Want to Stop a Whistleblower? Listen Carefully.

Companies that establish a culture of respect can identify and resolve problems before a whistle is blown.

By Jeremy M. Simon

Whistleblowing is in vogue according to data from the Securities and Exchange Commission, as reported in The Wall Street Journal. The agency awarded a record $168 million to 13 individuals in the fiscal year ending Sept. 30, 2018, out of a total of 5,282 whistleblower tips during the year. Tipsters who provide information that helps the SEC collect at least $1 million in fines can receive between 10 and 30 percent of the fine.

About 83 percent of current or former employees who blow the whistle on their employers had previously raised their concerns to the company first. Why are reports of wrongdoing not dealt with more decisively within the organizations?

It’s not for lack of wanting to know. Corporate executives usually want to hear about internal problems, says Texas McCombs Lecturer Grace Renbarger, who spent four years as the chief ethics and compliance officer at Dell. “They can’t stop it if they don’t know about it,” she says.

Many large companies offer mechanisms such as ethics hotlines that enable workers to report misconduct anonymously. Under the Sarbanes-Oxley Act, passed in 2002, all publicly traded companies must have mechanisms for the reporting of accounting or audit fraud.

But those hotlines don’t always get used. One problem could be a corporate culture that discourages it. To get more employees to speak up, “you have to tackle the culture itself,” says Professor of Management Ethan Burris.

Whistleblowing Isn’t Easy

The consequences of becoming a whistleblower are “generally pretty awful,” says Robert Prentice, professor and chair of the Business, Government, and Society department.

Prentice explains that whistleblowers are often shunned by coworkers, may be fired, and can have difficulty finding work in their industry again.

Unemployment, combined with years spent in court battling former employers, can drag whistleblowers into bankruptcy. In the most extreme cases, whistleblowers may be the victims of physical intimidation or even murder. There is speculation, for example, that the 1974 death of nuclear safety activist Karen Silkwood may have been linked to her public opposition to unsafe practices at her company.

“Being a whistleblower is far from rosy.” — Robert Prentice

Things may not turn out so great for the company, either. Employee whistleblowing can potentially mean fines, lawsuits, or government investigations of the company, Prentice says. If the whistleblowing case isn’t handled well internally or high-level executives are involved, expect the press to pick up on it. “You’re going to hear a lot of publicity about the really catastrophic ones,” Renbarger says.

Company Hotlines Are Mostly Symbolic

For companies, it’s important to get workers to speak up before problems get too serious.

Companies should consider how they are soliciting employee input. Renbarger says most large U.S. corporations have toll-free hotlines or web portals managed by third-party vendors that allow employees to blow the whistle while remaining anonymous.

Some experts say more needs to be done. Anonymous hotlines are important “symbolic actions,” but they aren’t enough, says Burris, who researches how employees share feedback in the workplace.

“To me, a hotline is just sticking a Band-Aid on the underlying issue.” — Ethan Burris

A hotline doesn’t change the wider corporate culture that not only allowed wrongdoing to occur, but also made the employee feel the need to seek out an independent third party, either inside or outside the organization, to resolve the issue, Burris says.

Changing Corporate Culture

Instead, Burris says employees should be talking about serious workplace problems with their managers. The company can encourage discussion by letting workers know that it’s safe and worthwhile to speak up about sensitive issues, and by letting managers know that it’s safe and worthwhile to address problems and make changes, rather than continuing with the status quo.

“Unless you have both pieces involved, you’re not going to change the equation all that dramatically for employees,” Burris says.

“If the culture is one of openness and transparency, that values integrity and encourages people to speak up; then I think there will be more reporting.” — Grace Renbarger

“On the other hand, if the culture is authoritarian, greed-obsessed, and lacking in values, then there will be a lot less reporting because people are either afraid or don’t care — they just want to keep their heads down, get their paycheck, and go home.”

The Personal Touch Counts

Burris’ research has shown that to get employees talking, managers should be physically present, open and nice about receiving employee feedback, and willing to take action when appropriate. They also should let employees know how their feedback is being used — or not used — and why. Most importantly, managers need to visit employees on their turf and request input, rather than waiting for employees to come to them.

In other words, touting your open-door policy doesn’t mean much on its own, Burris says. “Unless you actually do something with [employee feedback], why would I want to waste my time going out of my way and sticking my neck out to tell you how things are if nothing is going to change?”

For companies that want their employees to speak up, hiring good management isn’t enough, though. Employers need to take a holistic approach to the corporate culture since the company as a whole has a greater influence than the malleable personalities of individual managers.

“If the culture’s terrible, they’re going to adapt to that terrible culture,” Burris says.