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How to manage whistleblowing inside your organisation
8 June, 2012 - 09:20
By now we've all heard about Goldman Sachs and the repercussions of being a whistleblower. But what should communicators do in such a scenario? It all comes down to building the right corporate culture.
By Karuna Kumar
To disclose a grievance and experience no retaliation is a rarity.
In 2011, 45% of employees witnessed misconduct at work. Out of that figure, 65% reported the bad behaviour they saw. More than one in five employees who reported misconduct say they experienced some form of retaliation, reveals the 2011 National Business Ethics Survey, US. It further suggests that the overall share of companies that were identified as having a weak ethical culture was at 42%.
Retaliation contributes to workplace instability and drives talented people out of their current employment. The survey further states that about seven out of ten employees who experienced retaliation plan to leave their current place of employment within five years, compared to about four in ten of employees who were not victims of retaliation.
Author, psychologist and journalist, Daniel Goleman, says, “The universal consequence for whistleblowing is that they get booted out. They get transferred. They get fired. In fact, it is the worst in government and private industry. 80% of whistleblowers suffer immensely.”
“The paradox of this is that the whistle blower is actually highly loyal to the organisation. He/She is not blowing the whistle because they want to get someone, but because they feel the basic mission, the higher ideal is getting violated and they can’t live with that. Their own ethics drive them to tell the truth. The organisation, paradoxically feels betrayed, angry and retaliates.”
Shel Holtz, veteran communications consultant, co-host of FIR (For Immediate Release) and founder of http://www.stopblocking.org/ says, “I think most of the people who are whistleblowers believe in the organisation’s values. They see the say-do difference. Organisations say different things but do different things. There is a direct contradiction. When the employee brings it to the attention of the management and the leadership is unable to alleviate the issue, the employee goes out and blows the whistle.”
Longtime crisis communication consultant Jim Lukaszewski adds:
“I have done a lot of work in this area and I am yet to meet a whistleblower who is disloyal. All of these people feel they are loyal and that they are doing what they should be doing. They believe they are saving the company from further damage. However, from the standpoint of management, they are considered to be disgruntled employees. I personally believe they are acting in the interest of truth and acting in the interest of disclosure and acting to prevent illegal behaviour.”
Only 40% of companies are prepared to deal with whistleblowers
Grant Thornton's recent International Business Report reveals that only 40% of UK businesses have measures in place to accommodate employees who want to expose inappropriate or illegal activity at work.
“To me a code of conduct sounds almost disingenuous. It almost sounds like companies who are going to implement it are the ones who are afraid that something is going to happen. You have to wonder as to what motivated them. I think if there is a code of conduct that addresses disclosure and you are communicating that well, that is what you really need to worry about,” says Holtz.
The foremost challenge of a code of conduct is in ensuring that the malpractice or fraud is raised early enough so that the grievances of employees can be listened to and questioned well in time.
Change driving the recruitment playing field
When it comes to recruiting new staff in an organisation, company values are high on employees’ lists of why they want to work there.
Rob Wilson, Entrepreneur in Residence at Ashoka UK, says, “The traditional tick list of salary, career development and employer reputation still matters but of equal importance are the employer’s core values, the degree to which those are lived by on a daily basis and the level of commitment to and investment in the relevant communities and other stakeholders.”
Youth, in particular, are demanding change and institutions need to start taking stock of the situation.
Holtz says, “I think organisational values matters a lot to young graduates. I refer here to the Cisco study with college graduates. The youth today are looking at the values and culture of the organisation and usually work with those companies who values are aligned with their own personal values and beliefs. Even in a tight economy, it is playing an important role.”
Lukaszewski adds, “The idea of values is an important one but to make it work, leadership and management must implement these values in every aspect of the company’s activities. However, it must be said that some of these value systems are so incomprehensible that one cannot even talk about them at the dinner table.”
The Dodd-Frank Act was enacted in the United States in 2010 to provide significant financial incentives to whistleblowers who reveal information about possible violations of federal security laws. In addition, the act allows whistleblowers to remain anonymous till they receive their monetary reward. It also promises robust anti-retaliation protection to whistleblowers for up to ten years.
“I think it is unfortunate that you need legislation, but I think it is needed in light of the violations we have known companies have made,” Holtz feels.
The role of HR
As awareness around whistleblowing has gained momentum – particularly following the recent Goldman Sachs revelations - the focus of HR needs to shift from seeking approvals for policymaking around whistleblowing to policy implementation through strong communication practices and ethics. Building a code of conduct and making it accessible to all employees lies at the very core of this effort. Ensuring a disciplined approach to allowing more opportunities for interaction between employees and their employers will be crucial.
Simplification is key to successful implementation; complicating policies would endanger the very flow of information. Reviewing archaic policies would be instrumental in improving practices that help in creating a culture of integrity and transparency.
Educating managers about legal processes and training them to investigate grievances thoroughly and objectively is prerequisite to a diligent response. Establishing the right reporting channels is also critical.
Sceptical of the extent to which HR can help, Lukaszewski says, “The HR department can play a role but if you are talking about whistleblowing then, generally speaking, when a complaint like this is filed with the organisation or with the outside agency, it is automatically beyond the HR department. The truth is, the only way a company genuinely develops a compliant attitude is from the top of the organisation. It’s a very top down process. How ethical they are at the top is going to make a company more ethical. If the leadership fails to establish a tone of ethical conduct, then HR can do little about it.”
The importance of maintaining an appropriate corporate culture
A recent survey conducted with 100 business leaders and HR professionals conducted by the MWW Group reveals that three out of four business leaders believe that corporate reputation is substantially driven by internal corporate culture. A mere 5% believe their company culture is solid enough to prevent a reputational crisis.
Many executives rate employees among the top two influencing groups that most impact their reputation. However, only 74% feel employees actually buy in to their corporate culture.
The research reveals a gap between executives' perceptions of the importance of a cohesive corporate culture and their willingness to tend to the factors that cultivate that type of culture. As a result, these executives are putting their companies at risk of employee discord that can lead to long-term reputational damage.
Jane Mitchell, an experienced advisor on internal communications strategies and a specialist in business ethics programmes, feels “What organizations should be trying to do is to encourage an open and transparent culture. More and more organizations are required to think about how they build an ethical culture.”
Mitchell explains how the Enron scandal triggered organisations to think about their internal culture and how to create more transparency. As a result of the scandal, Sarbanes–Oxley was formed: a United States federal law that set new or enhanced standards for all U.S. public company boards, management and public accounting firms. Companies were now focused on governance more than ever before.
“The concept of reporting lines got increasingly sophisticated after Enron. They encouraged some form of engagement. Many companies now have reporting lines in multiple languages. You also have online access to these reporting channels. That side of an organisation’s governance has become more and more secure,” Mitchell points out.
The three components of corporate ethics
According to Lukaszewski, companies need:
1. A code of conduct that explains all the corporate rules, policies and the procedures;
2. A structure of compliance in which internal management oversees what is going on in the governed areas, while maintaining the power to intervene and stop bad practices;
3. The right management tone.
“A part of the challenge faced has to do with the leadership. In a lot of companies, the leadership is of a different generation. Open knowledge and information is seen as a liability. The old view that knowledge is power impels them not to share what they absolutely have to. What they fail to understand is that transparency doesn’t mean opening all doors and windows to every company secret. It is about conveying a culture. Some companies like Southwest Airlines are doing a great job,” Lukaszewski points out.
The keys to maintaining an open culture
Holtz shares three significant aspects:
“First of all, it is important for leadership to understand why they are doing this. It is easy to say that we need to be transparent. Understanding where it aligns with the leadership strategy and where it contributes to the organizations goals is really important. It’s about understanding that the advantage will be greater than the risk.”
“The second key is to have policies in place so that those things that do need to remain confidential remain confidential. Also, these policies should be positioned as positive and not negative. Too many of these policies are talking too much about ‘don’t, don’t, don’t’ as opposed to ‘here is how you could do these things without worrying.’”
“The third aspect is about implementing processes that enable these sorts of activities and behaviour. The processes should allow employees to engage internally and externally more effectively.”
Perhaps Lukaszewski sums it up best:
“In the end, there is nothing that guarantees success, but what brings about an ethical behaviour is the leader. The leader who relies on the values that are aligned with the organisation’s growth, a leader who supports the compliance people to ensure that the rules are met and a leader who walks the talk and talks the walk to ensure that the expectations of ethics are met, can ensure success at creating an ethical culture within the organisation. As along as you can match ethical performance to ethical behaviour, you will have an ethical company.”
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