Impact of whistleblowing on organizational work environment and morale

Whistleblowing Activity and the Work Environment

Freedom of the Press

The Impact of Whistleblowing Activity on the Work Environment

The Impact of Whistleblowing Activity on the Work Environment

The world paid attention as disclosure after disclosure revealed that the National Security Agency had overstepped its congressional mandates and in some cases broke the law in this and other countries (Gelman, 2013). The whistleblower, Edward Snowden, fled U.S. territory and traveled the globe looking for a safe place to reside. Without having a source inside the NSA, one can only imagine the atmosphere of distrust and paranoia that descended upon the organization. This research report will examine whether public disclosures of sensitive information by whistleblowers have a negative impact on the work environment. Rather than take a position one way or the other, this essay will analyze the problem from multiple perspectives to arrive at a logical conclusion.

Body

Whistleblowing and whistleblowers have a troubled history in the United States, however, recognition of the need for whistleblowers dates back to the Civil War when President Lincoln ushered through the False Claims Act in 1863 to sanction the sale of fake gunpowder to the Union Army (Eaton & Akers, 2007). The False Claims Act still plays a significant role today in helping the government recoup losses due to unscrupulous suppliers and sub-contractors. In 1989 Congress passed the Whistleblower Protection Act and has since updated protections for federal employees in 1994 and 2007. In 2002, Congress passed the Sarbanes-Oxley Act that established strict protections for whistleblower employees of publicly-traded companies. The federal government, at least, has long recognized the need for whistleblowers and attempted to protect them from retaliation.

Eaton and Akers (2007) advise all organizations, whether government, private, public, or non-profit, should craft and implement a whistleblower policy. They cite a fraud examiners report that estimates $600 billion is lost annually to this crime and implementing a functional whistleblower policy reduces losses by 50%. In essence, Eaton and Akers argue that implementing a robust whistleblower policy is essential for good corporate governance. Schreiber and Marshall (2006) have the same view, but view the implementation of whistleblower policies as effective risk management. Their concern is not only the losses due to fraud, but also establishing the policies necessary to protect the company against litigation by whistleblowers who feel they were treated unfairly. One of the more revealing recommendations by Schreiber and Marshall is to document employee performance deficiencies in anticipation of possible whistleblower activity in the future. The potential negative impact of such a policy on employee moral would be easy to predict.

Despite the obvious negative outcome should a company decide to take steps to protect itself from litigious whistleblowers, the inertia in Congress and elsewhere seems to be strengthening fraud sanctions against organizations and whistleblower protections. In other words, as long as a risk for fraud exists there will be significant political support for strong whistleblower statutes and policies. Kaptein (2011) would argue, based on their research findings, that whistleblower activity taking place in any organization is symptomatic of an absent or weak ethical culture. When Kaptein examined how employees would respond in light of the ethical culture of their employer it was discovered that confrontation and filing a complaint within the chain of command were preferable if the employer's ethical expectations were clearly defined. Whistleblowing is therefore a measure of last resort for most employees who suspect or have witnessed fraud or employee maltreatment.

Conclusion

The purpose of this analysis was to better understand whether public disclosures of sensitive information by whistleblowers have a negative impact on the work environment. Based on the above analysis, the question should not be whether public disclosures of malfeasance undermine a positive work environment, but how did the work environment become so hostile to internal reporting that an employee felt the need to turn whistleblower? The principles of good corporate governance, risk management, and ethics assumes that fraud occurs; therefore, the way forward is to create a corporate culture that not only protects whistleblowers, but also encourages an internal reporting process.

The research findings by Kaptein (2011) should be encouraging to managers and directors because it suggests that most employees prefer an internal reporting process and are therefore not inherently litigious. Based on their findings a clearly defined ethical culture is one of the primary means of ensuring internal reporting, because it seems to help employees feel comfortable enough with their managers to report problems. Their findings also revealed that in an ethical corporate culture employees may even feel supported enough to directly confront the suspected wrongdoer.