The value of having an organisational whistleblowing process

Recently, whilst lecturing to business and economics students at University of Surrey, I tested their knowledge and recognition of worldwide whistleblowers. Interestingly, but unsurprisingly, most of them recognized Edward Snowden, less so Julian Assange. None of the students recognized or knew any of the remaining twenty whistleblowers projected onto the screen.

Why is this relevant?  The way that individuals frame whistleblowers is significant to how organisations and broader society engage with the topic of whistleblowing.  In my experience, the prevalence of focusing and reporting predominantly on whistleblowers such as Snowden, Manning and the leaker Assange has resulted in organisations kicking the issue of whistleblowing to the curb.

Fewer than one in 10 corporations polled around the world (7.1%) said that whistleblowing was a priority for their organisation in 2015, and even fewer (6.5%) said it was a current priority. Whistleblowing has become an emotionally charged hot potato, with a resulting reluctance to engage with it.

But there’s something worse than a hot potato.  It’s the fire that rages when a whistleblower elects to speak out publicly. If penalties and fines are not bad enough, there is often a large and immediate drop in stock prices, financial performance suffers for years thereafter, and executives are shunned.  There is also a serious liability risk for company boards and management.

The biggest loss, however, is reputational. Attempts to ‘manage the truth’ through PR, communications or specialists typically fails, and people immediately see the deception.

Are corporate leaders burying their heads in the sand?

Investigations into corporations – and sanctions against them – have increased dramatically in recent years. Global antitrust fines in seven key jurisdictions in 2015 (including the U.S., EU, Japan, Brazil and South Africa) surpassed $4.2 billion – a 10% rise over 2012. In the U.S. and UK, companies in certain regulated sectors, such as financial services, are now required to have whistleblowing policies.

A robust whistleblowing policy and process can help insulate a company from criminal sanctions. It gives the business the opportunity to investigate wrongdoing internally and deal with it properly before the regulators get involved. If a company is charged with a corporate offence, it can make the defence that it had adequate procedures in place.

However, if a company has a non-existent, outdated, or inadequately communicated internal whistleblowing process, the laws are on the side of the whistleblower. This is especially true if they disclose externally, opening the company up to corporate criminal charges.

Why do whistleblowers speak out publicly?

The most common reason a whistleblower will disclose externally is an inadequate and weak internal process. In these cases, a whistleblower often won’t have an existing or well-known internal whistleblowing process to follow, and will have observed that previous internal disclosures have resulted in retaliation and/or job losses.

Research by PCAW in the UK show that many whistleblowers (44%) raise a concern only once, and a further 39% will only go on to raise their concern a second time. The overwhelming majority (83%) will only try internal options once or twice and then give up. There is therefore a small window of opportunity to address wrongdoing internally.

Regulators and policy-makers are homing in on the important link between a good corporate culture and ethical corporate conduct. A robust, independent whistleblowing process that makes employees feel comfortable about reporting wrongdoing is a critical asset in building a positive, ethical culture that supports strong corporate outcomes.

However, the challenge for many organisations is that there is currently little evidence-based information to guide them in developing best practice whistleblowing processes. Therefore companies are largely dependent on guesswork to develop a process that will actually work and which will have the confidence of staff, management and the board alike.

Attention needs to turn to what new legal and governance standards must contain to best support internal, regulatory and public whistleblowing. This is a necessary first step in changing the mindset that whistleblowers are destined to suffer, no matter what.

My 14 step roadmap to building and managing an internal whistleblowing process:

Most employees ensure they understand their rights, such as leave entitlements, benefits and pay. However, it is also essential for employees to recognise whether the whistleblower protection system in place applies to them, and if so to what extent.

Individuals who disclose often do not recognise themselves as whistleblowers, attributing their actions of detecting and disclosing information as falling within the scope of their workplace duties and responsibilities. It’s therefore important for employees to know how the internal whistleblowing policy and process has been invoked in the organisation. Here are the most important steps to remember:

1. Encourage the raising of concerns.
2. Maintain the confidentiality or anonymity of the whistleblower (unless explicitly waived by the whistleblower).
3. Ensure thorough and timely investigations of whistleblowers’ disclosures.
4. Manage whistleblowers’ expectations.
5. Keep the whistleblower in the loop of the investigation, from beginning to conclusion.
6. Produce accessible annual reports recording the number of disclosures, steps taken and remedial action taken.
7. Have enforceable mechanisms requiring an investigation into a whistleblower’s retaliation complaints within strict, short time frames (including a process for disciplining those who retaliate against them).
8. Have enforceable mechanisms in place to restore whistleblowers who faced retaliation to their previous positions and statuses within strict, short time frames.
9. Communicate that employees do not have to follow the internal chain of command.
10. Clarify the difference between major misconduct (illegal), employee concerns (illegitimate – bullying, discrimination) and pro-organisational input. All are significant when ‘joining the dots’. Build filters and categories into the whistleblowing process. See the Whispli mechanism as an example.
11. Ensure the process allows the organisation’s own employees (including self-employed workers, trainees and volunteers) in addition to suppliers and customers, to make internal reports of concerns of wrongdoing or irregularities.
12. Ensure that the circumstances in which an external report may be submitted are made clear.
13. Regularly promote the process in clear and understandable terms.
14. Regularly evaluate the reporting process and internal approach to dealing with disclosures.

Appreciate that relying on a whistleblower to disclose misconduct requires a courageous behaviour which is not innate.  With this in mind:

Keep the process alive

• Communicate the reporting process on the organisation’s intranet and on its website, but also ensure middle managers communicate the process in face-to-face meetings. Employees are more likely to listen and discuss compliance and ethical issues within their own groups.
• Focus on positive action – publish stories about demonstrated ethical behaviours to clarify corporate expectations beyond adherence to rules and regulations. For example, how the company reinstated an employee who was unjustly fired by a manager for blowing the whistle or speaking out.
• Build acknowledgement for speaking up into the measure for performance appraisals, reward accordingly and make it public.
• Break down whistleblowing challenges into real-life decision points – as opposed to detailing generic reporting protocols.
• Personalise the process by providing the names of individuals involved in the whistleblowing process, not just their roles or positions. You’re asking people to behave outside social norms, so make it easy. Humanise it.
• Provide training that focuses on what to do, rather than what not to do.
• Brand and promote the importance of whistleblowing separately – do not mix this up with other messages.
• Address employee attitudes and underlying concerns toward whistleblowing and how reports are handled, instead of increasing process awareness only.

A whistleblowing process forms part of an open culture. A whistleblowing process is more than just adopting regulations for reporting; it is driven by behaviour, requiring continuous training.

In some circumstances, a culture of anxiety itself can qualify as wrongdoing that affects the public interest; certainly if it involves serious mismanagement, or the systematic intimidation of employees. The management of the organisation can either be the driving force behind a culture of anxiety, or a contributor by turning a blind eye to it.

Alternatively, an organisation’s management can promote an open culture by valuing and respecting critical and courageous conversations between management and employees, from the top of the organisation right down to its lowest ranks.

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To deal with whistleblowing only on the legislative level, through process, or within the halls of academia is superficial.

We need to investigate what either drives or hinders whistleblowing in the deep structure of the human mind, and to leverage that research for a fuller understanding of current whistleblowing issues.

Behaviour is at the root of all of society’s big problems, with trust being critical to harness lasting change.

With corruption identified at the front and centre of social ills, it’s worth exploring and understanding if social scientists consider whistleblowing a mitigating behaviour to corruption.

There are three main areas to consider:

• Employee Loyalty and Whistleblowing
• Altruistic cheating
• Whistleblowing legislation and 50 Shades of Grey

Most whistleblowers tell stories of shock and betrayal when they discover they have been emphatically condemned as disloyal to their group and organisation, leaving them with misplaced feelings of shame and guilt.

“Keeping one’s promises” and honouring agreements are among the highest values we are taught to observe. But how can individuals in organisations, under certain circumstances, act as if those values are actually absolute, overriding other moral and ethical considerations?

Being a team player shouldn’t mean ‘taking a dive’ on integrity

Due to our evolved sociology, humans behave as herd animals. Our sense of well-being and self-image is largely dependent on our peer group. It is because of this that we may be driven to participate or conceal unethical behaviours we would otherwise abhor.

The threat of expulsion and the irrational expectation of being cast adrift is an ever-present fear.

The practice of keeping an organisation’s secrets gradually blinds us to moral ambiguities. The consequence is that we may become less and less mindful of what is being demanded, as loyalty to the institution becomes stronger than any other, including the interests of outsiders.

History is replete with examples where institutional secrets are kept and, as a result, greatly prejudiced the welfare and safety of others. Examples range from the child sexual abuses in the Catholic Church, to spying on citizens, threats to the environment and even the safety of food products.

One only has to look at the current unravelling of the cheating at VW to see how groups value ‘secrets’ over the societal good. In the case of VW, the consequences, including the significant costs to our health and the ecosystem, are just beginning to be known as the facts present themselves.

The VW bosses have admitted there was a culture of rule-breaking being tolerated within certain areas of the company that led to the misconduct of individual employees and weaknesses in some processes.

If prosecuted by the SFO (Serious Fraud Office) under the 2006 Fraud Act for false representation, VW bosses will be looking at a possible jail sentence of up to ten years.

Furthermore, the long term damage to the environment and health is estimated to have caused at least 32.2 million tons of extra carbon pollution into the atmosphere, equal to roughly 6.8 million cars. In addition to its environmental impact, pollution by nitrogen oxides (or NOx) has been linked to grave health problems, namely asthma and other serious respiratory illnesses.

It is a dramatic model of what happens to society when ‘those in the know’ remain silent.

Whistleblowing in business is often frowned upon because it appears, incorrectly, that individuals are blowing the whistle on their team. Instead, it is important to understand that individuals blow the whistle on a particular practice that is immoral and/or illegal, expecting the practice to be halted.

Because companies have been able to get their employees to view themselves as part of a team, like in sports, it is easier to demand loyalty. Thus, the rules governing teamwork and team loyalty apply.

But businesses are not games. Sports, games and victory in both are socially constructed conventions and are participated in within rules that are enforced by a referee (a literal whistle-blower).

Both business and games have the element of competition, but games take place within a larger social context that is different from competition in business. A team can lose at sport with few consequences. Losing at business has much greater consequences which permeate into society.

Would you condemn a Good Samaritan?

Whistleblowing must be not only permissible, but also expected, when a company is harming society. The issue is not one of disloyalty to the company, but of whether the whistle-blower has an obligation to society, even if blowing the whistle brings them victimisation and retaliation.

Would you condemn a Good Samaritan interfering in the prevention of someone doing harm to themselves or someone else? Probably not. The same applies to whistleblowing.

Now, take into account the consequences of staying silent. Chances are high that sooner or later, the truth will come out and the entire organization will suffer the results.

If individuals aren’t able to speak out or formally blow the whistle on small ethical lapses, these lapses cascade into much larger acts of malfeasance, becoming ‘business as usual’.

The culture becomes embedded with the rationalisations and justifications for not speaking out as opposed to one where courageous conversations are ‘business as usual’.

Often, an employee with the knowledge, evidence and intention of blowing the whistle seeks advice either internally, from within management, or externally.

Intervention at this stage can be enormously helpful, for both company and individual, so long as those in the company’s leadership, who are empowered to act, are prepared to listen and respond.

Altruistic cheating all too often goes hand in hand with employee loyalty

The vulnerability of our irrational inclination to frame and justify cheating is alarming. Ethical decision making research suggests that cheating and dishonesty should be studied at both individual and group level, as group members influence each other through their own ethical and unethical behaviours.

Contrary to what one might expect, unethical decision-makers are judged most unfavourably when attempting to obtain small (5%) gains in profit when compared to those acting to achieve large (50%) gains, or indeed in attempting to prevent a loss of either size.

An individual seeking a small gain is framed as a ‘bad’ person, since gain seeking is worse than loss prevention and there is not that much external pressure to go after a small gain; ie., being unethical is seen as more of a personal choice when the gain is a small benefit rather than a large one, such as the behaviours that drove the VW emission scandal.

Additionally, by focusing on the social utility (benefit to others at group level), people can more freely categorise their own actions in positive terms and avoid negative updating of their moral self-image. As a result, people feel less guilty about their own dishonest behaviour when others (in addition to themselves) can benefit from it.

Neatly stitched to Employee Loyalty is Altruistic Cheating, to which we are all vulnerable:

When people’s dishonesty benefits others, the others are more likely to view dishonesty as morally acceptable and, therefore, feel less guilty about benefiting from the cheating. Why?

• Individuals cheat more when others can benefit from their wrongdoing
• Cheating increases with the number of beneficiaries
• Altruism serves as a moral justification for self-serving cheating
• When cheating also benefits others, it involves less guilt

Can we remove the grey ‘danger zones’ from compliance regulation?

Every time there’s a grey zone, people abuse that grey zone.

The same applies to organisations and governments initiating legislation, both of whom have challenges of how flexible their rules should be. This applies to whistleblowing in addition to codes of conduct and fiduciary responsibilities – the range of grey zones within them allows misbehaviour.

Synchronising whistleblowing legislation and process with behavioural training for Courageous Conversations will help us to figure out for ourselves what is good in a pro-socially effective way.

Having Courageous Conversations negates small problems becoming scandals or large problems but this is not an innate skill, rather it is a learnt behaviour.

We can all learn the skills and strategies to become more adept at addressing challenging social situations at work and in our personal lives by using our best thinking, values and social support.

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