Whistleblowing is becoming more accepted as a way for organisations to access internal information that can help leaders to minimise risks. Are you weighing up the possibility of implementing a whistleblowing system in your organisation? In this post we will share feedback from our work with customers to highlight the whistleblowing benefits that your organisation and its stakeholders may expect. We aim to describe the benefits from the perspective of different stakeholder groups.
Please note that all the quotations used in this article are from actual customers who have implemented our whistleblowing system.
Whistleblowing – from fraud detecting to trust building
Whistleblowing is seen as a very effective tool to combat fraud. Indeed, in its 2018 ACFE Report to the Nations on Occupational Fraud and Abuse, the Association of Certified Fraud Examiners reported that tips are by far the most common initial detection method with 46% of all cases being detected by a tip. The same report also states that fraud losses were 50% smaller at organisations with whistleblowing hotlines than those without.
While the rise of whistleblowing started with the 2007-08 global financial crisis, and the resulting drive for a crackdown on corporate corruption, today the benefits of having a whistleblowing system in place stretch far wider than uncovering financial irregularities.
In fact, in our most recent customer study on organisational whistleblowing, 50% of the participants responded that building trust was the main benefit of a whistleblowing system. This indicates that whistleblowing has moved from being an early warning hotline to an important part of the organisational ethics toolkit.
"In one example, the bullying behaviour of a manager led to a review and investigation and subsequent resignation of the manager when it was clear that we would investigate and take appropriate disciplinary action."
Whistleblowing is unique in that it gives everybody in the organisation, and often also external stakeholders, the opportunity to report a concern if they see something they suspect is against the organisation's ethical principles. These concerns may relate to environmental crimes, major deficiencies in workplace security or serious forms of discrimination or harassment – all matters that are considered potential whistleblowing cases.
How does whistleblowing help different stakeholders?
"Our whistleblower service, which aims to protect our interests and the policies that guide us, is made available to employees, contractors, interns, etc. and also at our portfolio companies. As an investor, we want to ensure that the employees working in our portfolio companies can raise a red flag, in a secure manner, if there is any suspicion of a serious irregularity."
Whistleblowing systems are not only valuable for an organisation's leaders. They are beneficial to a wide range of stakeholders, and can be made available as a channel for reporting suspected misconduct both internally and externally.
Whistleblowing benefits: What the Compliance Officer might say:
Whistleblowing reinforces our compliance policies. As the head of the compliance department, I'm on the team that deals with the whistleblowing reports when we receive them. Through the online whistleblowing system, it is easy to stay in touch with the whistleblower, even if they choose to remain completely anonymous, so we can get that critical information we might need for an investigation.
Our whistleblowing system gives us... "Improved compliance with legal and stakeholder requirements."
However for me, one benefit that is equally important is that the system makes handling each case so much more efficient. It has a built in process that me and my colleagues all follow, so I know that cases are handled sensitively, consistently and correctly. The system is also compliant with all applicable laws, for example those related to data protection and privacy. That gives me confidence that we handle things in a compliant manner. I can also assign different managers to respond to different kinds of whistleblowing reports from different groups.
Whistleblowing benefits: What the Human Resource Manager might say:
Sometimes reports come in through the whistleblowing system, about something that is wrong in the organisation in the eyes of the whistleblower. But it may not really be a whistleblowing case. However, it is clearly something that is important to the sender of the report, something they are very unhappy about, or uncertain about, like an ethical dilemma, and they do not know where to turn.
One benefit is "...having a channel when nothing else seems possible for the whistleblower."
The fact that we receive a report opens up an opportunity for dialogue with the person reporting – even if they remain anonymous. It helps us build trust with employees and even improve some of the HR related matters in the organisation. In Human Resources we take these kinds of reports seriously, we might otherwise never get to know about these issues, so it is important that we are represented on the whistleblowing team.
Whistleblowing benefits: What the employee might say:
I am so relieved that my company has a secure whistleblowing service. I mean, sometimes I see things going on, but I'm not sure they are "wrong". When the whistleblowing system was introduced we all received training in how to use it. At the same time we had to re-read our company code of conduct, and go through training on anti-corruption and other misconduct. It was good to understand how it all fits together and I also felt really proud that the company I work for has zero tolerance for unethical behaviour.
One benefit of our whistleblowing system is "...the fact that (employees) can report in local language as we operate in 22 countries and not many of our staff speak English."
Obviously, I hope I'll never have to blow the whistle, but just knowing the company is open to whistleblowing is a comfort. In the training we were told that the whistleblowing system is completely anonymous and has the most secure technology to protect my identity and data. I can report in my own language. I can also report from my mobile phone if I want. I would hate to have to sneak around trying to work out how to report a colleague, or worse, my boss if I could only access the whistleblowing system from work.
Whistleblowing benefits – What an investor might say
I want my investments to be protected. And I want to know that I invest in companies with high business ethics. If there is fraud going on inside the organisation, then I want it to be stopped before the financial losses impact a wider group of people than necessary. If somebody is being bullied or discriminated against, they have to be given a voice. I am happy that the board understands how the organisation can become more transparent to us as investors thanks to the whistleblowing system.
Whistleblowing benefits – What a Managing Director/CEO might say
Whistleblowing for me is another tool for minimising risks. No management team wants a crisis on their hands. As the Managing Director, I have to do everything I can to reduce the kind of crises and resulting risks that are caused by my own employees, on behalf of all my stakeholders. Our whistleblowing system is very important for that. When we receive an early warning tip from a whistleblower, there's a much greater chance we can address it internally, or with expert help, and limit reputational damage considerably.
"Offering this service is a natural part of our risk culture."
But it's not just about the crisis element. We are very serious about being a sustainable, ethical company full of people with integrity. This is the responsibility of everybody in the organisation. Our code of conduct explains what that looks like, our corporate culture enables right action and behaviour, and the whistleblowing system reinforces it all. The system shows our people that we are ready to listen and ready to act. I also like to think that by communicating the purpose of the system properly, and our openness to tips, we remind people that they also have a responsibility to report anything they suspect, even if they are not sure whether it is a whistleblowing case.
Whistleblowing benefits – What a member of the Board might say:
Whistleblowing helps us as members of the board with our top priorities: ensuring transparency and good governance. At the end of the day it's our responsibility to ensure that the management team creates an environment, a structure and a culture that reduces risk and enhances transparency. Whistleblowing is an effective tool in that regard.
"Our whistleblowing service is an insurance that we are doing everything we can to govern the business." Board member in a global company
If we receive a lot of reports then this would indicate that there's something very wrong in the very fabric of the organisation. If we receive nothing, no reports at all, then I'd say that the whistleblowing system is doing its job in preventing or reducing the risk of misconduct.
Whistleblowing benefits – What a supplier might say:
When we were given access to our customer's whistleblowing system, I was impressed. I know that corporate social responsibility is really important to them and that they only want to work with companies that share their values. Their openness to whistleblowing really underlined that they wanted to hear about unacceptable conduct throughout their entire supply chain. I wasn't really sure what I would need to look for, but they gave me some training on typical signs that indicate fraud might be at play. I'm proud to be part of an ecosystem does not tolerate misconduct. As a bonus, I have been able to apply what I've learnt to other customers – and point them to more structured ways to work with whistleblowing.
Whistleblowing benefits – What a customer might say:
I really wasn't very favourable to whistleblowing before I knew more about how it can be handled professionally. So I was sceptical when I was offered access to the reporting part of my supplier's whistleblowing service. Their compliance officer explained to me that they took they corporate ethics seriously, both inside and outside the organisation. For example, my supplier has zero-tolerance for bribery, but of course they wouldn't be aware of their own salespeople being guilty of it, say for winning new business, unless we as customers told them. They shared their code of conduct with me, and now I have a link to their system if ever I suspect behaviour that I think goes against their code. It's admirable. A supplier that has the confidence to invite customers to report concerns through their whistleblowing system feels like a transparent company to work with.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.