From: Compliance Week
By Aaron Nicodemus
Aug 4, 2021
Compliance Week’s recent series, “Witness to Wrongdoing: Whistleblowers share their stories,” explored the experiences of five corporate whistleblowers. It shed light on their blowing the whistle but also detailed their attempts to bring forward complaints within their organizations.
Most internal complaints from employees never become whistleblower cases. That’s because they are handled correctly and efficiently by the organization receiving them. The best organizations have a strong, reliable, and trusted system for reporting wrongdoing—one that values accountability, transparency, communication, and results. Investigations are launched based on facts, not emotion, and are concluded after a thorough examination of the complaint.
The investigation might lead to positive changes, like better working conditions, better safety equipment, or more efficient procedures, or more thoughtful accommodations for an employee with disabilities. In the case of wrongdoing, an investigation could lead to updates in policies, reassignment of responsibilities, or even punishment or termination of employees involved in the misconduct.
The primary reason for having an effective internal complaint reporting system, according to Carrie Penman, chief risk and compliance officer at integrated risk and compliance management solutions provider NAVEX Global, “is that smart, effective, and successful organizations want to know where they have problems. Every organization has problems. Do you want to let them fester or cause you to lose employees or create a toxic culture?”
Here’s what whistleblowers, their supporters, and advocates would like compliance officers who handle internal complaints to understand about the process from their side of the table.
Employees reporting wrongdoing often didn’t go looking for trouble—it found them. Of course, there are cases of disgruntled employees using internal reporting processes to air grievances. But those are not the norm. Most employees report wrongdoing out of a sense of outrage their company—a company that has values and culture in which they believe—would allow bad things to happen or to continue happening.
In 2001, Aaron Westrick blew the whistle on defective bulletproof vests manufactured by Second Chance Body Armor, then spent nearly two decades providing testimony and evidence in various lawsuits. He didn’t want to destroy Second Chance, which filed for bankruptcy when Westrick filed a False Claims Act lawsuit in 2004. On the contrary, he wanted to save it.
“I loved that company. I still do,” Westrick said. “It’s interesting: People say (whistleblowers) weren’t loyal. I was the most loyal person there! I really believed in what I was doing.”
Appreciate the value of internal reporting. For most companies, effective internal reporting programs can head off massive problems down the line.
“Organizations would rather hear about that issue internally first before a regulator knocks on their door,” said Jane Norberg, chief of the Office of the Whistleblower at the Securities and Exchange Commission (SEC) from 2016-21. “And so, whistleblowers need to feel comfortable and confident that if they report internally, they won’t be treated negatively because of it. This starts from the top down.”
Make it clear how the internal reporting system works. Employees will want to know: Where does my complaint go? Who sees it? Who investigates it? A good internal reporting system should acknowledge the receipt of a complaint within 24-48 hours, said Penman, and also lets the employee know who or what department is handling the investigation. Then, investigators should provide the employee with regular updates, weekly or bimonthly, on its status. Finally, the company should notify the employee when the review is complete with the outcomes of the investigation they are able to share.
“One of the biggest fears for whistleblowers is the belief that nothing will be done with their complaint,” Penman said. “Absent good communication, people will fill in the blanks themselves, and they usually assume the worst.”
Take the complaint seriously. “Don’t make them (whistleblowers) feel like they’re stupid and don’t understand,” said Dee Dee Stone, who blew the whistle with the SEC in 2011 on accounting fraud at a Texas-based investment vehicle called China Voice Holding Corp. “Usually if somebody catches something like that, they have a pretty analytical mind, and so they’ve already thought through the scenarios. … Don’t give a fluff piece or blow them off because you have a chance to stop it internally, which is way better than having to get all the government agencies involved.”
Don’t shoot the messenger. Examine the content of the complaint—don’t dwell on a whistleblower’s motivations for filing a report.
“It’s not kill the messenger time. It’s not shoot the messenger time,” said Sherron Watkins, whose reporting of massive accounting irregularities at Enron brought the company down in 2001. “Let’s pull out our tool kit. What can we do to see whether this is true? Do some interviews; do some anonymous surveys; and they say within a week or two, they know whether it’s a real complaint or not. Treat it for real.”
Investigations must have consequences. Companies should not grant exceptions to so-called “star performers.”
“If you really want your internal control systems to mean anything, you’ve got to get rid of the ethically challenged employees,” said Watkins. Even a company’s top workers—be it a high-level executive or successful salesperson or integral manager—should be fired if proven to have participated in wrongdoing, she said.
“They have to be treated the same as the underperformers. And if you treat them in any other way … you are undermining your internal control systems,” Watkins said.
Watch for all kinds of retaliation—and not just from the top. Retaliation by a company against an individual for reporting a problem is a real fear among whistleblowers. So is peer-to-peer retaliation that creates a toxic work environment for the reporter.
Penman says only about 1 percent of internal whistleblowers report retaliation to their internal system, which gives companies a false sense of security that retaliation is not an issue for them.
“I think companies, in general, need to spend a lot more time thinking about retaliation in many forms,” she said.
Why aren’t there many reports on retaliation? Because the employee reported a problem, then suffered retaliation because of stepping forward. It sure doesn’t engender confidence their retaliation complaint will be handled any better than their first one, Penman noted.