BMO Leadership & Ethics 2 — Questions and Answers
Question 1: A manager discovers that a high-performing employee has been falsifying expense reports. What is the most ethically appropriate first action?
- Ignore it to avoid losing a top performer
- Confront the employee privately and report to HR per policy (Correct answer)
- Publicly reprimand the employee to deter others
- Quietly reduce the employee's next bonus to offset losses
Correct answer: Confront the employee privately and report to HR per policy
Ethical leadership requires addressing misconduct through proper channels—private confrontation and HR reporting upholds integrity while following due process.
Question 2: Which leadership theory suggests that effective leadership depends on matching style to the maturity level of followers?
- Transformational leadership
- Servant leadership
- Situational leadership (Correct answer)
- Transactional leadership
Correct answer: Situational leadership
Situational leadership (Hersey & Blanchard) prescribes adapting directive versus supportive behaviors based on follower competence and commitment.
Question 3: An organization's code of ethics is MOST effective when it:
- Is distributed to employees only during onboarding
- Is enforced selectively for senior management
- Is integrated into daily operations, training, and performance reviews (Correct answer)
- Uses complex legal language to cover all scenarios
Correct answer: Is integrated into daily operations, training, and performance reviews
A code of ethics becomes a living document only when embedded in culture through ongoing training, role modeling, and accountability mechanisms.
Question 4: Which of the following best describes 'ethical relativism' in a business context?
- All ethical standards are universal and apply equally across cultures
- Moral standards are culturally determined and vary by context (Correct answer)
- Ethics must always align with legal requirements
- Managers set ethical standards for their teams unilaterally
Correct answer: Moral standards are culturally determined and vary by context
Ethical relativism holds that right and wrong are defined by cultural norms, meaning practices acceptable in one culture may be unethical in another.
Question 5: A leader who focuses on inspiring a shared vision and fostering innovation is demonstrating which leadership style?
- Autocratic
- Laissez-faire
- Transformational (Correct answer)
- Bureaucratic
Correct answer: Transformational
Transformational leaders motivate through vision, intellectual stimulation, and individualized consideration rather than rule-following or authority alone.
Question 6: When a manager takes credit for a subordinate's idea without acknowledgment, this violates which ethical principle?
- Justice
- Autonomy
- Honesty and integrity (Correct answer)
- Beneficence
Correct answer: Honesty and integrity
Taking credit for others' work is a form of deception that directly violates honesty and integrity, foundational ethical principles in management.
Question 7: In stakeholder theory, which group is typically considered a PRIMARY stakeholder of a corporation?
- Local community activists
- Industry trade associations
- Employees and shareholders (Correct answer)
- Government regulators
Correct answer: Employees and shareholders
Primary stakeholders (Freeman's model) are those with a direct economic relationship to the firm—employees and shareholders are core examples.
BMO Leadership & Ethics 2
A manager discovers that a high-performing employee has been falsifying expense reports.
What is the most ethically appropriate first action?