A) write a code of conductB) send a memo to all employees C) appoint an ethics officer D) put the ethical code on the intranet Answer: CExplanation: C) To keep the code on the front burner for employees, larger firms appoint an ethics officer. The ethics officer is the point person in guiding everyone in the company toward ethical actions. This individual should be a person who understands the work environment.

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55) At Tyson Foods, Lily serves as the point person who guides everyone in the firm towards ethical actions. Lily most likely serves as the firm's ________. A) chief financial officerB) HR managerC) ethics officerD) safety officerAnswer: CExplanation: C) The ethics officer is the point person in guiding everyone in the company toward ethical actions. This individual should be a person who understands the work environment.

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56) Which law prohibits bribes of foreign government officials or business executives? A) Federal and Foreign Bribery Act B) Foreign Corrupt Practices Act C) Corruption Practices Act D) Sarbanes-Oxley Act Answer: BExplanation: B) U.S. companies must comply with the Foreign Corrupt Practices Act, which prohibits bribes of foreign government officials or business executives. Obviously, the law does not prevent foreign competitors from bribing government or business officials to get business, and such practices are common in many countries.

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57) Which quality is emphasized more than in the past for the Baldrige National Quality Award?A) interpersonal skills B) leadership ethicsC) personal motivation D) community serviceAnswer: BExplanation: B) Even the criteria for winning the Baldrige National Quality Award have changed, and an increased emphasis on ethics in leadership is now stressed. The criteria say senior leaders should serve as role models for the rest of their organizations. Baldrige applicants are asked questions about how senior leaders create an environment that fosters and requires legal and ethical behavior, and how the leaders address governance matters such as fiscal accountability and independence in audits.

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58) According to the text, which firm has implemented one of the nation's most comprehensive ethics programs? A) Target B) Walgreens C) State Farm InsuranceD) Adolph Coors Company Answer: DExplanation: D) The Adolph Coors Company of Golden, Colorado, has developed one of the nation's most comprehensive ethics programs. The company offers its employees considerable resources, including interactive online courses, ethics leadership training, a decision map, a highly detailed set of policies, and a help line.

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59) Doug works at the Adolph Coors Company, and he is currently facing an ethical dilemma related to a hiring decision. Which of the following ethics tools is LEAST likely to be offered by Doug's firm? A) appraisalsB) decision mapsC) detailed policiesD) interactive online coursesAnswer: AExplanation: A) The Adolph Coors Company of Golden, Colorado, has developed one of the nation's most comprehensive ethics programs. The company offers its employees considerable resources, including interactive online courses, ethics leadership training, a decision map, a highly detailed set of policies, and a help line.

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60) Which term refers to the application of ethical principles to human resource relationships and activities? A) morals B) social ethics C) business ethics D) human resource ethics Answer: DExplanation: D) Human resource ethics is the application of ethical principles to HR relationships and activities. It is vitally important that those who work in HRM understand those practices that are unacceptable and ensure that organizational members behave ethically in dealing with others.

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61) Angie, an HR manager, has been given the task of strengthening the ethical culture at her firm. Which of the following activities would be most beneficial? A) e-mailing ethics codes to all employees B) posting ethics code posters in the hallways

C) writing a memo about ethics to top executivesD) discussing ethics during performance appraisals Answer: DExplanation: D) HR professionals can help foster an ethical culture, but that means more than just hanging the ethics codes posters on walls. Instead, since the HR professionals' primary job is dealing with people, they must help to instill ethical practices into the corporate culture. Those values must be clearly communicated to all employees, early and often, beginning with the interviewing process and reinforced during performance reviews.

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62) Lincoln Enterprises recently fired two employees who were caught stealing tools from the firm's warehouse. As a result, the CEO of Lincoln wants to strengthen the firm's ethical culture and prevent future violations by requiring employees to participate in ethics training programs. Which of the following best supports the CEO's idea?A) Lincoln Enterprises desires the respect of citizens in the local community. B) The social contract developed by Lincoln Enterprises addresses employee concerns. C) HR managers at Lincoln Enterprises provide new employees with policy handbooks. D) The Sarbanes-Oxley Act requires Lincoln Enterprises to provide ethics training courses.Answer: AExplanation: A) Companies that consistently rank high on the lists of best corporate citizens tend to make ethics training part of a company-wide initiative to promote integrity. If Lincoln wants the respect of the community, then ethics training would be beneficial. Social contracts primarily relate to corporate social responsibility rather than ethics programs. Providing ethics information in a handbooks is typically insufficient. The FSGO required ethics training programs, not the Sarbanes-Oxley Act.

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63) Lincoln Enterprises recently fired two employees who were caught stealing tools from the firm's warehouse. As a result, the CEO of Lincoln wants to strengthen the firm's ethical culture and prevent future violations by requiring employees to participate in ethics training programs. Which of the following most likely undermines the CEO's idea?A) Middle managers at Lincoln regularly receive reports of questionable employee behavior.B) Since Lincoln Enterprises is a global firm, the training program would need to be translated. C) Senior managers at Lincoln indicate that valuable work time would be lost with a training program. D) Competitors of Lincoln Enterprises provide regular ethics training programs to managers and employees.Answer: CExplanation: C) Ethics training should begin at the top and be driven down the organization by senior management. If senior managers at Lincoln fail to see the value of an ethics program, then the program will not be effective because top management sets the ethical tone. Middle managers are the ones who will likely be the first to receive reports of unethical behavior, so if Lincoln's middle managers are hearing about issues then the training would be useful. The global nature of the firm and the firm's competition are less relevant issues.

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64) According to research, what characteristic is most frequently shared by firms that receive high rankings for corporate social responsibility? A) encouraging employees to participate in civic activitiesB) requiring managers to understand ethics lawsC) promoting integrity through ethics trainingD) linking compensation to ethical behaviorsAnswer: CExplanation: C) Companies that consistently rank high on the lists of best corporate citizens tend to make ethics training part of a company-wide initiative to promote integrity. Only a small percentage of firms link pay to ethics.

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65) The primary purpose of an ethics audit is to ________. A) ensure that EEO policies are being implementedB) supplement a company's code of ethicsC) evaluate a company's ethical cultureD) interview ethics training candidatesAnswer: CExplanation: C) An ethics audit is simply a systematic, independent, and documented process for obtaining evidence regarding the status of an organization's ethical culture. It is taking a closer look at a firm's ethical culture instead of just allowing it to remain unexamined.

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66) Harvey Electronics has used a number of methods to create an ethical culture that both employees and customers appreciate. What is the most effective way for the firm to sustain its ethical culture? A) asking job candidates ethical questionsB) implementing an ethics audit regularlyC) publishing the firm's code of ethics periodicallyD) ensuring that new employees receive ethics trainingAnswer: BExplanation: B) One way to create and sustain an ethical culture is to audit your ethics, much as you might audit your finances each year. An ethics audit is simply a systematic, independent, and documented process for obtaining evidence regarding the status of an organization's ethical culture. It is taking a closer look at a firm's ethical culture instead of just allowing it to remain unexamined.

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67) A profession is characterized by the existence of a common body of knowledge and a ________.A) procedure for certifying members B) specified educational requirementC) requirement for periodic re-accreditationD) functional procedure for designated activitiesAnswer: AExplanation: A) A profession is a vocation characterized by the existence of a common body of knowledge and a procedure for certifying members. Performance standards are established by members of the profession rather than by outsiders.

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68) Most professions are characterized by all of the following qualities EXCEPT ________. A) existence of a common body of knowledgeB) established procedures for certifying membersC) representative organizations for sharing ideas

D) standards set by external representativesAnswer: DExplanation: D) A profession is a vocation characterized by the existence of a common body of knowledge and a procedure for certifying members. Most professions also have effective representative organizations that permit members to exchange ideas of mutual concern. Performance standards are established by members of the profession rather than by outsiders.

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69) Which of the following is a prominent professional organization in the field of human resources? A) ASTD B) SHRM C) WorldatWork D) all of the above Answer: DExplanation: D) Professional characteristics apply to the field of human resources, and several well known organizations serve the profession. Among the more prominent are the Society forHuman Resource Management, the Human Resource Certification Institute (HRCI), the American Society for Training and Development, and WorldatWork.

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70) What is the largest national professional organization for individuals involved in all areas of human resource management? A) American Society for Training and DevelopmentB) Society for Human Resource ManagementC) American Compensation AssociationD) WorldatWork Answer: BExplanation: B) The largest national professional organization for individuals involved in all areas of human resource management is the Society for Human Resource Management (SHRM). American Society for Training and Development (ASTD) is the world's largest association dedicated to workplace learning and performance professionals.

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71) Which organization's basic goals include defining, maintaining, and improving standards of excellence in the practice of human resource management? A) ASTD B) SHRM C) IAPW D) WorldatWork Answer: BExplanation: B) The basic goals of SHRM include defining, maintaining, and improving standards of excellence in the practice of human resource management. Both ASTD and WorldatWork focus on training and certification rather than standards.

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72) Cody has earned all three certifications through the HRCI. Which of the following is NOT one of Cody's certifications? A) Professional in Human ResourcesB) Global Professional in Human Resources C) Senior Professional in Human ResourcesD) National Professional in Human ResourcesAnswer: DExplanation: D) The Human Resource Certification Institute (HRCI) was founded to recognize human resource professionals through a certification program. HRCI offers three certifications for HR professionals—PHR (Professional in Human Resources), SPHR (Senior Professional in Human Resources), and GPHR (Global Professional in Human Resources).

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73) Which organization offers HR professionals the opportunity to earn PHR, SPHR, and GPHR certification?A) SHRMB) ASTDC) HRCID) WorldatWorkAnswer: CExplanation: C) The Human Resource Certification Institute (HRCI) was founded to recognize human resource professionals through a certification program. HRCI offers three certifications for HR professionals—PHR (Professional in Human Resources), SPHR (Senior Professional in Human Resources), and GPHR (Global Professional in Human Resources). WorldatWork offers CCP, CBP, GRP, and WLCP certifications.

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74) What is the world's largest association dedicated to workplace learning and performance professionals? A) ASTD B) SHRM

C) IPMA D) WorldatWork Answer: AExplanation: A) American Society for Training and Development (ASTD) is the world's largest association dedicated to workplace learning and performance professionals. The largest national professional organization for individuals involved in all areas of human resource management is the Society for Human Resource Management (SHRM).

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75) Kara, an HR professional, recently earned the CPLP credential. Through which organization did Kara obtain this credential? A) SHRMB) ASTDC) HRCID) WorldatWorkAnswer: BExplanation: B) The ASTD Certification Institute has the Certified Professional in Learning and Performance (CPLP) credential to provide a way for workplace learning and performance professionals to prove their value to employers and to be confident about their knowledge of the field.

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76) Steve works as an HR generalist at FedEx, but he would like to become a benefits specialist. Which organization would enable Steve to earn the designation of Certified Benefits Professional? A) ASTDB) SHRMC) HRCID) WorldatWorkAnswer: DExplanation: D) WorldatWork Society of Certified Professionals is an organization that certifies human resource professionals in the disciplines of compensation, benefits, and work–life. Steve would earn the designation of Certified Benefits Professional (CBP) through WorldatWork.

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77) Which of the following is NOT one of the triple bottom line factors of corporate social responsibility?A) societyB) environmentC) economyD) cultureAnswer: DExplanation: D) Companies such as Nike, Kodak, and Intel have demonstrated the ability to

manage the "triple bottom line" of social responsibility (society, environment, and economy). Culture is not one of the factors.

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78) The implied, enforced, or felt obligation of managers, acting in their official capacities, to serve or protect the interests of groups other than themselves is known as ________.A) human resource ethicsB) environmental moralityC) corporate social responsibilityD) business centered moralityAnswer: CExplanation: C) Corporate social responsibility (CSR) is the implied, enforced, or felt obligation of managers, acting in their official capacity, to serve or protect the interests of groups other than themselves. When a corporation behaves as if it has a conscience, it is said to be socially responsible.

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79) When a corporation behaves as if it has a conscience, it is said to be ________.A) globally ethicalB) socially responsibleC) participativeD) charitableAnswer: BExplanation: B) When a corporation behaves as if it has a conscience, it is said to be socially responsible. Corporate social responsibility (CSR) is the implied, enforced, or felt obligation of managers, acting in their official capacity, to serve or protect the interests of groups other than themselves.

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80) Which term best describes how a company as a whole behaves towards society? A) corporate social responsibility B) business ethics C) social morality D) equal opportunityAnswer: AExplanation: A) Corporate social responsibility (CSR) is the implied, enforced, or felt obligation of managers, acting in their official capacity, to serve or protect the interests of groups other than themselves. CSR considers the overall influence of corporations on society at large and goes beyond the interests of shareholders. It is how a company as a whole behaves toward society.

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81) Which of the following companies announced that it would double its green technology research expenditures and "make money doing it"? A) General Electric B) Burger KingC) Procter & GambleD) Hewlett-Packard Answer: AExplanation: A) When GE CEO Jeffrey Immelt announced that the company would double its spending on green technology research, it was no grand attempt to save the planet; it was an example of astute business strategy. Immelt said, "We plan to make money doing it."

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82) Which HR practice would most likely be improved through a firm's efforts at corporate social responsibility? A) benefitsB) recruitingC) compensationD) succession planningAnswer: BExplanation: B) CSR has impacted the recruiting process for many firms. Current generations of workers are interested in working for firms that stress CSR.

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83) Who usually determines a corporation's approach to social responsibility? A) government B) stockholders C) top executives D) board of directors Answer: CExplanation: C) An organization's top executives usually determine a corporation's approach to social responsibility. For example, when McDonald's began, it was Ray Kroc's philosophy to be a community-based business. His philosophy from the very beginning was to give back to the communities that McDonald's served.

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84) Which of the following statements is true based on an SHRM survey? A) Most HR professionals are directly involved in CSR activities.B) Most HR professionals lack the skills and interest to participate in CSR activities. C) Most HR professionals are completely responsible for developing CSR strategies.D) Most HR professionals are completely responsible for implementing CSR strategies.Answer: AExplanation: A) A survey by the Society for Human Resource Management found that approximately two-thirds of U.S. HR professionals are directly involved in CSR activities; 13 percent of HR professionals were mainly responsible for creating CSR strategy, and 23 percent were charged with implementing the strategy. The background, experience, and skills of HR professionals fit quite nicely into the profiles of individuals needed to develop and direct the CSR strategy.

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85) Which term refers to an individual or group whose interests are affected by organizational activities?A) stockholderB) organizational stakeholderC) corporate ownerD) corporate shareholderAnswer: BExplanation: B) Most organizations, whether profit or not-for-profit, have a large number of stakeholders. An organizational stakeholder is an individual or group whose interests are affected by organizational activities.

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86) What percent of U.S. companies reported donating money to community groups or charitable causes?A) 94%B) 74%C) 54%D) 34%Answer: AExplanation: A) Approximately 94% of U.S. companies said they had donated money to community groups or charitable causes. Some authorities favor this trend and suggest that members of the public should be placed on major corporate boards to protect the interests of non-owner stakeholders.

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87) Which of the following is increasingly holding corporations accountable for putting the interest of stakeholders first? A) state regulatory agenciesB) local governmentsC) society D) SECAnswer: CExplanation: C) Society is increasingly holding corporate boards of directors and management accountable for putting the interest of stakeholders in front of the needs of communities. Local, state, and federal agencies are less likely to require firms to be socially responsible.

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88) Which term refers to the set of written and unwritten rules and assumptions about acceptable interrelationships among the various elements of society?A) social obligationB) social contractC) social norm D) social responsibilityAnswer: BExplanation: B) One approach to stakeholder analysis involves consideration of the social contract. The social contract is the set of written and unwritten rules and assumptions about acceptable interrelationships among the various elements of society. Much of the social contract is embedded in the customs of society.

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89) Most of a social contract stems from a society's ________. A) rules B) ethics C) customs D) government Answer: CExplanation: C) The social contract is the set of written and unwritten rules and assumptions about acceptable interrelationships among the various elements of society. Much of the social contract is embedded in the customs of society.

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90) Which of the following is expected from the quid pro quo nature of social contracts? A) a stakeholder analysisB) a coordinated code of ethicsC) an exchange of informationD) an appreciation of differencesAnswer: CExplanation: C) Like a legal contract, the social contract often involves a quid pro quo (something exchanged for something). One party to the contract behaves in a certain way and expects a certain pattern of behavior from the other. For example, a relationship of trust may have developed between a manufacturer and the community in which it operates. Because of this, each will inform the other well in advance of any planned action that might cause harm, such as the phasing down of a plant's operations by the company.

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91) With a social contract, an organization primarily has relationships with all of the following EXCEPT ________. A) individuals B) government C) other organizations D) corporate shareholders Answer: DExplanation: D) The social contract concerns relationships with individuals, government, other organizations, and society in general. Social contracts often emerge when firms focus more on the interests of shareholders than of outsiders.

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92) In the traditional view of social responsibility, how did business best meet its obligations? A) pursuit of society's interests B) pursuit of government's interests C) pursuit of its own interestsD) pursuit of employees' interestsAnswer: CExplanation: C) In the traditional view of social responsibility, businesses best meet obligations through pursuit of their own interests. Some companies view the social contract mainly in terms of the company's interests.

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93) Traditionally, a firm's obligation to society in general has been to produce and distribute goods in return for ________.A) government protectionsB) financial profitsC) charitable contributionsD) societal praisesAnswer: BExplanation: B) The traditional view of business responsibility has been that businesses should produce and distribute goods and services in return for a profit. Businesses have performed this function effectively, giving the United States one of the highest overall standards of living in the world.

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94) Businesses operate by public consent with the basic purpose of satisfying the needs of ________.A) governmentB) societyC) workersD) stockholdersAnswer: BExplanation: B) Businesses operate by public consent with the basic purpose of satisfying the needs of society. As those needs are more fully met, society demands more of all of its institutions, particularly large business firms.

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95) Which term refers to a systematic assessment of a company's activities in terms of social impact?A) managerial appraisal B) social auditC) social responsibility metricD) ethics auditAnswer: BExplanation: B) A social audit is a systematic assessment of a company's activities in terms of its social impact. To overcome the negative publicity of corporate misdeeds and to restore trust, businesses are now conducting audits of their social responsibility activities, not just financial audits.

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96) Which of the following is NOT a topic included in the social responsibility audit focus? A) open communication B) treatment of employees C) leadership D) management structure Answer: DExplanation: D) A social audit is a systematic assessment of a company's activities in terms of its social impact. Some of the topics included in the audit focus on core values such as social responsibility, open communication, treatment of employees, confidentiality, and leadership but not management structure.

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97) Which of the following is NOT one of the types of social audits currently being utilized? A) simple inventory of activities B) analysis of social and cultural norms C) compilation of socially relevant expenditures D) determination of social impact Answer: BExplanation: B) An increasing number of companies, as well as public and voluntary sector organizations, are trying to assess their social performance systematically. Three possible types of social audits are currently being used: (1) simple inventory of activities, (2) compilation of socially relevant expenditures, and (3) determination of social impact.

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98) Which of the following would NOT be considered a socially-oriented activity for a firm? A) ADA adherenceB) minority trainingC) corporate giving D) pollution controlAnswer: AExplanation: A) Socially oriented activities undertaken by the firm might include minority employment and training, support of minority enterprises, pollution control, and corporate giving. Complying with the ADA is legally required.

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99) Viking Glass Corporation wants to establish and implement a corporate social responsibility (CSR) program. What is the first step that needs to occur in this process?A) reviewing the company's current CSR activitiesB) assessing shareholders' expectations and perspectives C) assigning a person responsibility for the programD) writing a policy statement to address community issues Answer: CExplanation: C) The first step recommended for establishing and implementing a CSR program involves assigning a person responsibility for the program and developing a structure for the program. Reviewing the firm's current CSR activities, determining shareholders' expectations, and writing policy statements are steps that occur later in the process.

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100) Emma has been assigned the responsibility of establishing and implementing a CSR program at her firm. She has already developed the program's structure. What should be her next step?A) reviewing what the company is presently doing with regard to CSR B) asking shareholders about their expectations for a CSR programC) writing a policy statement to address community issues D) establishing two-year performance indicatorsAnswer: AExplanation: A) The next step for Emma is to review the firm's current CSR activities. After that she should talk to shareholders, write a policy statement, and establish performance targets.

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True/False and Essay Questions

1) A recent survey by SHRM found that approximately two-thirds of U.S. HR professionals are directly involved in CSR activities.Answer: TRUEExplanation: A survey by the Society for Human Resource Management found that approximately two-thirds of U.S. HR professionals are directly involved in CSR activities; 13 percent of HR professionals were mainly responsible for creating CSR strategy, and 23 percent were charged with implementing the strategy.

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2) Corporate social responsibility is the discipline dealing with what is good and bad, or right and wrong, or with moral duty and obligation. Answer: FALSEExplanation: Ethics is the discipline dealing with what is good and bad, or right and wrong, or with moral duty and obligation. Corporate social responsibility (CSR) is the implied, enforced, or felt obligation of managers, acting in their official capacity, to serve or protect the interests of groups other than themselves.

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3) Since Enron, ethical abuses are no longer a concern within corporate America. Answer: FALSEExplanation: Although Enron was a significant example of unethical actions, more recent situations have occurred, such as the Ponzi scheme of Bernie Madoff.

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4) Surveys indicate that 25% of investors would move their account if they discovered the company was involved in unethical behavior. Answer: FALSEExplanation: In one survey, 67 percent of investors said they would move their account if they discovered the company was involved in unethical behavior.

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5) Most of the 500 largest corporations in the U.S. now have a code of ethics. Answer: TRUEExplanation: Most of the 500 largest corporations in the United States now have a code of ethics, which encompasses written conduct standards, internal education, and formal agreements on industry standards, ethics offices, social accounting, and social projects.

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6) Unethical practices are limited to Wall Street because of the money and pressure involved.Answer: FALSEExplanation: Business ethics scandals continue to be headline news today. Lying on résumés, obstruction of justice, destruction of records, stock price manipulation, and cutting corners to meet Wall Street's expectation. However, business is not alone. There is virtually no occupation that has not had its own painful ethical crises in recent years.

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7) Corporate social responsibility is about deciding whether an action is good or bad and what to do about it if it is bad. Answer: FALSEExplanation: Ethics is about deciding whether an action is good or bad and what to do about it if it is bad. Ethics is a philosophical discipline that describes and directs moral conduct. Corporate social responsibility (CSR) is the implied, enforced, or felt obligation of managers, acting in their official capacity, to serve or protect the interests of groups other than themselves.

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8) Firms such as Charles Schwab, Cisco Systems, and Southwest Airlines serve as models of ethical organizations. Answer: TRUEExplanation: Organizations inside and outside of banking have been successful by being honest and transparent. Companies such as Charles Schwab, Cisco Systems, Southwest Airlines, and Costco Wholesale have come through the recent financial crisis with flying colors.

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9) According to the model of ethics, advice from friends, Biblical selections, and laws serve as sources of ethical guidance. Answer: TRUEExplanation: People use a number of sources to determine what is right or wrong, good or bad, moral or immoral. These sources include the Bible and other holy books, the inner conscience, friends, family members, and laws.

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10) The strength of the relationship between what an individual or an organization believes to be moral and correct and what available sources of guidance suggest is morally correct is Type II ethics. Answer: FALSEExplanation: The strength of the relationship between what an individual or an organization believes to be moral and correct and what available sources of guidance suggest is morally correct is Type I ethics. Type II ethics is the strength of the relationship between what one believes and how one behaves.

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11) A store manager believes it is acceptable to not hire people with disabilities despite the fact that almost everyone condemns this practice. The store manager is unethical in a Type I sense. Answer: TRUEExplanation: The strength of the relationship between what an individual or an organization believes to be moral and correct and what available sources of guidance suggest is morally correct is Type I ethics. In this example, the manager is unethical based on Type I ethics.

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12) Type I ethics is the strength of the relationship between what one believes and how one behaves. Answer: FALSEExplanation: Type II ethics is the strength of the relationship between what one believes and how one behaves. The strength of the relationship between what an individual or an organization believes to be moral and correct and what available sources of guidance suggest is morally correct is Type I ethics.

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13) A store manager who knows that it is wrong to discriminate against minorities yet refuses to hire minorities anyway is exhibiting behavior that is unethical in a Type II sense.Answer: TRUEExplanation: Type II ethics is the strength of the relationship between what one believes and how one behaves. For example, if a manager knows that it is wrong to discriminate, but does so anyway, the manager is being unethical in a Type II sense.

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14) The Procurement Integrity Act of 1988 was passed after reports of military contracts for $500 toilet seats and $5,000 hammers. Answer: TRUEExplanation: The Procurement Integrity Act of 1988, prohibits the release of source selection and contractor bid or proposal information. The Act was passed after there were reports of military contracts for $500 toilet seats and $5,000 hammers.

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15) According to the Procurement Integrity Act, if a firm that has an ethics program in place is found guilty of misconduct, the firm will receive a reduced punishment. Answer: FALSEExplanation: The Federal Sentencing Guidelines for Organizations Act promised softer punishments for wayward corporations that already had ethics programs in place. The Procurement Integrity Act of 1988, prohibits the release of source selection and contractor bid or proposal information.

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16) Enron never developed a code of ethics. Answer: FALSEExplanation: The Enron Code of Ethics was sixty-two pages long and had a foreword by Kenneth L. Lay, who was then the company's chairman saying "Enron's reputation finally

depends on its people, on you and me. Let's keep that reputation high." Page Ref: 27

17) The Corporate and Auditing Accountability, Responsibility and Transparency Act criminalized many corporate acts that were previously relegated to various regulatory structures and is known as the Sarbanes-Oxley Act.Answer: TRUEExplanation: The Corporate and Auditing Accountability, Responsibility, and Transparency Act of 2002 was passed to legislate business ethics. The act, also known as the Sarbanes-Oxley Act, criminalized many corporate acts that were previously relegated to various regulatory structures.

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18) The Federal Sentencing Guidelines for Organizations Act contains broad employee whistle-blower protections that subject corporations to penalties for retaliating against employees who report suspected corporate wrongdoing. Answer: FALSEExplanation: The Sarbanes-Oxley Act contains broad employee whistle-blower protections that subject corporations and their managerial personnel to significant civil and criminal penalties for retaliating, harassing, or discriminating against employees who report suspected corporate wrongdoing.

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19) The Sarbanes-Oxley Act was passed in response to reports of out-of-control military spending. Answer: FALSEExplanation: The Sarbanes––Oxley Act was passed to redress accounting and financial reporting abuses in light of corporate scandals rather than military spending.

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20) In the 2003 case Bechtel v Competitive Technologies Inc., the Supreme Court overturned Sarbanes-Oxley's whistleblower-protection rule.Answer: FALSEExplanation: Bechtel v Competitive Technologies Inc. involved wrongful termination under Sarbanes–Oxley's whistle-blower-protection rule. The Court ruled that the company violated the Act by firing two employees and ordered them reinstated, so the whistleblower protection rule was upheld.

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21) The Corporate and Auditing Accountability, Responsibility and Transparency Act requires SEC reporting banks and bank holding companies to have a code of ethics.Answer: FALSEExplanation: The Corporate and Auditing Accountability, Responsibility and Transparency Act does not require SEC reporting banks and bank holding companies to have a code of ethics, but if an SEC reporting company does not have one, it must explain why.

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22) According to research studies, unethical companies financially outperform ethical companies, although ethical companies are more successful with recruiting.Answer: FALSEExplanation: Dov Seidman, a management guru who advocates corporate virtue to many companies believes that companies that "outbehave" their competitors ethically will generally outperform them financially. Further, the ethical—or unethical—behavior of an organization is a critical factor for new college graduates seeking jobs, according to the National Association of Colleges and Employers.

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23) A code of ethics establishes the rules by which the organization lives and becomes part of the organization's corporate culture.Answer: TRUEExplanation: The code of ethics is a statement of the values adopted by the company, its employees, and its directors, and sets the official tone of top management regarding expected behavior.

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24) Surveys indicate that most companies link employee bonuses to ethical performance. Answer: FALSEExplanation: A survey of 358 compliance and ethics professionals by the Society of corporate Compliance and Ethics (SCCE) and the Health Care Compliance Association found that only a few companies have made ethics and compliance a process for determining how employees are compensated, and only about one company in six ties employee bonuses and incentives to ethical performance.

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25) According to the FSGO, firms must provide ethical training to employees.Answer: TRUEExplanation: The Federal Sentencing Guidelines for Organizations Act outlined an effective ethics training program and explained the seven minimum requirements for an effective program to prevent and detect violations. The fourth requirement stated, "Educate employees in the company's standards and procedures through publications and training."

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26) Ethics training for global firms requires accurate translations as well as localization. Answer: TRUEExplanation: Ethics training for global organizations is more complicated than preparing the training for U.S. employees. Experts say that localization is as important as the accuracy of the translation process. Learners need to be able to connect in a way that is believable to them.

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27) The primary goal of the Society for Human Resource Management is to recognize HR professionals through a certification program that offers three different certificates. Answer: FALSEExplanation: The basic goals of the SHRM include defining, maintaining, and improving standards of excellence in the practice of human resource management. The Human Resource Certification Institute recognizes human resource professionals through a certification program. HRCI offers three certifications for HR professionals—PHR (Professional in Human Resources), SPHR (Senior Professional in Human Resources), and GPHR (Global Professional in Human Resources).

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28) Corporate social responsibility (CSR) is the implied, enforced, or felt obligation of managers, acting in their official capacity, to serve or protect the interests of groups other than themselves. Answer: TRUEExplanation: Corporate social responsibility (CSR) is the implied, enforced, or felt obligation of managers, acting in their official capacity, to serve or protect the interests of groups other than themselves. When a corporation behaves as if it has a conscience, it is said to be socially responsible.

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29) Many organizations today refer to the "triple bottom line" suggesting that attention is now being paid to social and environmental concerns as well as economic issues. Answer: TRUEExplanation: The "triple bottom line" refers to three factors of corporate social responsibility–society, environment, and economy. Firms that demonstrate the ability to manage all three factors represent the top five percent of socially responsible companies.

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30) Procter & Gamble has served as a leader in corporate social responsibility by developing and implementing environment-protection technology and encourage employees to participate in civic activities. Answer: TRUEExplanation: Procter & Gamble has long believed it has a responsibility for the long-term benefit of society as well as the company. Over the years, P&G has pursued programs to strengthen U.S. education, to encourage employment opportunities for minorities and women, to develop and implement environment-protection technology, and to encourage employee involvement in civic activities and the political process.

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31) An organization's middle managers usually initiate a corporation's approach to social responsibility.Answer: FALSEExplanation: Usually, top executives in a firm determine the organization's approach to CSR. Lower level managers are more active in implementing policies.

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32) In most firms, corporate social responsibility activities are implemented by the HR department, although the marketing and public relations departments would be more suitable for the task. Answer: FALSEExplanation: Surveys indicate that 23% of HR professionals are charged with implementing their firm's CSR strategy. In most cases, the responsibility for CSR falls to the public relations and marketing departments, although the background, experience, and skills of HR professionals fit quite nicely into the profiles of individuals needed to develop and direct the CSR strategy.

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33) Employees, customers, local governments, and suppliers are organizational stakeholders for most firms.Answer: TRUEExplanation: An organizational stakeholder is an individual or group whose interests are affected by organizational activities, such as employees, customers, governments, and suppliers.

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34) The stakeholder contract is the set of written and unwritten rules and assumptions about acceptable interrelationships among the various elements of society. Answer: FALSEExplanation: One approach to stakeholder analysis involves consideration of the social contract. The social contract is the set of written and unwritten rules and assumptions about acceptable interrelationships among the various elements of society.

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35) Like a legal contract, the social contract often involves a quid pro quo (something exchanged for something). Answer: TRUEExplanation: The social contract is the set of written and unwritten rules and assumptions about acceptable interrelationships among the various elements of society. Like a legal contract, the social contract often involves a quid pro quo (something exchanged for something). One party to the contract behaves in a certain way and expects a certain pattern of behavior from the other.

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36) The social contract deals with relationships between an organization and individuals, government, other organizations, and society in general. Answer: TRUEExplanation: The social contract is the set of written and unwritten rules and assumptions about acceptable interrelationships among the various elements of society. The social contract concerns relationships with individuals, government, other organizations, and society in general.

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37) A firm's competitors are part of the firm's social contract. Answer: TRUEExplanation: Managers must be concerned with relationships involving other organizations, both organizations that are like their own, such as competitors, and very different ones. Commercial businesses are expected to compete with one another on an honorable basis, without subterfuge or reckless unconcern for their mutual rights.

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38) Compiling socially relevant expenditures is a method of developing a social contract. Answer: FALSEExplanation: A social audit is a systematic assessment of a company's activities in terms of its social impact, while a social contract is a set of assumptions about acceptable interrelationships among elements of society. Three possible types of social audits are currently being used: (1) simple inventory of activities, (2) compilation of socially relevant expenditures, and (3) determination of social impact.

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39) A social contract is a systematic assessment of a company's activities in terms of its social impact. Answer: FALSEExplanation: A social audit is a systematic assessment of a company's activities in terms of its social impact, while a social contract is a set of assumptions about acceptable interrelationships among elements of society.

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40) The Global Compact was a United Nation's voluntary, anti-sweatshop initiative that attempted to improve international corporate social responsibility. Answer: TRUEExplanation: The United Nation's all-voluntary, anti-sweatshop initiative "Global Compact" de-listed 630 companies worldwide who had agreed to the principles of the compact but were found to be out of compliance.

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41) What is the difference between ethics and corporate social responsibility as each concept applies to corporations? Answer: Ethics is the discipline dealing with what is good and bad, or right and wrong, or with moral duty and obligation. Ethics is about deciding whether an action is good or bad and what to do about it if it is bad. Those in management make ethical (or unethical) decisions every day regarding hiring, safety, and compensation. Corporate social responsibility (CSR) is the implied, enforced, or felt obligation of managers, acting in their official capacity, to serve or protect the interests of groups other than themselves. When a corporation behaves as if it has a conscience, it is said to be socially responsible. CSR considers the overall influence of corporations on society at large and goes beyond the interests of shareholders. It is how a company as a whole behaves toward society.

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42) What government legislation has been passed to encourage ethical behavior by corporations? In your answer, provide recent examples of firms that have exhibited unethical behavior despite these laws.Answer: Much of the current legislation was passed because of business ethics breakdowns. There have been three attempts to legislate business ethics since the late 1980s. The first, the Procurement Integrity Act of 1988, prohibits the release of source selection and contractor bid or proposal information. The second attempt occurred with the passage of the 1992 Federal Sentencing Guidelines for Organizations Act (FSGO), which outlined an effective ethics training program and explained the seven minimum requirements for an effective program to prevent and detect violations. The third attempt at legislating business ethics was the Corporate and Auditing Accountability, Responsibility, and Transparency Act of 2002 (Sarbanes-Oxley Act), which criminalized many corporate acts that were previously relegated to various regulatory structures. The primary focus of the Sarbanes-Oxley Act is to redress accounting and financial reporting abuses in light of corporate scandals. Bernard Madoff swindled money from investors by promising quick, high returns with a $65 billion Ponzi scheme. Sky Capital was accused of bilking investors out of more than $140 million over the past decade. Then there is the $8 billion scheme orchestrated by Texas billionaire R. Allen Stanford. Companies that focused on short-term profits seemingly to the exclusion of everything else were the culprits of the 2008/10 financial crisis.

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43) How do firms benefit from a strong ethical culture? How can HR departments foster such cultures?Answer: By fostering a strong ethical culture, firms are better able to gain the confidence and loyalty of their employees and other stakeholders, which can result in reduced financial, legal, and reputation risks, as well as improvements in organizational performance. HR professionals can help foster an ethical culture, but that means more than just hanging the ethics codes posters on walls. Instead, since the HR professionals' primary job is dealing with people, they must help to instill ethical practices into the corporate culture. Those values must be clearly communicated to all employees, early and often, beginning with the interviewing process, reinforced during employee orientation, and regularly recognized during performance reviews, public ceremonies, celebrations, and awards.

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44) How can a firm implement a CSR program? Provide specific examples of CSR programs implemented by today's firms. Answer: The following steps are recommended for establishing and implementing a CSR program. First, a person should be assigned the responsibility for the program and a structure should be developed. Second, a review of what the company is currently doing with regard to CSR should be determined. Third, shareholders' expectations and perspectives are determined. Fourth, a policy statement is written covering CSR areas such as environmental, social, and community issues. Fifth, a set of corporate objectives and an action. plan to implement the policies should be developed. Sixth, company-wide quantitative and qualitative targets and key performance indicators over a two- to five-year period, together with the necessary measurement, monitoring, and auditing mechanisms, should be created. Seventh, communicate to stakeholders and fund managers the direction of CSR for the company. Eighth, the progress of the CSR program should be determined. Finally, the progress of the CSR program should be reported. Numerous companies are also working toward becoming eco-friendly. For example, Target's waste-reduction efforts have cut waste by 70 percent. Home Depot attempts to make sure that wood and lumber sold in its stores come from sustainable forests. McDonald's has eliminated the use of containers made with ozone-depleting chlorofluorocarbons, cut down on the amount and type of packaging it uses, and implemented a program of purchasing goods made from recycled materials.

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45) In a brief essay, discuss the difficulties facing U.S. firms that implement ethics training programs and corporate social responsibility programs in global environments.Answer: Ethics training for global organizations is more complicated than preparing the training for U.S. employees. One must also train for the country in which the global company operates. Experts say, "Localization is as important as the accuracy of the translation process. Learners need to be able to connect in a way that is believable to them. Otherwise, you don't make that strong emotional connection that allows us to facilitate an emotional change."

The recession of 2008/10 had some global firms questioning the wisdom of being socially responsible. Experts wonder if global firms can continue experiencing the lowest possible production costs while still being in compliance with national laws and being socially responsible. Since the global economic crisis began, adherence to CSR issues has declined because firms need to focus on costs rather than CSR.

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46) Why is a code of ethics important? What should be included in a firm's code of ethics?Answer: A code of ethics helps foster a strong ethical culture. To build and sustain an ethical culture, organizations need a comprehensive framework that encompasses communication of behavior expectations, training on ethics and compliance issues, stakeholder input, resolution of reported matters, and analysis of the entire ethics program. The code of ethics helps employees know what to do when there is not a rule for something. The code of ethics is a statement of the values adopted by the company, its employees, and its directors, and sets the official tone of top management regarding expected behavior. The code of ethics should include expectations about business conduct, fair competition, and workplace and HR issues.

47) As an HR professional, how would you benefit from joining a professional organization, such as SHRM, HRCI, or ASTD?Answer: Professional organizations permit members to exchange ideas of mutual concern. The largest national professional organization for individuals involved in all areas of human resource management is the Society for Human Resource Management (SHRM). The basic goals of the society include defining, maintaining, and improving standards of excellence in the practice of human resource management. The Human Resource Certification Institute (HRCI) recognizes human resource professionals through a certification program. HRCI offers three certifications for HR professionals—PHR (Professional in Human Resources), SPHR (Senior Professional in Human Resources), and GPHR (Global Professional in Human Resources). Certification encourages human resource professionals to update their knowledge and skills continuously. It provides recognition to professionals who have met a stated level of training and work experience. The American Society for Training and Development (ASTD) has a certification program that offers the Certified Professional in Learning and Performance (CPLP™) credential so that workplace learning and performance professionals can prove their value to employers and be confident about their knowledge of the field.

48) What is an organizational stakeholder? Why should a firm conduct a stakeholder analysis?Answer: Most organizations, whether profit or not-for-profit, have a large number of stakeholders. An organizational stakeholder is an individual or group whose interests are affected by organizational activities. Society is increasingly holding corporate boards of directors and management accountable for putting the interest of stakeholders first. However, managers may not acknowledge responsibility for all of them. Protecting the diversity of stakeholder interests

requires answering questions regarding how you will treat the various stakeholders. Answering such questions is termed stakeholder analysis.

49) What is a social contract? Discuss the different relationships a corporation would have in a social contract.Answer: The social contract is the set of written and unwritten rules and assumptions about acceptable interrelationships among the various elements of society. Much of the social contract is embedded in the customs of society. The social contract concerns an organization's relationships with individuals, government, other organizations, and society in general. To the extent that an employee's expectations, such as fair pay, are acknowledged as responsibilities by the organization, they become part of the social contract. An organization is obligated to compete fairly with other firms, support charities, and repay loans. Organizations are obligated to follow governmental laws. Organizations are obligated to be responsible corporate citizens and satisfy the needs of society.

50) What is the purpose of a social audit? What methods are available to firms that want to conduct social audits?Answer: To overcome the negative publicity of corporate misdeeds and to restore trust, businesses are now conducting audits of their social responsibility activities, not just financial audits. A social audit is a systematic assessment of a company's activities in terms of its social impact. Three possible types of social audits are currently being used: (1) simple inventory of activities, (2) compilation of socially relevant expenditures, and (3) determination of social impact.