REFRAMING INTERNAL WHISTLEBLOWING AS RISK IDENTIFICATION

Recent changes to the technological, social and legal context in which organizations operate mean that it is in the organization's best interests for its powerful managers to respond differently when internal whistle- blowers speak up. With the growing global use of mobile phones, the Internet and social media, the risk of the public exposure of organiza- tional wrongdoing is increasing (Oliver & Daly, 2007), multiplying the potential for swift reputational damage. This new technology has made it possible to capture evidence (via phones with digital cameras and recor- ders and through digital records of emails and documents) and dissemi- nate it widely (via Wikileaks, blogs, YouTube, etc.). Moreover, the increasing exposure of organizational malfeasance has shifted the public perception of whistleblowers (Lewis & Vandekerckhove, 2011). Civil society is increasingly intolerant of organizations covering up wrongdoing and has begun to endorse whistleblowing as a moral good. Furthermore, regulators have begun to use whistleblowers as resources, valuing them as frontline watchdogs against organizational misconduct and as an essential element of anti-fraud measures. Governments are now protecting and even rewarding whistleblowers. Many countries have enacted whistleblower pro- tection laws. The US Securities and Exchange Commission now gives a bounty of between ten and 30 per cent of any fines that exceed $1 million to individuals who expose major fraud. There is evidence to suggest that these efforts to encourage employees to speak up have exerted a positive impact. The seventh NESB Survey reported that in 2011, two thirds of the 45 per cent of the surveyed US employees who observed workplace misconduct reported it to management, the highest proportion ever since the survey (ERC, 2012).

However, many organizations are out of step with the new shift in public opinion. Organizational retaliation is still a real and present danger for the internal whistleblower. Alongside the increase in employee reporting, orga- nizational punishment has also increased. In the same NESB Survey, almost one in four employees reported experiencing sanctions for speaking up internally (ERC, 2012). It seems that management is failing to recognize that retaliation or ignoring internal whistleblowers' reports presents a real and present danger to their organization.

Without support for employee voice and internal whistleblowing, compa- nies risk exposure to reputational, legal and financial damage. Research has shown that retribution (or fear of it) often drives an internal whistle- blower to report the wrongdoing outside the organization (Brown, 2008), leading to damaging exposure and public relations disasters, which internal acknowledgement could have avoided. Observed retaliation also dis- courages the future reporting of wrongdoing, which undermines the organi- zation's ability to detect and self-correct damaging misconduct (Miceli, Near, Rehg, & Van Scotter, 2012). Moreover, an organization's reaction to observed wrongdoing impacts its employees' morale and performance. When employees observe organizational misconduct and management's subsequent failure to correct it, they believe that the system is unjust and feel demoralized and less committed to their workplace. A further danger is that ethical employees who are silenced are likely to leave the organization, or worse still, to lose their ethical perspective. Since employees who speak out are more likely to be the high performing ones (Detert & Burris, 2007), who are extremely loyal (Miceli, Near, & Dworkin, 2008) and well respected (Bjorkelo, Einarsen, Nielsen, & Matthiesen, 2011), the cost to the organiza- tion may be considerable.

The increasing public suspicion about organizations concealing wrong- doing, legislation that protects and even rewards whistleblowing, regula- tors drawing on whistleblowers as resources, and changing technology that enables observers to capture and disseminate evidence, all add up to a significant change in an organization's operating context. In view of these very real game changers, organizations should consider reframing employee internal whistleblowing in risk management terms. We propose that management shifts its view of internal whistleblowing from threat to opportunity; from risk creator to risk identifier (Tsahuridu, 2011); and from deviance to organizational citizenship behaviour. Internal whis- tleblowing presents an opportunity to reduce risk, rather than cause risk.

In fact, while internal whistleblowing is not the cause of the problem,

it can be the solution (Richardson & McGlynn, 2011). Research shows that when appropriately responded to, internal whistleblowing is actually beneficial to organizations (Miceli et al., 2012). Internal reporting acts as an early warning signal that provides an effective opportunity for the organization to protect itself from undetected wrongdoing (Tsahuridu, 2011). Organizations that welcome internal whistleblowing are able to self- correct before issues they become too damaging (Keil, Smith, Pawlowski, & Jin, 2004). Managers who are responsive to employee reports of wrongdoing actually boost employee morale and increase commitment to the organiza- tion (Miceli et al., 2012). If internal whistleblowing is beneficial to an orga- nization that responds appropriately, how can organizations learn to embrace employee voice? The remaining sections of the chapter will outline a proposed plan of action for creating an organizational environment conducive to fostering employee voice.

 
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