Your business benefits from embracing whistleblowers

Many corporate scandals in the news today involve some form of willful misconduct or negligence on behalf of executives or others in senior positions. Sometimes this is driven by corruption, but often it can be attributed to trying to win business by whatever means necessary. NAVEX’s 2023 State of Risk & Compliance Report shows that less than half (47 per cent) of senior leadership persist in a commitment to compliance in the face of competing interests and/or business objectives. While a commitment to compliance is stated as a value for many organizations, when the going gets tough, many leaders let ethics and compliance go by the wayside; in these cases, compliance is thought of as an inconvenience, not a cultural north star.

Start with a tone at the top and fully commit to compliance. This involves everyone from the C-suite, board of directors, general counsel, senior and middle management leadership, and will permeate the culture with enough focus. Only when organizations start with a commitment to ethics and compliance can they have a truly functional speak-up programme that encourages internal reporting.

Communicate clearly and define expectations

Once ethics and compliance are integrated into the culture, trust in the system can be established and grown. For this to work successfully, channels to report concerns need to be various, easily accessible, available in multiple languages, and secure for the reporter. Some of the barriers we have seen in the past include difficulty in accessing reporting mechanisms and a lack of structure to investigate claims. Combined with the common challenge of employee mistrust in the system or a fear of reprisal, it is clear why many organizations fail to implement an effective whistleblowing system.

Those seeking to implement a speak-up culture should, first, Eetablish a secure and trusted intake and investigation system. Second, they should clearly define an anti-retaliation policy, regularly communicate the value of reports and inquiries with the workforce (and even third parties).  Lastly, they should instill an unrelenting commitment to compliance – especially in the face of competing priorities, because that is often where the process breaks down.

Global whistleblower protection frameworks

Whistleblower protection legislation now has global attention and regulatory enforcement continues to thrive. While the nuances of each country’s specific laws vary, they frequently have several commonalities. Non-retaliation policies, ability to report anonymously, and requirements for organizations to have neutral parties to receive and/or investigate claims are just a few common threads we see in whistleblower protections and organizational requirements. Not only are these mandatory in many countries, but they also represent the bare minimum needed for employees to trust the programme in general.

Between the public, employee, shareholder and potential investor attention to how businesses do business, it is in the organization’s best interest to get ahead of potential issues by way of a culture of ethics and compliance.

Business benefits of a speak-up culture

Creating a culture that lives the values of ethics and compliance and embraces whistleblower reports is a net positive for the business because it creates a better ethos that improves reputation and the bottom line.

Regulatory enforcement for corporate misconduct is at an all-time high and happening in tandem with increased whistleblower protections. So, when businesses have robust compliance programmes, investigate reports thoroughly, and have clear whistleblower protection in place, they are in a much better position to avoid regulatory enforcement for misconduct or whistleblower mistreatment. Research conducted by George Washington University reveals that organizations with robust compliance programmes perform better on key metrics such as higher profitability (+2.8% ROA), fewer negative news stories (by -46 per cent), and lower fines if non-compliance does occur (-20 per cent).

Between the potential cost of fines due to misconduct compounded with the reputational damage that can ensue, organizations benefit greatly from getting ahead of the issue. This means that the compliance function should not be thought of as a cost center, but rather a cost saver as the investment in compliance is nominal compared to the hefty fines levied at violators.

Jan Stappers is an EU whistleblowing specialist at NAVEX.