Ethics in Organizations Quiz

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Questions and Answers

What tends to influence individuals' decisions regarding ethical behavior?

Intuition and gut feelings alone

Strict adherence to laws and regulations

Only personal beliefs and values

External pressures and context (correct)

What is a key component of creating an ethical organization?

Eliminating any form of employee feedback

Setting a clear set of standards of conduct (correct)

Focusing solely on profitability and growth

Promoting competition among employees

Which of the following strategies helps promote ethical behavior in an organization?

Hiring based on strict academic performance only

Minimizing employee training sessions

Designing a system of incentives and punishments (correct)

Isolating departments from each other

How did some participants in the experimental results demonstrate a lack of ethical behavior?

By enforcing authoritarian measures and psychological abuse Signup and view all the answers

What role does leadership play in establishing an ethical organization?

Leaders must act as role models for ethical behavior Signup and view all the answers

What was the primary cause of the Rana Plaza collapse?

Structural failure due to ignored warnings Signup and view all the answers

How many people were reported dead as a result of the Rana Plaza disaster?

1,134 Signup and view all the answers

What unethical practice was revealed by Christopher Wylie regarding Cambridge Analytica?

Exploiting Facebook data without consent Signup and view all the answers

What is one of the main reasons why ethical rules develop?

To minimize transaction costs Signup and view all the answers

Which type of ethics is defined by the personal and moral standards of individuals?

Individual ethics Signup and view all the answers

What significant admission did Facebook make regarding the data harvested from users?

87 million users had their profiles mined Signup and view all the answers

What does the term 'tragedy of the commons' refer to?

The depletion of shared resources Signup and view all the answers

Which of the following best describes professional ethics?

The values a group uses to govern their tasks Signup and view all the answers

What is a primary characteristic of organizational stakeholders?

They have an interest, claim, or stake in the organization. Signup and view all the answers

Which group of individuals contributes skills and expertise to an organization?

Managers Signup and view all the answers

What is one potential inducement for the workforce to contribute to the organization?

Wages and bonuses Signup and view all the answers

How does the gig economy arrange work?

Using freelance assignments and contract opportunities. Signup and view all the answers

What is a potential negative aspect of the gig economy mentioned in the content?

It can lead to exploitative work conditions. Signup and view all the answers

What role does digitalization and AI play in relation to organizational stakeholders?

It expands the pool of potential shareholders. Signup and view all the answers

Why is it important for organizations to incorporate ethics?

To enhance brand loyalty and stakeholder trust. Signup and view all the answers

What kind of contribution do shareholders provide to an organization?

Financial capital and investment Signup and view all the answers

What was the multiple of pay that Marathon Petroleum's CEO earned compared to a typical employee in 2017?

What percentage of shareholders voted against CEO Carlos Tavares' salary increase?

30% Signup and view all the answers

What is the primary role of the board of directors in an organization?

Oversee managers’ performance and exercise control Signup and view all the answers

In an organizational hierarchy, which group is responsible for providing direction and policy for the entire organization?

Top management team Signup and view all the answers

Which type of manager has direct responsibility for the production of goods and services?

Line manager Signup and view all the answers

How much can Carlos Tavares' salary potentially increase to with bonuses?

36.5 million euros Signup and view all the answers

Which management group reports directly to the CEO and COO?

Top-management team Signup and view all the answers

What significant change did the World Surf League implement starting in 2019?

Offered equal prize money to men and women Signup and view all the answers

What was the gross volume generated by the global gig economy?

$204 billion Signup and view all the answers

How many freelancer profiles were created worldwide in 2021?

163 million Signup and view all the answers

What percentage of Italy's GDP is attributed to the gig economy?

0.7% to 1.3% Signup and view all the answers

Which institution coined the term 'algorithmic management'?

Carnegie Mellon University Signup and view all the answers

What is a primary inducement for customers as stakeholders?

Revenue from purchase of goods and services Signup and view all the answers

What is essential for organizational effectiveness regarding stakeholder rewards?

Inducements offered influence future contributions. Signup and view all the answers

What significant reporting change has occurred in US corporations regarding pay?

Corporations have begun reporting pay ratio data. Signup and view all the answers

What is a notable argument against excessive CEO salaries?

No CEO should earn 1,000 times more than a regular employee. Signup and view all the answers

What is a key expectation of companies in a global stakeholder society?

To be accountable for wider economic, environmental, and societal impacts Signup and view all the answers

Which aspect is emphasized as vital for managing stakeholder relationships?

Building and cultivating sustainable and trustful relationships Signup and view all the answers

How do ethics influence managerial decision-making regarding stakeholders?

They guide managers on responding to varied stakeholder interests Signup and view all the answers

What defines an ethical dilemma in organizational contexts?

A decision between actions that benefit one party but harm another Signup and view all the answers

What role do laws play in the context of ethics and organizational behavior?

Laws specify permitted actions but can differ from ethical standards Signup and view all the answers

In balancing the interests of stakeholders, what challenge do managers face?

Reconciling conflicting interests of various stakeholder groups Signup and view all the answers

What is the outcome of unethical but legal behaviors in organizations?

They may cause harm without any legal consequences Signup and view all the answers

Who is credited with the development of stakeholder theory?

Edward Freeman Signup and view all the answers

Study Notes

Stakeholders, Managers, and Ethics

Stakeholders are individuals or groups with an interest in an organization, its operations, and performance.
Internal stakeholders include shareholders, managers, and the workforce.
Shareholders contribute money and capital, and receive dividends or stock appreciation.
Managers contribute skills and expertise, team building, and influence organizational status and power.
The workforce contributes skills and expertise, and receives wages, bonuses, and stable employment/promotion.
External stakeholders include customers, suppliers, partners, government, unions, community, and the general public.
Customers contribute revenue by purchasing goods and services, and expect quality, price, and value.
Suppliers contribute high-quality inputs.
Partners co-produce inputs, and contribute to organizational visibility.
Government sets rules for good business practices, fair competition, and equitable inducements.
Unions contribute to fair and collective bargaining.
Community contributes to social and economic infrastructure, and receives revenue, taxes, and employment.
The general public contributes to customer loyalty and reputation, and expects national pride.

Key Topics

Who are the organizational stakeholders?
Top Managers and Organizational Authority
Top Managers and Organizational Ethics
Why do organizations need ethics?
Creating an Ethical Organization

Internal Stakeholders

Contribution to the organization
Inducement to contribute
Influence of digitalization and AI

External Stakeholders

Contribution to the organization
Inducement to contribute
Influence of digitalization, AI and visibility

Allocating Rewards

The allocation of rewards to stakeholders is critical for organizational effectiveness as it affects their motivation and future contributions.
Managers must decide on appropriate inducements for each stakeholder group.

Competing Goals

Shareholders are focused on maximizing wealth, whereas managers aim to optimize organizational returns on investments.
Short-term managerial focus sometimes conflicts with long-term shareholder interests.
Risk aversion is a common managerial trait.

Agency Problem

An agency problem arises when one party (principal) delegates decision-making authority to another (agent).
Moral hazard arises due to asymmetric information.
Self-dealing is when managers exploit their position for personal gain.

Solving the Agency Problem

Governance mechanisms, monitoring, code of ethics, incentives, stock options, and promotion tournaments can help resolve agency problems.

Is it only a matter of shareholders?

Stakeholder theory emphasizes that organizations should be accountable to all their stakeholders, not just shareholders.

Stakeholders not shareholders

A global stakeholder society demands corporate accountability encompassing economic, societal, and environmental impacts.
Sustainable relationships with all stakeholders contribute to organizational success and ethical practice.

Ethical Dilemma

Ethical dilemmas involve complex situations with difficult choices, where one stakeholder group's well-being may come at the expense of another's.
The stakeholder view provides a framework for analyzing moral issues impacting organizational decision-making.

What determines whether a decision is ethical?

Utilitarian model: Decisions optimizing good for the greatest number of people.
Moral rights model: Decisions safeguarding fundamental rights and privileges.
Justice model: Decisions distributing benefits and harms equitably.

A simple approach to ethical dilemma

If a manager answers "yes" to the following:
- Does my decision align with organizational values?
- Am I willing to publicly share this choice?
- Would my trusted advisors approve?
- The decision is likely ethically acceptable.

Why do organizations need ethics?

Ethical conduct fosters trust and builds positive relationships.

Ethics Scandal Examples (Illustrative)

Equifax data breach (sensitive customer data was compromised or sold)
Corporate examples of unethical business practices.

Ethics Sources

Societal ethics: norms and values governing behavior.
Professional ethics: moral rules guiding professionals' conduct.
Individual ethics: personal moral standards.

Why do ethical rules develop?

To minimize transaction costs
To address the tragedy of the commons
To enhance reputation

Why unethical behavior occurs?

Unethical behavior stems from personal ethics, self-interest, and external pressures.
The Stanford Prison Experiment showcased how situational influences can lead to unethical behavior within organizations.

Creating an Ethical Organization

To instill an ethical culture, companies must design an ethical structure, including setting clear goals, establishing ethical standards, designating ethics officers, and empowering whistleblowers.
Role models and strong leadership are paramount.

Ethics and Organizational Culture

Organizational culture heavily influences ethical behavior.
An ethical organizational culture fosters ethical behavior through role modeling, incentives, and whistle-blowing policies.

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Description

Test your understanding of the factors influencing ethical behavior in organizations. This quiz explores key components of creating an ethical organization, the role of leadership, and strategies to promote ethical behavior. Assess your knowledge and identify areas for improvement.