Is whistle-blowing for you?
At some point in a company’s lifespan, a handful of employees may engage in unethical behavior — ranging from financial misconduct to bullying including sexual harassment. This behaviour has adverse effects on the shareholders’ wealth and as such has to be knit in the bud. Arise the case for the whistle blower, one who due to their ethical standards finds it imperative to speak out on the ills that are ongoing in the organisation. This article seeks to look at the why, how and impact of whistle blowing.
Whistle-blowing refers to the act of disclosing or exposing any information on illegal, immoral or clandestine activities that are being committed by a natural or juristic person detrimental to either the public or private sector. Whistle-blowing can be done internally, to management or externally to the police or specific units such as Zimbabwe Anti-Corruption Commission (ZACC) as provided by legislation. Deloitte defines a whistle-blower as someone who discloses reportable conduct. While some may view it as “snitching,” it can be viewed as an action of bravery and stemming from a dedication to ethics. For whistle-blowing to come into effect, there is need for policies and procedures that govern the manner in which things are done, as such, when one acts in manner that transgresses the set out procedure, this becomes the mismatch leading to the rise of ill effects and one to speak out on this. Whistle-blowing can result in the whistle-blower being given a reward, for example, the Zimbabwe Revenue Authority (ZIMRA) offers a 10% reward on revenue collected from information provided by a whistle-blower.
Why is whistle-blowing an issue?
International organisations that are involved in the fight against corruption have deduced that one of the most critical players in the fight against corruption are whistle-blowers. Globally, it is argued that having an independent hotline to report unethical or criminal behaviour helps to strengthen an organisation’s first line of defence in combating unethical behaviour. Every organisation desires honesty from and among its employees. Honesty allows for dedication to the organisation’s mission resulting in trust leading to success. Perceptions of whistle-blowing vary, some scholars believe that employee complaints signal poor internal controls and weak corporate governance while others view it positively as a workplace culture built on trust. The way to look at internal whistle-blowing is that it provides valuable information that managers can use to prevent problems from getting big. The tendency is that as organisations get bigger, they get more impersonal and those at the top are distant from the daily operations, relying much on reports from subordinates. The scenario above means that the whistle-blower may provide insights on some of the activities that could easily miss management of the organisation.
In this world, there are always two sides, North and South, East and West, right and left. Whistle-blowing is no different and provides its fair share of positives and negatives. In the USA, in a 1972 case, an arbitrator told a whistle-blowing employee that the employee could not, “Bite the hand that feeds you and insist on staying on the banquet.” In a scenario that an organisation has such a view on whistle-blowing this hurts would be whistle-blowers. Most whistle-blowing policies have a reward for whistle-blowers. The end result is that an individual may see an ill brewing and ignore it until it rises in magnitude up to a level that the reward is significantly high due to the loss that has been incurred. It is thus important for organisations to devise ways that have a futuristic outlook in creating reward incentives that ensure that matters that are quickly handled look at the potential loss if it continued for a further period of time and reward individuals accordingly to avoid having employees wait to report when the reward becomes attractive. There is also the potential for reputational damage to the business given that the exposure occurs in the public domain. It is important to ensure all is kept internal and controls set ensuring that not even rumours squirm out of the boardroom as the whistle-blowing act may end up causing more harm to the company’s reputation than hurting the financial position (even though long-term, reputation harm affects financial position). Whistle-blowing can also have financial impacts in terms of costly court cases, fines imposed by regulators, or compensation payouts, depending on the nature of the activity exposed. In worst case scenarios, the results of whistle-blowing could lead to staff or managers proceeding to criminal proceedings, which leads to damaged company reputation and depressed employee morale.
How to promote whistle-blowing
The first step in promoting whistle-blowing is creating and publicising a whistle blowing policy. For one to become a whistle-blower, there is need to have in place a particular document or piece that handles the manner of whistle-blowing. Making use of provided guidelines by auditing firms, companies can establish ways in which one can blow the lid on unethical behaviour. The policy has to provide whether rewards exist or not, the protection of anonymity of whistle-blowers and ensure that no victimisation of the whistle-blower in the unlikely event they are known. To be effective, it is important to ensure that there are conditions that allow for any implicated individual to not be part of the investigation process. Once a policy is in existence, the top management has to communicate effectively to all stakeholders of the existence of the policy and the need to stick to set standards when one wants to tell on mishaps in an organisation. In communicating, it must be clearly spelt out that whistle-blowing is not to solve personal vendettas and is in existence to benefit the organisation in curbing illicit conduct.
The policy has to be owned by top management. Just like any policy or principle in any organisation, without the commitment of top management, it is bound to fail. The requirement is that top management has to demonstrate the inclusion of whistle blowing in the culture. Once it is embraced and encouraged to speak out when you see something is wrong, the organisation creates an enabling environment for adequate whistle-blowing. Commitment should be emphasized and promoted so that no one is in doubt that there is desire to fight corruption and no stone shall be left unturned in the battle.
Once a report is made, thorough investigations have to be done. Just as in all matters dealing with legal proceedings, justice must not only be done, but must manifestly be seen to be done that even a common man can attest that truly justice was done. This ensures that employees keep on reporting as they know that no issue is swept under the carpet. This becomes important as employees will throw a test case implicating one in senior management to see if the process is truly transparent. Whistle-blowing to be effective has no sacred cows and once a matter is brought to the front, due diligence has to occur and if there are consequences they should be shown so as to both curb the illicit act and encourage people to speak out.
It is imperative to discuss with employees their personal thoughts on topics to make sure everyone has a similar mindset. Clear communication is key to building an organisation where employees feel comfortable raising their concerns. In the resulting positive work environment, organisation goals are foremost, allowing employees to focus on the success of the organisation and its members. It has to be made clear that this is not a witch hunting exercise or some way of dealing with members that do not agree to leadership style, it must clearly be embedded on ensuring that the goals of the organisation are achieved in ways that protect shareholder wealth.
Evaluation is always important. The success rates of the whistle-blowing events have to be illustrated and communicated effectively. It should be known that the mechanism that is in place works and is providing results that are effective. This requires further looking into forecasting techniques that look at the magnitude of savings that have been made by the report leading to apprehension of the ill doers. For as much a service is seen to be effective, people will be committed to it and ensure that they keep on speaking up when they see contrary behaviour.
The best policies tend to be those which actively encourage internal whistle-blowing, while at the same time removing any need for employees to contact external regulators or the media directly. There is a Shona proverb, “chidembo hachiviirwe pane vanhu” (a skunk is not skinned in front of people). Organisations should strive to ensure through whistle-blowing, fraudulent activities are exposed and known internally with those outside not having any idea whatsoever. The Deloitte tip offs anonymous is a popular mechanism that is being used by most organisations in ensuring that unethical behaviour is spoken out and dealt with internally.
Whistle blowing is an essential tool for any organisation, without it, fraud, misconduct, and failure may dominate an organisation. Top management by promoting clear communication and keeping the organisation’s goals in focus for everyone, chances of creative accounting and other ills that dread its ugly head in the media are drastically minimised. It takes a community to build a nation, as such, be your brother’s keeper and next time you see action that compromises an organisation or the general population, do not hesitate, speak out, you may have just preserved our finite resources.
