[Author: Sean Thompson]
June 23rd is World Whistleblowers Day. An occasion to acknowledge people who speak up when they know something is not right and needs to change. That said, it is unfortunate we use the word “whistleblower” to describe them. Traditionally, the term is synonymous with tattletale. Someone intent on getting another person or organization in trouble. But I prefer to think of whistleblowing as a means to shed light on a problem. I also prefer the term “reporter”, a person trying to hold the organization accountable for a solution.
Unfortunately, when the public hears about whistleblowing, it is usually because the issue in question is already in the news. But what’s frequently not reported is that nearly all public whistleblowers have actually tried to report internally first. Most are trying to help fix whatever is wrong and prevent it from getting worse. Sounds more like a concerned employee than a tattletale.
It is almost impossible to overstate the role internal reporting plays in creating and maintaining a healthy workplace culture. When employees, partners, and other stakeholders all know they are allowed – even encouraged – to report concerns the whole organization benefits. But this is only possible if there is buy-in and support from the C-suite down.
Encouraging reporters to speak up about workplace problems, safety issues, and suspected illegal or unethical behavior allows leadership to respond swiftly and appropriately. This is helpful in two ways: it gives reporters confidence they’ll be heard, and it discourages future misconduct.
In addition to using a neutral term like “reporter” that elevates employee status as a force for good, (rather than “whistleblower”, which can be intimidating and discouraging), the best way to accomplish this is to put a reporting and incident management system at the center of your organization’s compliance program. Of course, a robust program also includes employee compliance training, third-party risk management, attention to ESG factors and a system to establish and enforce appropriate policies including one against retaliation. But at the heart of the program, the risk-signal radar, if you will, is an internal reporting system.
In recent years there has been a significant increase in regulations focused on internal reporting requirements. The U.S. Department of Justice updated its longstanding Evaluation of Corporate Compliance Programs guidance in March this year. This guidance is explicit about the need for a “confidential reporting structure and investigation process.” The same is true in many other countries.
But at the heart of the program, the risk-signal radar, if you will, is an internal reporting system.
Perhaps the most well-known is the European Union’s Whistleblower Protection Directive, which is in the process of being implemented across member states. These regulations provide reporters with legal protection and companies with instructions on how to comply. The Directive is explicit, but complicated – so much so that NAVEX published a Solution Guide to the EU Whistleblower Protection Directive to help organizations better understand it. Regulations like the EU Directive are in place or being enacted by countries around the world including the U.K., Australia, and Japan.
But the value of creating a corporate culture that supports reporters goes far beyond regulatory compliance. Enlightened organizations know it also gives them a considerable competitive advantage. It helps build employee engagement, commitment, and trust – all of which contributes to higher retention and better performance. Contrast this with an unhealthy culture that allows bad behavior and unsafe working conditions to persist. In this latter case, the risk of legal exposure goes up while performance and trust go down.
Yet, the reports themselves are not really the point. It’s the speak-up culture that promotes the reporting that matters most.
But don’t just take my word for it. Research conducted by Prof. Kyle Welch at George Washington University shows that more internal reporting by employees correlates with greater profitability, fewer material lawsuits, and far lower exposure to regulatory fines and judgements. Yet, the reports themselves are not really the point. It’s the speak-up culture that promotes the reporting that matters most.
If your organization is truly committed to high-performance, a strong risk and compliance program – including support for internal reporting – should be a priority. That way, there will be no need for “whistleblowing”.
NAVEX is committed to helping organizations establish and grow a culture that prioritizes ethics and compliance. To learn more about NAVEX solutions for hotline and incident management, discover:
NAVEX Ethics Hotline & Incident Management Software
View original article at Risk & Compliance Matters
