Whistleblowing plays a critical role in exposing misconduct, unethical and illegal behavior and corporate vulnerabilities that may give rise to misconduct. It can expose fraud, embezzlement, bribery, discrimination, harassment, safety violations, ineffective internal rules, etc. Whistleblowing's underutilization may be due to concerns about confidentiality. In addition, effort and commitment is required for the employer to create a whistleblowing mechanism. Once in place, organizations work hard to protect whistleblowers and provide the support they need to speak out against wrongdoing that they discover.
What is whistleblowing?
Corporate whistleblowing is very different from public whistleblowing, which involves reporting misconduct to a government authority. We focus only on corporate whistleblowing in the private sector, in which misconduct is reported to a corporate entity.
A corporate whistleblower reports unethical behavior, illegal activities, or perhaps conduct that exploits deficiencies in internal rules. The identity of the whistleblower remains unknown even to the employer until voluntarily disclosed by the whistleblower herself. The whistleblower is often – but not always – an employee. She can be a company insider, or in some cases, a knowledgeable third party. That is, companies that promote whistleblowing invite information from any informed source and promise confidentiality.
If an employee discovers and reports, say, embezzlement, immediate action can be taken. If an internal policy causing dissatisfaction and low productivity is reported, the company can respond. If, say, a manufacturer neglects safety protocols and puts both employees and consumers at risk, the act of a whistleblower is often more reliable than simple internal inspection.
The person appointed to receive and process information from a whistleblower could be a company officer or perhaps a trusted person with training and conversational skills, or maybe the company's lawyer.
Why is whistleblowing important?
An early warning system
Corporate whistleblowing is a valuable tool. The intention is to uncover unethical or illegal corporate activities which otherwise might never be discovered or be discovered by chance or with great difficulty. It is also a channel to report ineffective internal practices that may lead to financial loss to the company. With a whistleblower's information, the company can take corrective action before there are consequences. Being proactive can be prudent.
A chance to speak up
Whistleblowing gives an employee a chance to be heard. It allows employees to report misconduct or unethical behavior without fear of discovery and gives the safety of continued anonymity. It gives them some control. It allows them to air concerns even when she lacks total certainty that misconduct has occurred.
Navigation away from public whistleblowing
Despite its importance, the practice lacks legal regulation. Vietnam has only promulgated laws that regulate public whistleblowing – ie, there is a legal requirement that a person informed of some types of misconduct must report to a government authority. The law does provide for confidentiality, but generally one's identity must be disclosed to the authorities.
Corporate officials recognize that a public report of wrongdoing to the government may trigger official investigations or unfavorable press coverage which will have economic consequences. Having a confidential mechanism for employees or others to report, gives companies an incentive to create an effective and reliable whistleblowing policy and gives them the freedom to correct the problem.
Factors to create an effective whistleblowing program
What is the core of an effective corporate whistleblowing policy?
Confidentiality
Again, confidentiality is paramount. To give a person the comfort to report, the company must make it clear that it will treat the whistleblower's identity with total confidentiality.
Many people are afraid to speak up for fear that their personal and professional life might suffer. Indeed, a whistleblower may have participated in the wrongdoing, but for a variety of reasons, now wants to report. Confidentiality not only encourages reporting, but without it, the wrongdoing may never be known. Corporations that rely on a whistleblower must create a mechanism that permits the whistleblower to report anonymously. That is, the source of the information is unknown to the company. Disclosure is at the whistleblower's discretion.
Preserving the confidentiality of individuals under investigation is also important. Confidentiality avoids tarnishing their reputation before a thorough conclusion is reached.
Reward and Redemption
Some companies offer financial or other incentives to persons with the courage to report unlawful activities. The reward may depend on several factors, eg: thoroughness and detail, significance of the matter, level of assistance, or perhaps benefits realized from corrective action. Often the rewards are generous.
A whistleblower who herself is involved in wrongdoing may see whistleblowing as a way to avoid prosecution. If a whistleblower is complicit, coming forward with information may be a mechanism to receive leniency or favorable treatment. The chance for redemption, with or without financial reward, can be a powerful incentive for individuals to expose the truth even though disclosure may seem to be against their interest.
Skillful Investigator
The investigator should be a skillful interlocutor. Effective communications and developing trust increase the likelihood that accurate and complete information is provided. The skill of the investigator involves creating a comfortable environment for the interviewee to share her knowledge, asking open-ended questions, teasing out facts, requesting clarification, etc. Language skill, of course, is important.
Some companies use people from their own staff – but that may make employees disinclined to talk. Others use someone from their outside law firm or an outside party. An external investigator will work closely with the company to understand the context of the whistleblower's report. External investigators, as they are physically separated from the company, are in a better position to ensure the confidentiality of the investigation.
Since whistleblowing cases often involve intricate details and legal nuances, an investigator with at least a general understanding of the law is valuable, but perhaps not critical.
Clear Policies and Procedures
The company's policy on whistleblowing should be clear and unambiguous and well publicized within the company. The policy should outline the steps to be taken and indicate the anticipated timelines to complete the process. In certain circumstances, it might not be appropriate to keep the whistleblower fully updated, but there should at least be acknowledgement of reports and a notice when investigations have commenced. In any case, assurances of confidentiality must be clear.
The whistleblowing policy should be subject to periodic audits and reviews, taking into consideration feedback from employees. This process ensures the effectiveness of the whistleblowing system over time and projects the seriousness of the company.
Abuse of whistleblowing mechanism
A whistleblowing mechanism, however well-established, cannot be totally free of abuse. One might submit false accusations to settle personal conflicts or to tarnish the reputation of colleagues. In other cases, the veracity of the reported conduct may be affected if the motivation of the whistleblower is solely a financial reward.
This is where a skillful investigator is important. The investigator should be alert to possible abuse of the whistleblower mechanism while using her interviewing skills to receive reliable information.
Conclusion
Many corporations craft their own whistleblowing program. The reporting channel for whistleblowers should be easily accessible and understood and should emphasize its confidentiality. The program can be highly effective. Incentives can have a positive effect. An effective corporate whistleblowing policy can significantly help to detect misconduct, avert unwanted publicity, prevent financial loss, and create the mindset of an ethical corporate environment.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
