Reading between the Headlines: A Lesson in Risk Mitigation from Edward Snowden

more+
less-

Whistleblowing has become a highly charged term, stirring up emotive rhetoric ranging from “ethical hero” to “treasonous traitor” with very little substantive evaluation of the real impact on the corporation and the broader communities around it.

The meteoric media rise of the “celebrity” whistleblower/leaker – be they laudable or villainous – has shone a spotlight on the practice, with personalities such as Chelsea Manning, Julian Assange, Bradley Birkenfeld and Edward Snowden dividing public opinion on the ethics of spilling secrets.  But organizations should pay close attention to the surge in this whistleblowing trend beyond the headlines; whistleblowers don’t need to be popular to be effective, and opinions on their motives and morality are entirely secondary to the critical issues they potentially uncover.

The Central Roles of Culture and a Robust Internal Reporting System

A recent Forbes article dubbed 2014 “The Year of the Whistleblower,” pushing internal reporting and compliance structures to the very top of the corporate “must have” list. Whistleblowing has never been more appealing to those seeking the moral high ground, monetary gain (the Dodd-Frank Whistleblower Program is authorized to reward information that results in an enforcement action), notoriety or just plain retribution. The results of airing grievances externally have never been so visible or damaging – just ask the NSA .

All this makes the overarching need to give employees a comprehensive internal reporting system that they have confidence in imperative. Ideally, one consequence of the heightened media attention on whistleblowers is the growing realization that organizations must develop a more open corporate culture where people feel comfortable speaking up (as early as possible), and where there is zero tolerance for retaliation.

(Read NAVEX Global’s research on how retaliation claims are handled.)

The Relentless Surge in Retaliation

Putting aside the substantial reputational damage caused by external whistleblowing, failing to prevent retaliation is hitting companies in the pocket more directly than ever before with both protections and penalties continuing to expand via statute and case law. By way of example, a series of new laws passed in California expand whistleblower and anti-retaliation protections for employees in the state and violations can subject an employer to a variety of damages, including civil penalties, of up to $10,000 per violation.

The rise in reports of retaliation (retaliation now makes up more than 40 percent of all EEOC charges), which has corresponded with the increase in instances of whistleblowing, is clearly something organizations need to address as a priority. Even with overall workplace misconduct on the decline according to a seminal 2013 NBES study from the Ethics Resource Center (ERC), retaliation bucks the trend, continuing to rise at an alarming pace.  This synchs up with NAVEX Global’s own proprietary data (based on the largest database of reported incidents in the world) where overall report volume has increased substantially over the past three years. 

Addressing Claims Head On

A good starting point is to look past the individual raising the allegation, regardless of whether it comes from an underperformer who is being managed out or a disgruntled worker who appears to have an “obvious agenda.”  It’s smart practice to treat every allegation as if it came from your most valuable employee in order to remain objective and avoid missing red flags. And, it may come as a surprise, but repeat reporters (who can be frequently dismissed as “whiners”) have their clams substantiated at a rate four percent higher than first time reporters.  According to NAVEX Global's Hotline Benchmarking data, the number of repeat reporters has more than doubled in the last five years, with a four percent increase in 2013 alone.

And if there is an area that needs acute attention, it is middle managers.  According to the 2013 ERC survey, sixty percent of misconduct is perpetrated by managers.  Pile on that most managers do not understand what constitutes prohibited retaliation, and that they are in the best position to engage in it, and you have a perfect storm.  This is where focused education and training on retaliation for managers is so imperative, and directly supports overall efforts to address workplace culture.

2014 – The Year to Rebuild Trust?

While feelings toward people like Snowden are mixed, his highly public whistleblowing saga could be a saving grace for organizations that read between the sensational headlines. Employers need to proactively assess and continuously improve their cultures while ensuring their internal reporting system is robust, well understood and recognized as an absolutely critical component to protecting both people and reputation, and succeeding across any measure of business success. Let’s make 2014 the year to rebuild trust and confidence in internal reporting and the rule against retaliation.

- See more at: http://www.navexglobal.com/blog/2014/02/14/reading-between-headlines-lesson-risk-mitigation-edward-snowden#sthash.gPDqi9Ze.dpuf

Whistleblowing has become a highly charged term, stirring up emotive rhetoric ranging from “ethical hero” to “treasonous traitor” with very little substantive evaluation of the real impact on the corporation and the broader communities around it.

The meteoric media rise of the “celebrity” whistleblower/leaker – be they laudable or villainous – has shone a spotlight on the practice, with personalities such as Chelsea Manning, Julian Assange, Bradley Birkenfeld and Edward Snowden dividing public opinion on the ethics of spilling secrets.  But organizations should pay close attention to the surge in this whistleblowing trend beyond the headlines; whistleblowers don’t need to be popular to be effective, and opinions on their motives and morality are entirely secondary to the critical issues they potentially uncover.

The Central Roles of Culture and a Robust Internal Reporting System

A recent Forbes article dubbed 2014 “The Year of the Whistleblower,” pushing internal reporting and compliance structures to the very top of the corporate “must have” list. Whistleblowing has never been more appealing to those seeking the moral high ground, monetary gain (the Dodd-Frank Whistleblower Program is authorized to reward information that results in an enforcement action), notoriety or just plain retribution. The results of airing grievances externally have never been so visible or damaging – just ask the NSA .

All this makes the overarching need to give employees a comprehensive internal reporting system that they have confidence in imperative. Ideally, one consequence of the heightened media attention on whistleblowers is the growing realization that organizations must develop a more open corporate culture where people feel comfortable speaking up (as early as possible), and where there is zero tolerance for retaliation.

(Read NAVEX Global’s research on how retaliation claims are handled.)

The Relentless Surge in Retaliation

Putting aside the substantial reputational damage caused by external whistleblowing, failing to prevent retaliation is hitting companies in the pocket more directly than ever before with both protections and penalties continuing to expand via statute and case law. By way of example, a series of new laws passed in California expand whistleblower and anti-retaliation protections for employees in the state and violations can subject an employer to a variety of damages, including civil penalties, of up to $10,000 per violation.

The rise in reports of retaliation (retaliation now makes up more than 40 percent of all EEOC charges), which has corresponded with the increase in instances of whistleblowing, is clearly something organizations need to address as a priority. Even with overall workplace misconduct on the decline according to a seminal 2013 NBES study from the Ethics Resource Center (ERC), retaliation bucks the trend, continuing to rise at an alarming pace.  This synchs up with NAVEX Global’s own proprietary data (based on the largest database of reported incidents in the world) where overall report volume has increased substantially over the past three years. 

Addressing Claims Head On

A good starting point is to look past the individual raising the allegation, regardless of whether it comes from an underperformer who is being managed out or a disgruntled worker who appears to have an “obvious agenda.”  It’s smart practice to treat every allegation as if it came from your most valuable employee in order to remain objective and avoid missing red flags. And, it may come as a surprise, but repeat reporters (who can be frequently dismissed as “whiners”) have their clams substantiated at a rate four percent higher than first time reporters.  According to NAVEX Global's Hotline Benchmarking data, the number of repeat reporters has more than doubled in the last five years, with a four percent increase in 2013 alone.

And if there is an area that needs acute attention, it is middle managers.  According to the 2013 ERC survey, sixty percent of misconduct is perpetrated by managers.  Pile on that most managers do not understand what constitutes prohibited retaliation, and that they are in the best position to engage in it, and you have a perfect storm.  This is where focused education and training on retaliation for managers is so imperative, and directly supports overall efforts to address workplace culture.

2014 – The Year to Rebuild Trust?

While feelings toward people like Snowden are mixed, his highly public whistleblowing saga could be a saving grace for organizations that read between the sensational headlines. Employers need to proactively assess and continuously improve their cultures while ensuring their internal reporting system is robust, well understood and recognized as an absolutely critical component to protecting both people and reputation, and succeeding across any measure of business success. Let’s make 2014 the year to rebuild trust and confidence in internal reporting and the rule against retaliation.

 

Topics:  Compliance, Dodd-Frank, Edward Snowden, EEOC, NSA, Reporting Requirements, Retaliation, Risk Mitigation, Whistleblowers

Published In: General Business Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© NAVEX Global | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »