Only 20% of whistleblowers disclose their concerns to someone outside the company, creating an opportunity for employers to preempt the involvement of regulators, according to a recent report.
Urging employers to embrace whistleblowers and “cultivate a culture of reporting,” The Network, a provider of ethics and compliance software, says research contradicts the stereotype of reporters being disgruntled employees motivated by financial incentives.
“There are certainly whistleblowers whose intentions are questionable at best,” the authors of the report write. “However, the reality is that most whistleblowers are simply trying to do the right thing and more likely than not tried to report their concerns to their companies long before they ever went to a government regulator.”
In fact, 92% of reporters turn to somebody inside the company when they first report misconduct, only one in five ever tell someone outside the company, and only 9% of employees report to the government.
“That means you have a chance to uncover and address the vast majority of potential issues before regulators, the media, or lawyers ever get involved,” The Network says.
Retaliation is certainly not an effective response, the report says, noting that it “drives employees into the arms of investigators — and makes it less likely that you will learn of a problem while there is still time to address it internally.”
“For most organizations, encouraging a speak-up culture (and ensuring it permeates your extended enterprise) is the most effective way to manage potential whistleblower liability — and the one factor entirely within your control,” the report recommends. “A strong reporting culture will not only make sure you learn about potential problems, studies show it will actually lead to a decline in misconduct.”
While nearly 70% of employees will report an incident to their direct supervisor, only 58% of managers feel prepared to handle employee reports of misconduct. “To close this gap, you need to provide middle management with the support and guidance they need,” The Network says.
Earlier this month, a federal appeals court ruled that the retaliation remedies of the Dodd-Frank Act are available to whistleblowers who report wrongdoing at a company internally before they go to securities regulators.