New Report Counsels Companies To Encourage Internal Whistleblowing

On September 28, 2015, The Network, a compliance and ethics software company, released a report detailing the motivations of potential whistleblowers and urged companies to cultivate a compliant, whistleblower-friendly environment.  According to The Network’s statistics, 92% of whistleblowers report internally, which offers those companies the opportunity to address the situation before it triggers the liability of an outside investigation.

The report also dispels the negative stereotype of disgruntled, money-grubbing whistleblowers.  Relying on facts gathered in its recent investigation, the Network report portrays the average whistleblower as they usually are: “simply trying to do the right thing” and more likely than not they “tried to report their concerns to their companies” before seeking outside help.  Only 20% of whistleblowers ever report externally, with only 9% reporting to the government.  Thus, the notion of a “bounty-hunting” whistleblower does not align with reality.  In fact, according to a University of North Carolina poll cited in the report, the force that drives whistleblowers to report externally is not the desire for monetary gain, but a fear of retaliation.

As the report notes, retaliatory conduct toward the whistleblower is likely to be largely detrimental to the company, leading to outside reporting, costly settlement proceedings, and the risk of harsh fines it.  However, as it stands, many companies are not prepared to address concerns effectively.  Of the 70% of employees who report incidents to their direct supervisors, only 58% were met by managers who feel prepared to address their concerns.  This underscores the necessity of company-wide support and guidance, which should also cover those who perform services for the company but are not employees (20% of whistleblowers are consultants and contractors).  The report suggests web-based reporting mechanisms, training middle management on potential risks and compliance procedures, a holistic “speak-up culture,” and an enforced anti-retaliation policy.

As the report’s findings make clear, it is clearly in everyone’s best interest—from the reporter to the company to the consumer—for companies to encourage rather than punish internal whistleblowing.