June 23rd is World Whistleblowers Day. It’s an occasion to acknowledge people who speak up when they know something is not right and needs to change, who raise their voices against corporate misconduct or unethical practices. That said, it is unfortunate we use the word “whistleblower”, which can carry a negative connotation, to describe them. Traditionally, the term is synonymous with tattletale. Someone intent on getting another person or organization in trouble. But I prefer to think of whistleblowing as a means to shed light on a problem. I also prefer the term “reporter”, a person trying to hold the organization accountable for a solution by bringing issues that need attention and resolution forward.
Unfortunately, when the public hears about whistleblowing, it is usually because the issue in question is already in the news. But what’s frequently not reported is that nearly all public whistleblowers have actually tried to report internally first. Most are trying to help fix whatever is wrong and prevent it from getting worse. Sounds more like a concerned employee than a tattletale.
It is almost impossible to overstate the role internal reporting plays in creating and maintaining a healthy workplace culture. When employees, partners, and other stakeholders all know they are allowed – even encouraged – to report concerns the whole organization benefits. But this is only possible if there is buy-in and support from the C-suite down.
Encouraging reporters to speak up about workplace problems, safety issues, and suspected illegal or unethical behavior allows leadership to respond swiftly and appropriately. This is helpful in two ways: it gives reporters confidence they’ll be heard, and it discourages future misconduct.
In addition to using a neutral term like “reporter” that elevates employee status as a force for good and shows that a company values employees as agents for positive change (rather than “whistleblower”, which can be intimidating and discouraging), the best way to accomplish this is to put a reporting and incident management system at the center of your organization’s compliance program. Of course, a robust program also includes employee compliance training, third-party risk management, attention to ESG factors and a system to establish and enforce appropriate policies including one against retaliation. But at the nucleus of the program, the risk-signal radar, if you will, is an internal reporting system.
In recent years there has been a significant increase in regulations focused on internal reporting requirements. The U.S. Department of Justice updated its longstanding Evaluation of Corporate Compliance Programs guidance in March this year. This guidance is explicit about the need for an effective “confidential reporting structure and investigation process.” The same is true in many other countries.
Perhaps the most well-known is the European Union’s Whistleblower Protection Directive, which is in the process of being implemented across member states. These regulations provide reporters with legal protection and companies with instructions on how to comply. The Directive is explicit, but complicated – so much so that NAVEX published a Solution Guide to the EU Whistleblower Protection Directive to help organizations better understand it. Regulations like the EU Directive are in place or being enacted by countries around the world including the U.K., Australia, and Japan.
But the value of creating a corporate culture that supports reporters goes far beyond regulatory compliance. Enlightened organizations know it also gives them a considerable competitive advantage. It helps build employee engagement, commitment, and trust – all of which contributes to higher retention and better performance. Contrast this with an unhealthy culture that allows bad behavior and unsafe working conditions to persist. In this latter case, the risk of legal exposure goes up while performance and trust go down.
But don’t just take my word for it. Research conducted by Professor Kyle Welch at George Washington University shows that more internal reporting by employees correlates with greater profitability, fewer material lawsuits and far lower exposure to regulatory fines and judgements. Yet, the reports themselves are not really the point. It’s the speak-up culture that promotes the reporting that matters most.
If your organization is truly committed to high-performance, a strong risk and compliance program – including support for internal reporting – should be a priority. That way, there will be no need for “whistleblowing.”
NAVEX is committed to helping organizations establish, grow and nurture a culture that prioritizes ethics and compliance. To learn more about NAVEX solutions for hotline and incident management, discover:
NAVEX Ethics Hotline & Incident Management Software
Frequently Asked Questions (FAQ)
1. What is World Whistleblowers Day, and why is it significant?
World Whistleblowers Day, celebrated on June 23rd, recognizes individuals who courageously report corporate misconduct and unethical practices. It emphasizes the importance of their role in improving organizational integrity and accountability.
2. How do whistleblowers contribute to a healthy corporate culture?
Whistleblowers or "reporters" act as guardians of corporate culture by spotlighting and resolving internal issues. Their internal reporting encourages a healthy work environment by addressing problems and preventing escalation.
3. Why is internal reporting crucial in an organization?
Internal reporting systems help create a more ethical and transparent work culture. Encouraging internal reporting allows for quick action on workplace issues, safety concerns and unethical behavior, which fosters a culture of accountability and trust.
4. How do regulatory updates support whistleblowers in reporting unethical practices?
Recent regulatory updates, such as the U.S. Department of Justice's guidance and the European Union's Whistleblower Protection Directive, aim to protect reporters and offer a framework for companies to comply with legal standards while nurturing an environment conducive to internal reporting.
5. How does a strong corporate culture benefit from encouraging reporters?
By embracing a culture that encourages internal reporting, organizations strengthen employee engagement, commitment and trust, leading to better performance and retention rates while minimizing the risks associated with unethical or unsafe practices.
6. What role does compliance play in maintaining a healthy corporate culture?
A robust compliance program, with a focus on internal reporting, forms the core of a healthy corporate culture. This program includes employee training, enforcement of policies against retaliation and an effective internal reporting system.
7. What does research show about the outcomes of increased internal reporting?
Studies, such as Professor Kyle Welch's research, indicate a positive correlation between increased internal reporting and better company outcomes. It often leads to increased profitability, fewer legal suits, and reduced exposure to regulatory penalties.
8. How can NAVEX assist organizations in building a culture that values ethics and compliance?
NAVEX offers solutions designed to nurture an ethical and compliant work culture. Their hotline and incident management software provide the necessary tools for organizations aiming to strengthen their internal reporting systems and overall compliance efforts.
