Why employees should become whistleblowers despite organizational risks

Whistleblowing

Businesses today are faced with a number of challenges, and one of the biggest is unethical or illegal practices by their employees. It is important to examine why whistleblowing should be encouraged to prevent irreparable damage to the company.

Understanding Whistleblowing

Whistleblowing is defined as "an exposure of fraud and abuse by an employee. This is a straightforward enough definition, but one involving complex issues. For the intending whistleblower, the decision to expose illegal or unethical practices within his or her organization carries it own pitfalls (Gurmeet)."

Conflicts

There are conflicts an employee may face such as "loyalties-personal, organizational, and social, which may be a collision more than he or she is willing to bear (Gurmeet)." The employee may also worry about retaliation from the company, and view it as "David and Goliath, where the little guy confronts the mighty company (Gurmeet)."

Examples of Whistleblowing

There are some people who have taken risks in order to do the morally correct thing, and blow the whistle on corruption. Some of these include: "Enron employees Sherron Watkins and Maureen Castaneda who blew the whistle on dubious company practices. Initially they were ignored, then ridiculed and threatened with sack before bringing the giant corporation to it knees, and Harry Templeton, who stood up to the might and wrath of Robert Maxwell by revealing the newspaper tycoon's abuse of workers' pension funds (Timms)."

Whistleblower Protection

Due to the risks and fears faced by potential whistleblowers, there have been statutes enacted in all 50 states as a means to "expose, deter, and curtail wrongdoing. Policymakers' recognition of whistleblowing's potential effectiveness as a mechanism by which to expose wrongdoing has become increasingly widespread in the last fifteen to twenty years. The benefits and drawbacks of the federal False Claims Act have received a great deal of attention on a national scale such as: initiatives aimed at encouraging whistleblowing being pursued by the states, and numerous courts interpreting pertinent federal and states statutes (Dworkin)."

Federal Level

There are two types of legislation concerning whistleblowing offered at the federal level. One is "aimed at encouraging whistleblowing through incentives, while the other is focused on protection against retaliation (Dworkin)." The most commonly used statutes concentrate on "providing a cause of action for whistleblowers who experience job-related retaliation as a consequence of their revelations (Dworkin)."

False Claims Act

In 1986, the federal False Claims Act (FCA) was revised. It is "one of a small handful or relevant laws that provide financial incentives for disclosure, and has become one of the prime whistleblowing laws, as well as the most demonstrably effective (Dworkin)." Since the revision, the number of FCA reports of "fraud against the government have increased from an average of six per year, to over 450 per year. The Act, which provides substantial rewards to whistleblowers who prosecute successful suits in the name of the government against individuals or companies who have fraudulently claimed federal funds, has made millionaires of most successful FCA whistleblowers and resulted in the recovery of more than $3 billion (Dworkin)."

There is another approach that employers have grudgingly adapted to in their quest to encourage whistleblowing, aimed at motivating employees through the benefits of rewards. The "Corporate Sentencing Guidelines encourage corporate 'rightdoing' by mitigating sanctions such as large fines, corporate probation, and mandated negative publicity for corporations that have an effective compliance program and are convicted of federal crimes. An important part of such a program is a whistleblowing procedure that is well-publicized, monitored, and under which complaints are acted on without retaliation to the whistleblower. This action has effectively prompted major companies to establish whistleblowing procedures, most commonly in the form of hotlines (Dworkin)."

Conclusion

Many individuals are hesitant to engage in internal whistleblowing for fear of retaliation from the organization. It is important for organizations to address these concerns, and emphasize their compliance with the FCA and Corporate Sentencing Guidelines.

By doing this, as well as providing information concerning the incentive programs, organizations are striving to encourage members to blow the whistle on corruption.