Human Resource Management, 12e (Mondy)
Chapter 2: Business Ethics and Corporate Social Responsibility
Multiple-Choice Questions
1) Bernard Madoff was most likely able to accomplish his Ponzi scheme because ______.
A) politicians protected his securities firm
B) laws failed to regulate bond investments
C) investors did not question his high returns
D) police were unable to find sufficient evidence
Answer: C
Explanation: 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.
Diff: 2Page Ref: 23
Chapter: 2
Skill: Concept
LO: 1
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 government
B) expanding the technology budget to improve enforcement
C) rewarding individuals for cooperating with investigations
D) establishing five specialized enforcement units
Answer: A
Explanation: 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.
Diff: 3Page Ref: 24
Chapter: 2
Skill: Concept
LO: 1
3) Which term refers to the discipline that deals with what is good and bad or right and wrong?
A) morals and traditions
B) social responsibility
C) cultural norms
D) ethics
Answer: D
Explanation: D) Ethics is the discipline dealing with what is good and bad, or right and wrong, or with moral duty and obligation.
Diff: 1Page Ref: 24
Chapter: 2
Skill: Concept
LO: 1
AACSB: Ethical Understanding
4) Which of the following firms has NOT been exposed for ethical and often illegal exploits?
A) Enron
B) Arthur Andersen
C) WorldCom
D) Charles Schwab
Answer: 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.
Diff: 2Page Ref: 22, 25
Chapter: 2
Skill: Concept
LO: 1
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: C
Explanation: 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.
Diff: 2Page Ref: 24
Chapter: 2
Skill: Concept
LO: 1
6) The CEO of GE begins and ends each annual meeting by ______.
A) introducing the firm's senior officials
B) reviewing the firm's financial details
C) stating the firm's integrity principles
D) asking stockholders for their opinions
Answer: C
Explanation: 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."
Diff: 3Page Ref: 24
Chapter: 2
Skill: Concept
LO: 1
AACSB: Ethical Understanding
7) What do most of the 500 largest corporations in the United States have?
A) social responsibility audits
B) environmental audits
C) codes of ethics
D) podcasts
Answer: C
Explanation: 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.
Diff: 1Page Ref: 24
Chapter: 2
Skill: Concept
LO: 1
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 appraisals
Answer: D
Explanation: 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.
Diff: 2Page Ref: 24
Chapter: 2
Skill: Concept
LO: 1
9) What ethical breaches in business today have involved hundreds of executives and led to numerous high-profile resignations?
A) stock-options-backdating
B) excessive severance pay
C) unethical salaries
D) insider trading
Answer: A
Explanation: 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.
Diff: 2Page Ref: 25
Chapter: 2
Skill: Concept
LO: 1
10) What was the primary focus of many financial firms involved in the 2008/10 financial crisis?
A) human resources
B) short-term profits
C) customer service
D) long-range returns
Answer: B
Explanation: 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.
Diff: 2Page Ref: 25
Chapter: 2
Skill: Concept
LO: 1
AACSB: Ethical Understanding
11) Which of the following is a strategy used by Costco?
A) outsourcing all administrative tasks to reduce HR costs
B) focusing on short-term profits to benefit stockholders
C) offering the CEO a high salary and few stock options
D) paying high wages to retain good employees
Answer: D
Explanation: 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.
Diff: 3Page Ref: 25
Chapter: 2
Skill: Concept
LO: 1
12) The minimum standards of ethical behavior in a firm are based on ______, while higher standards are established by ______.
A) corporate policies; human resources
B) co-workers; mission statements
C) organizational culture; laws
D) laws; corporate leadership
Answer: D
Explanation: 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.
Diff: 3Page Ref: 25
Chapter: 2
Skill: Concept
LO: 1
AACSB: Ethical Understanding
13) According to the text, sources of ethical guidance and personal beliefs are the basis for ______.
A) the model of ethics
B) economic modeling
C) behavior modeling
D) the model of philosophy
Answer: A
Explanation: 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.
Diff: 2Page Ref: 25-26
Chapter: 2
Skill: Concept
LO: 1
AACSB: Ethical Understanding
14) According to the text, what are the two key elements in the model of ethics?
A) moral background and cultural norms
B) sources of ethical guidance and personal moral beliefs
C) social awareness and cultural norms
D) sources of ethical guidance and education level
Answer: B
Explanation: 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.
Diff: 2Page Ref: 25-26
Chapter: 2
Skill: Concept
LO: 1
AACSB: Ethical Understanding
15) Which of the following would LEAST likely be a source of ethical guidance?
A) holy books
B) laws
C) friends
D) tests
Answer: D
Explanation: 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.
Diff: 2Page Ref: 26
Chapter: 2
Skill: Concept
LO: 1
AACSB: Ethical Understanding
16) As a professional, what should be your primary source of ethical guidance in the workplace?
A) corporate HR policies
B) corporate code of ethics
C) corporate mission statement
D) corporate procedures
Answer: B
Explanation: 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."
Diff: 2Page Ref: 26
Chapter: 2
Skill: Application
LO: 1
AACSB: Ethical Understanding
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 ethics
B) Type II ethics
C) Type III ethics
D) Type IV ethics
Answer: A
Explanation: 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.
Diff: 1Page Ref: 26
Chapter: 2
Skill: Concept
LO: 1
AACSB: Ethical Understanding
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 ethics
B) Type II ethics
C) Type III ethics
D) Type IV ethics
Answer: A
Explanation: 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.
Diff: 2Page Ref: 26
Chapter: 2
Skill: Application
LO: 1
AACSB: Ethical Understanding
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 I
B) Type II
C) Type III
D) all of the above
Answer: A
Explanation: 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.
Diff: 2Page Ref: 26
Chapter: 2
Skill: Application
LO: 1
AACSB: Ethical Understanding
20) Type I ethics is best defined as the strength of the relationship between ______.
A) an individual's moral beliefs and the individual's behavior
B) morals presented by external sources and the punishment for unethical acts
C) an individual's moral beliefs and the morals presented by external sources
D) morals exhibited by most of society and the unethical actions of friends and role models
Answer: C
Explanation: 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.
Diff: 3Page Ref: 26
Chapter: 2
Skill: Concept
LO: 1
AACSB: Ethical Understanding
21) Type II ethics is best defined as the strength of the relationship between ______.
A) an individual's moral beliefs and the individual's behavior
B) morals presented by external sources and the punishment for unethical acts
C) an individual's moral beliefs and the morals presented by external sources
D) morals exhibited by most of society and the unethical actions of friends and role models
Answer: A
Explanation: 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.
Diff: 3Page Ref: 26
Chapter: 2
Skill: Concept
LO: 1
AACSB: Ethical Understanding
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: B
Explanation: 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.
Diff: 1Page Ref: 26
Chapter: 2
Skill: Concept
LO: 1
AACSB: Ethical Understanding
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: B
Explanation: 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.
Diff: 2Page Ref: 26
Chapter: 2
Skill: Application
LO: 1
AACSB: Ethical Understanding
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: B
Explanation: 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.
Diff: 2Page Ref: 26
Chapter: 2
Skill: Application
LO: 1
AACSB: Ethical Understanding
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 I
B) Type II
C) Type III
D) Type IV
Answer: B
Explanation: 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.
Diff: 2Page Ref: 26
Chapter: 2
Skill: Application
LO: 1
AACSB: Ethical Understanding
26) Generally, people are considered ethical if they possess ______.
A) either Type I or Type II ethics
B) either Type II or Type III ethics
C) both Type I and Type II ethics
D) both Type 1 and Type III ethics
Answer: C
Explanation: 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.
Diff: 2Page Ref: 26
Chapter: 2
Skill: Concept
LO: 1
AACSB: Ethical Understanding
27) Which of the following laws was NOT enacted for the purpose of legislating business ethics?
A) Federal Sentencing Guidelines for Organizations Act
B) Procurement Integrity Act
C) Sarbanes-Oxley Act
D) Taft-Hartley Act
Answer: D
Explanation: 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.
Diff: 2Page Ref: 27-28
Chapter: 2
Skill: Concept
LO: 2
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: B
Explanation: 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.
Diff: 2Page Ref: 27
Chapter: 2
Skill: Concept
LO: 2
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 Organizations
B) Procurement Integrity Act
C) Sarbanes-Oxley Act
D) Federal Contract Protection Act
Answer: B
Explanation: 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.
Diff: 2Page Ref: 27
Chapter: 2
Skill: Concept
LO: 2
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: D
Explanation: 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.
Diff: 2Page Ref: 27
Chapter: 2
Skill: Concept
LO: 2
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: A
Explanation: 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.