Whistleblowers: Three Predictions (and One Solution)

A “whistleblower” is an individual reporting suspected violations of ethics, policy or law.  Good companies use such reports to advance systemic improvements, mitigate risk, appropriately discipline violators, and – occasionally – appropriately prepare for prosecution.  Bad companies ignore good faith internal reports at their peril, and encourage whistleblowers to directly disclose to enforcement authorities instead.   

Prediction 1:  Carnac says:  anticipate more HR-related whistleblower reports.  

Historically, tough times in business have correlated with an uptick in whistleblower reports.  This is because redundancies and shifts in job responsibilities generate accusations of bias, harassment, unfair labor practices, and favoritism.  Considering an economic recession, broken supply chains, and a raging global pandemic, we anticipate that these “interesting times” will be no different.

Prediction 2:  Bad faith or unsubstantiated allegations will increase.

Not all whistleblower reports are made in good faith; some are lodged to postpone a dismissal or retaliate against a demanding boss.  Challenging business climates increase redundancies, which increase the number of folks wishing to postpone them.  As market pressures increase and staff decrease, bosses become more demanding and metrics become less easily achievable – frustrating those retaining their positions and leading to HR-related reports.

Prediction 3:  Allegations of fraud, bribery and corrupt dealings will increase.

As market pressures increase, companies find themselves under enormous pressure to “make the numbers, no matter what” and employees become desperate to retain their jobs.  Incentives are aligned towards commercial survival, and anything that could impede short-term revenue streams may be discarded.  Unfortunately, sometimes things like “ethical business practices” and “legal obligations” could be seen to impede immediate revenue. 

Solution:  Organizational Justice.

Whistleblowers can report internally or externally, meaning they can proceed through your company’s internal review system or they can report directly to the government. It is in a company’s best interest for its employees to make their reports internally, so that matters can be handled discreetly and without the feds knocking on your door! 

A company with a healthy sense of Organizational Justice encourages its employees to report internally because they believe in the system.  (In other words, they believe that matters will be fairly investigated and will result in appropriate discipline and systemic improvements.)  How to insulate your company from the negative consequences of external whistleblowing?  Among other things:

• • Have a well-publicized whistleblowing hotline.

• • Don’t be afraid to publicize redacted metrics on investigations.

• • Analyze internal metrics against industry and pan-industry standards.

• • Demonstrate a commitment to ethical values and healthy company culture.

The Wallenstein Law Group will ensure you have strong systems and controls and a healthy corporate culture.  Contact The Wallenstein Law Group today to learn more. We can’t wait to collaborate with you!