An organization’s ethics are based on the collective behavior of its employees. If each individual is ethical, the organization will be ethical. Its management’s job to help ensure that everyone in the firm uses ethical behavior. Codes of ethics state the importance of conducting business in an ethical manner and provide moral standard guidelines (dos and don’ts) for ethical behavior.

Managers are ultimately responsible for the behavior of their employees, and they need to lead by setting an ethical example. If employees are rewarded rather than punished for their unethical behavior, or if managers know about it and do nothing, both employees and managers are more likely to engage in unethical business practices. As a means of enforcing ethical behavior, employees should be encouraged to become internal whistle-blowers. Whistle-blowing occurs when employees expose what they believe to be unethical behavior by their fellow employees.

Whistle-blowing should begin internally, and information should go up the chain of command. The FCPA law bars U.S.-based or U.S.-listed companies from bribing foreign officials in exchange for business and requires them to keep accurate books and records. Thus, global companies need to clarify the difference in their code of ethics.