How to Proactively Manage Whistleblowing
We’ve heard more about whistleblowing since the President’s recent signing of the Department of Veterans Affairs Accountability and Whistleblower Act of 2017 and the announcement that the Supreme Court will review the scope of Dodd-Frank’s whistleblower protections. Also, with whistleblower suits on the rise, increased CEO firings over ethical lapses, and National Whistleblower Appreciation Day falling on July 30, it’s an important time for companies to think about their corporate governance structures, whistleblower systems, and whistleblower investigation processes.
Instead of looking at whistleblowing as harmful, companies should consider whistleblowing a safety valve and a sign of an engaged, ethical culture. If employees are aware of the ethical standards and laws governing the business, they can be an effective tool in spotting “tip of the iceberg” behaviors that can spell trouble for the organization. Moreover, developing applicable, strong policies and procedures around whistleblowing creates an ethical culture that is constructive for the organization. These procedures allow the company to push the pause button on the current behaviors and environment and examine them to determine whether these (explicitly or implicitly) may have led to the issue. Thus, having a procedure as a part of the corporate governance structure is not a mark of failure but a proactive measure to protect the organization.
Whistleblowing claims can vary drastically from tax, procurement, contracts, and health and safety. However, regardless of department, it can affect you. Managing an investigation requires cross-functional collaboration. Legal, human resources, and ethics and compliance need to pay particularly close attention, as they are usually involved in the reporting and investigations processes. Investigations allow for errors and omissions to be rectified, and if done early enough can help mitigate their impact and prevent prolonged regulatory investigation, damage to the company’s reputation, and a messy or expensive lawsuit.
Additionally, the PR team should be involved. With the 24/7 news cycle and social media, the public is quick to learn about any alleged unethical behavior. Even more reason for companies to be transparent when needed, rather than letting an indiscretion become public and potentially unmanageable.
If someone reports a concern to you directly or to a whistleblower hotline, it should be reported immediately to in-house counsel.
Following a report, companies should take into account the following practicalities and best practices:
- Consider your governance structure
- Initiate the appropriate reporting processes
- Collect documentation
- Conduct internal investigations and interviews
- Consider bringing in a third party
- Consider self-reporting to the appropriate government regulatory agencies like OSHA, SEC, and IRS
While a whistleblowing situation is something companies often don’t want to endure, it’s best for organizations to be prepared. Encourage employees to bring up questionable activities and practices and ensure the proper procedures are in place to mitigate risks.